Nigeria’s dire economic condition and attendant high inflation, exchange rate volatility, rising interest rates and escalating construction costs are compelling estate surveyors and valuers to review property values more frequently. Stakeholders reckon that the sector could be more transparent through a national property transaction database and reliable data, CHINEDUM UWAEGBULAM reports.

Nigeria’s property valuation practice has undergone significant changes in recent years as economic instability and rising security concerns increasingly influence the assessment of real estate assets.

Estate surveyors and valuers are no longer relying solely on traditional valuation parameters such as location, physical condition, accessibility and comparable market transactions. Instead, macroeconomic realities and security risks have become critical factors shaping property values and valuation reports.

The Guardian gathered that persistent inflation, exchange rate volatility and high interest rates have weakened the purchasing power of households and businesses, reducing demand for residential, commercial and industrial properties. As fewer transactions occur, valuers face challenges in obtaining reliable comparable sales evidence, making market value assessments more complex. In many cases, valuation reports now include detailed market analyses that explain the impact of economic conditions on achievable prices and rental values.

The sharp depreciation of the naira has also significantly increased construction costs. Prices of cement, reinforcement steel, roofing materials, electrical fittings and other building components have risen substantially, pushing up replacement costs. Consequently, valuers frequently revise replacement cost estimates for insurance valuations, financial reporting, and compensation purposes.

High borrowing costs have further affected investment decisions. With mortgage financing remaining expensive and difficult to access, many prospective buyers have postponed acquisitions, resulting in longer marketing periods for properties. Valuation reports increasingly reflect reduced market liquidity and greater investor caution, particularly in the luxury residential and commercial segments.

The commercial property market has also experienced changing demand patterns. The rise of remote work, business downsizing and corporate cost-cutting have increased vacancy rates in some office developments, while retail centres in certain locations have struggled with lower consumer spending. These market realities influence rental assumptions, occupancy projections and investment valuations.

Security has emerged as another major determinant of property values. Communities affected by banditry, terrorism, kidnapping, communal conflicts, or frequent criminal activity often experience declining demand, lower occupancy rates, and reduced investor confidence. Properties in such locations may attract significant risk discounts compared to similar assets in safer neighbourhoods.

In contrast, estates with robust security infrastructure, including perimeter fencing, controlled-access gates, surveillance cameras, private security personnel, and emergency response systems, have become increasingly attractive to buyers and tenants. Such features now command higher rental values and stronger capital appreciation, particularly in major cities like Lagos, Abuja and Port Harcourt.

Insurance considerations have also become more prominent in valuation exercises. Properties located in flood-prone communities, erosion corridors or areas vulnerable to civil disturbances may attract higher insurance premiums, which ultimately affect investment returns and market values. Valuers are therefore expected to consider environmental and security risks when assessing long-term property performance.

Financial institutions have become more cautious about accepting properties located in high-risk areas as collateral for loans. Banks often require more detailed valuation reports, including market risk assessments, neighbourhood analyses and commentary on security conditions before approving mortgage facilities or corporate lending.

The scarcity of reliable market data during periods of economic uncertainty has further complicated valuation assignments. Transactions are often negotiated privately, while distressed sales may not accurately reflect market value. As a result, professional judgment has become increasingly important, supported by broader market intelligence and sensitivity analyses.

For corporate organisations, valuation reports prepared for financial reporting under International Financial Reporting Standards (IFRS) now require greater disclosure regarding market uncertainties, assumptions and valuation methodologies. Investors, auditors and regulators increasingly expect transparency on how economic and security conditions have influenced valuation outcomes.

Experts noted that economic reforms that restore macroeconomic stability, improve access to affordable housing finance and strengthen investor confidence will support more stable property values. Equally important is improved security nationwide, as safety remains one of the strongest drivers of real estate investment decisions.

They argued that accurate valuations must incorporate not only physical characteristics and market evidence but also the broader economic climate, security conditions, environmental risks and investor sentiment. According to them, estate surveyors and valuers who adapt to these evolving realities will continue to provide reliable guidance to investors, lenders, developers and policymakers navigating Nigeria’s dynamic real estate market.

A Senior Partner at Paul Osaji & Company, Mr Kevin Ofili, said the current economic climate has significantly altered property valuation practice, making valuation reports obsolete much sooner than in previous years.

According to him, rapid inflation and the persistent depreciation of the naira have drastically shortened the lifespan of valuation reports, resulting in more frequent requests for asset revaluations by investors, financial institutions and property owners.

“The speed at which valuation reports become outdated has increased significantly. This has made periodic asset revaluations more necessary than ever before. Inflation and exchange rate volatility also require valuers to update their market data and research records much more frequently,” he said.

Ofili noted that growing insecurity across several parts of the country is reshaping investment patterns and property market performance. He observed that kidnapping, banditry, terrorism and communal conflicts have weakened property values and rental demand in states such as Kaduna, Zamfara and parts of Borno, where investors have become increasingly reluctant to commit capital.

According to him, the shift in investor confidence has benefited relatively safer markets, particularly Lagos and the Federal Capital Territory (FCT), Abuja, which continue to attract stronger investment inflows despite prevailing economic challenges.

A fellow of the Nigerian Institution of Estate Surveyors and Valuers (NIESV), Ofili also identified the shortage of reliable comparable sales data, arising from declining property transactions, as another major challenge confronting the valuation profession.

He explained that where recent market transactions are limited, valuers rely on historical sales evidence, making appropriate adjustments to reflect prevailing market conditions. The sales comparison approach is complemented by the income capitalisation and cost approaches to determine market value using multiple lines of evidence.

“In situations where there are fewer recent property transactions, valuers use historical sales data with appropriate adjustments to account for current market conditions. They also assess a property’s income-generating capacity or replacement cost while considering broader market trends and available information,” he said.

He stressed that professional judgment remains central to the valuation process, noting that valuers enhance the credibility of their reports by clearly stating the assumptions underpinning their conclusions and validating their findings through more than one valuation methodology.

To strengthen Nigeria’s real estate market and restore investor confidence, Ofili called for coordinated policy reforms by government, regulators and financial institutions. He urged the government to improve security, implement prudent fiscal and monetary policies to stabilise the economy, strengthen land administration systems to enhance transparency and efficiency in property transactions, enforce professional valuation standards and expand access to affordable real estate finance.

According to him, these measures would stimulate market activity, improve the availability of transaction data, strengthen the credibility of the valuation profession and attract greater domestic and foreign investment.

Former Chairman of the Business Assets and Intellectual Property Valuation Faculty of NIESV, Mr Olalekan Akinwumi, stressed that property valuation can only remain credible when it accurately reflects prevailing market conditions, warning that economic instability; insecurity and poor market data continue to undermine professional valuation practice in Nigeria.

According to him, estate surveyors and valuers are essentially market interpreters whose opinions of value must be based on a careful assessment of prevailing economic and market indicators.

“As market interpreters, valuers consider all relevant market indices before forming an opinion of value. A valuation must reflect prevailing market conditions and current market characteristics at the valuation date. It is therefore impossible to arrive at a credible opinion of value without a thorough assessment of the market environment,” he said.

Akinwumi, a former President of the International Facility Management Association (IFMA) Nigeria Chapter, described security as one of the strongest determinants of property investment decisions and asset pricing.

He noted that kidnapping, terrorism, banditry and communal conflicts have weakened investor confidence, reduced market participation and depressed property values and rental returns in many parts of the country.

He cited a recent security incident in Oyo State, which prompted some investors to suspend planned investments, while persistent insecurity in parts of northern Nigeria has limited investment largely to indigenous investors familiar with the local environment.

Akinwumi identified the absence of reliable property market data as one of the most persistent challenges facing valuation practice. He advised valuers to reconcile the market, income and cost approaches in accordance with the International Valuation Standards (IVS), stressing that no single valuation method should be adopted in isolation.

“The appropriateness of each valuation method depends on the nature of the asset and the availability of reliable market evidence. Applying and reconciling multiple valuation approaches enables valuers to produce balanced, credible and defensible valuation reports,” he said.

To improve transparency, Akinwumi called for the establishment of a national valuation database and urged regulatory authorities to collaborate with practising estate surveyors and valuers to develop a central database of property transactions.

He also advocated a policy requiring the registration of all property transactions and the submission of valuation reports during title registration, saying the initiative would improve market transparency, strengthen valuation accuracy and boost investor confidence.

Former Chairman of NIESV’s Faculty of Estate Agency and Marketing, Mr Samson Eboigbe, identified inconsistent and inadequate market data as one of the biggest challenges confronting valuation practice in Nigeria.

According to him, reliable data is the foundation of every credible valuation opinion, yet the profession continues to grapple with poor disclosure of property transactions, the absence of a centralised property database and information hoarding among practitioners.

“The unreliability of market data is compounded by constant fluctuations in construction costs, rental values and other market indicators. The period between preliminary inspection, data compilation and submission of a valuation report can witness significant market changes, resulting in discrepancies in valuation figures,” he said.

Eboigbe explained that valuers are increasingly adopting dynamic valuation models, supported by econometric analysis, to enable real-time market assessment and appropriate adjustments for inflation, exchange rate movements, and interest rates.

He added that several commercial and administrative centres, particularly in parts of northern and eastern Nigeria, have experienced declining investor confidence, abandoned housing and hotel projects and falling property values as businesses and residents relocate to safer areas.

He urged governments at all levels to support the real estate sector through targeted policy interventions, noting that declining property values reduce property tax revenue, land registration fees and investment inflows.

“Banks also have an important role to play by expanding access to quality mortgage financing backed by professionally prepared valuation reports, thereby supporting sustainable growth in the real estate sector,” he added.

Vice Chairman of NIESV, Lagos Branch, Mr Ayodeji Odeleye, said valuation reports have evolved beyond merely stating a property’s value to providing a comprehensive assessment of market conditions, investment risks and the assumptions underpinning the valuation process.

According to him, valuers now place greater emphasis on the valuation date because property values can change rapidly in response to economic developments. “Valuers undertake more rigorous verification of comparable sales because recent transactions may no longer reflect prevailing market realities. There is also increased reliance on the depreciated replacement cost approach, particularly for insurance valuations and specialised properties, owing to rising construction costs,” he said.

Odeleye explained that professionals are adapting their methodologies to improve valuation accuracy amid market volatility. “Greater emphasis is now placed on the income approach for investment properties, while valuers increasingly reconcile the market, income and cost approaches to enhance the reliability of their conclusions. Technology, including Geographic Information Systems (GIS), drone surveys and digital property databases, is also improving market analysis. Ultimately, credible valuations depend on sound professional judgment, transparent assumptions, verifiable market evidence and strict adherence to the International Valuation Standards.”

He urged the government to establish a national property transaction database and a Multiple Listing System (MLS) to improve market transparency and access to reliable data. Odeleye also called on regulators to strengthen valuation standards, enforce ethical practice, promote continuing professional development and encourage the adoption of international best practices.