Property Valuation in Kenya

The purpose for which a property valuation in Kenya is required is important as the value of property is not necessarily the same for all purposes. Our valuations are carried out to conform to the Appraisal and Valuation Manuals published by the Institution of Surveyors of Kenya (ISK), Valuation and Estate Management Chapter and the International Valuation Standards (IVS).

Constitutionally, the laws and regulations of valuation practice in Kenya are regulated by the VALUERS ACT, CAP 532.

Hiring a professional valuer in Kenya is important because a professional valuer has a peculiar understanding of the property market and is able to forecast what might happen in the future. With access to historical facts of the market and of the changing trends, a professional valuer will ensure utmost accuracy on his opinion of value. A professional valuer is also able to do the following

  1. Due Diligence:

A professional valuer carries out due diligence (if instructed separately) while undertaking the valuation. Valuers have the basic understanding to interpret various elements of the property. Such include encroachment to road reserves, boundaries, illegal title deeds which come as a result of grabbing public land and double registration of title deeds.

2. Professional advice

The property valuation in Kenya process aims at establishing the highest and best use (if instructed separately) of the property. A professional valuer has the capability of analyzing/studying the market and consequently advising on how best to use the property in order to realize maximum returns.

Ark Consultants Limited is a valuation firm in Kenya that is able to provide independent valuations of all types of assets for all purposes and business needs. These include valuations of land and buildings, furniture, fittings, any type of equipment, plant & machinery and motor vehicles.

We carry out property valuations for all types of properties for various purposes such as:-

  • Bank/Mortgage/Loan

Banks will often carry out property valuation in Kenya where ;

  • real estate assets are to be used as collateral for loan facilities
  • Where they are to extend mortgage loans for the acquisition of property
  • Disposal/Sale/Purchase. This valuation is mainly carried out using the sales comparable approach (market evidence approach) to determine the selling price or purchase price. A valuation will ensure that both the purchaser and the vendor are armed with accurate knowledge as they get in to a transaction.
  • Insurance. Valuation for insurance properties is carried out to determine the insurance payable for an asset. The value returned by the valuer should be a representation of the cost that would be incurred to reinstate the property to its current standard taking into consideration the income lost for income generating properties for the period of reconstructing the property. This valuation also allows the parties to determine the monthly premiums payable for the insurance of the property.
  • Rental assessments/valuations. Property Valuation in Kenya for rental assessment is carried out to determine the rent chargeable for rental spaces. This is mostly carried out for commercial, residential or industrial properties.
  • Book/Audit/Balance Sheet. This is carried out by companies or institutions to determine the value of their real estate assets for the purposes of their annual financial report.
  • Local Taxation (Rating Assessment) with regard to assessing the Unimproved Site Values for rates calculation.
  • Merger and Acquisitions of businesses and companies to determine the value of the assets.
  • Compulsory acquisition. Compulsory acquisition is the power of government to acquire private rights in land without the willing consent of its owner or occupant in order to benefit society. Valuation for compulsory acquisition is carried out to determine the value of land and developments that are to be acquired by the government for the designated project.
  • Stamp duty purposes. Valuation for stamp duty purposes is carried out to determine the revenue collected from the sale of a property.

Factors That Influence the Value of a Property

To arrive at the value of a property, here are some of the factors that a valuer considers when carrying out property valuation in Kenya

  1. Location

One of the most important factors in real estate is location. The location of your property will determine the value assigned to your property. Properties in higher-end locations will attract a higher value than those in lower-end locations. The real estate valuation of the property will also be determined by its proximity to amenities such as shopping facilities such as malls and shopping centres, hospitals, religious institutions and utilities such as sewer lines, electricity, roads among others.

  1. Size

There is a direct correlation between the size of a property and the value of the same property. All other factors held constant, a larger property in built-up area will have a higher real estate valuation than a smaller property. However, when there are differing factors between two comparative properties i.e. proximity to amenities or internal finishes of the property, the values will be adjusted to allow for the differences.

  1. Age and Condition

All real estate investments depreciate with time. Depreciation affects the value of a property and this is usually taken into consideration when returning the value of the property whether you are using the sales comparison approach or the depreciated replacement cost method. Depreciation affects property in the following ways;

Physical Obsolescence

Functional Obsolescence

Economic Obsolescence

External Obsolescence

  1. Market conditions – Demand and Supply of similar property types

The demand and supply of a certain property type will affect the value of a property. Where the demand is high, the value of the property will most likely be higher than when the demand of a particular property is lower. Where the supply is high, the value of a property will likely be lower than when the supply of a certain property type is lower.

This will mainly affect residential properties and commercial properties.

  1. Economic Outlook

The overall health of the economy is a key driver of real estate market performance. The gross domestic product is a reflection of the country’s economy. When the GDP is high, it means that people have higher incomes and higher disposable incomes. The demand for property goes up which drives the prices for property up. The reverse is true.

Other factors such as the income being received from a property are also considered.

For more information about property valuation in Kenya get in touch with us.

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