Valuation Practices in Uncertain Times

#valuationpracticesinuncertaintimes The global economy and markets were badly affected since the start of the pandemic in FY19; making current market environment and key valuation assumptions for real estate and financial assets to experience new challenges. These challenges gave rise to a new process of determining value in the continuing uncertain and volatile environment, with many questions bothering on the perception and treatment of these pandemic-led changes and practices in the world of valuation. Valuers are currently looking at the key assets value level as against pre-pandemic level with a view to answer the following questions: 1. How to determine value in the continuing low interest rate environment? 2. How to treat uncertainty on current levels of value for key asset classes - from real estate, listed equities, infrastructure, bonds, agriculture and commodities. 3. How to treat incidence of impairment of asset values and valuations. 4. Market risk premium adoption. 5. Determination of cost of equity and debt - equity and debt rates. 6. What standard rate of inflation to adopt for escalations - recoveries and expense. 7. What perpetuity growth factor to be considered.  8. Effect of rent concessions and economic depreciation on asset values. 9. The most suitable rental growth rate to be adopted.  10. And consideration of ESG when performing valuations. Now that the general market environment and valuation standards across the globe are keen on building consistency, trust and independence in valuation practices; it is expected of valuers to understand the changes and find the best possible ways of treating them in valuation.  It is on this note we are inviting you to attend our next commercial real estate valuation training in order to better understand how these pandemic-led changes were handled in the FY20 and H121 valuations and how to treat them going forward. Kindly connect with us at +2348069774629 and aabraham@akaa-ng.com for further information. #realestate #realestatevaluation #commercialrealestatevaluation #marketuncertainty #volatility #valuations #valuationmatters #realestateassetclass #propertyinvestmentinnigeria