| dc.description.abstract | Housing occupies an important position in the Kenyan psyche along
with the concept of home ownership. The residential developments and
investments attract both institutional, corporate organisations as well as
private individuals. There are indications that the residential market in
Nairobi is very active and that most of the valuation firms in Nairobi
carry out market-based valuation of residential properties.
This study is about the valuation of up-market residential properties in
Nairobi and in particular the factors that are considered in the valuation
, of residential properties, the methods adopted and the source and
methods of analysis of sales data. The study attempted to determine the
causes of variations or differences in market values of residential
properties in a similar location.
This study was carried out in Lavington and Riverside Estates which
are up-market residential estates of Nairobi. Land values vary from
KShs.8.0 million to KShs.15.0 million per acre. The built residential
properties, .whose built up areas vary from 1500 square feet to 5000 t
square..'5.feet7' sell at between KShs.8.0 million and KShs.35 million.
Market rents ofthe built residential properties also range from ..
KShs:45,0001- p.m. to KShs.200,0001- per month. The sizes of
accommodation offered vary from standard three-bedrooms-onebathroom
house to five or six bedrooms with four or five bathrooms.
These estates extend from Kileleshwa to Kawangware and Kangemi,
which are low-income residential properties. Subsequently, variability
or differences in market values of residential properties is huge and
therefore provided data that was required in the research. Other estates
considered in the research included Kilimani, Westlands, Karen and
Runda mainly to supplement data used in the study.
The research was investigative and was conducted using information
mainly obtained from the Institution of Surveyors of Kenya, Secretariat
in Nairobi. All diploma examination papers were perused in order to
obtain data. In addition, registered valuers practising in Nairobi were
interviewed in order to ascertain the methods they used in the valuation
of residential properties.
The study found out that the significant factors that determine the value
of a residential property in the same location are size of plot and market
rent. Market rent is in tum determined by size of main house, location
and accommodation in terms of bathrooms, bedrooms and reception
areas.
Therefore the most appropriate method of valuation of built residential
properties is the Income Approach or the Investment Method.
The most preferred method of valuation adopted in the valuation of up
market,residential properties in Nairobi is the Cost Approach. However,
comparable sales are adopted to justify the final opinion of value. The valuer also relies on one method of analysis which is cost related.
Computer based methods of analysis are not used by valuers in Nairobi.
Market rent which is a significant variable in comparing sales data of
residential properties is also not considered.
Subsequently, variations in market values of up market residential
properties will arise due to the application of the various valuation
approaches, availability and subsequent analysis of comparable sales
data.
The research recommends that since comparable sales are central to the
valuation process, a central data bank of comparable sales should be
established and made accessible to valuers and researchers. The sales
data obtained from the data bank should be subjected to vigorous
analysis such as regression analysis to determine the significant
contribution of the units of comparison to market values of residential
properties. Valuers should therefore, be trained in the application of
these statistical methods through Continuous Professional Development.
The Institution of Surveyors of Kenya should also come up with
valuation guidelines and standards on valuation of all categories of
properties. This would form a basis for further research in areas of
intemational professional standards and valuation guidelines, which
would be suitable for valuers operating in Nairobi. | en |
