CHALLENGES ASSOCIATED WITH VALUATION OF SPECIALIZED PROPERTIES (A CASE STUDY OF HOPE ALIVE TRUST HOSPITAL IDOFIAN KWARA STATE)
Specialized properties are classes of proprietary bud wants which fall outside the general range of residential, commercial and industrial properties.
These properties have no comparable in the noble market, they lack rental evidence and they are not easily adapted to alternative uses.
Valuation of specialized properties poses a very tedious task for the values because of its specialized nature. It needs wider experience coupled with the availability for data and involves huge & capital outlay to build up.
The challenges associated with valuation of specialized property with a case study Hope Alive Trust Hospital, Idofian, Kwara State, would aim of revealing all the task and challenges that are involved in the valuation.
Furthermore, appropriate method for the valuing such specialized property shall be employed to determine the capital value of the said property.
Finally relevant recommendation will be made in order to ensure efficiency in the valuation exercise of a such property.
TABLE OF CONTENT
Title Page i
Table of Content vi-ix
CHAPTER ONE 1-9
1.0 Introduction 1-2
1.1 Background of Study 2
1.2 Statement of Research Problem 2
1.3 Aim and Objectives 2-3
1.4 Significance of the Study 3
1.5 Scope of the Study 3
1.6 Limitation of the Study 3
1.7 Study Area 4-6
1.8 Definition of Terms 6-9
CHAPTER TWO 10-20
2.0 Literature Review/Conceptual Framework 10
2.1 Valuation Concept 10-11
2.2 Purpose of Valuation 11-12
2.3 Method of Valuation 12-14
2.4 Types of Property 15-16
2.5 Development Requirement of Specialized Property. 16-19
2.6 Specialized Property as an Investment 19-20
CHAPTER THREE 21-24
3.0 Research Methodology 21
3.1 Introduction 21
3.2 Source of Data Collection 21
3.3 Primary Source 21
3.4 Secondary Source 22
3.5 Target Population 22
3.6 Sample Frame 22
3.7 Sampling Techniques 22
3.8 Methods of Data Collection 23-24
3.9 Method of Data Analysis 24
CHAPTER FOUR 25-32
4.1 Data Presentation and Analysis 25
4.2 Construction and Material Used for Calvary Baptist Church 25
4.3 Interpretation of Data on Facilities 26-27
4.4 How the Property is Being Managed 27
4.5 Facilities within the Study Area 27
4.6 Valuation Exercise 27-28
4.7 Sketch of the Total Floor Area of the Church 29
4.8 The Need for Serious Adjustment in the Valuation of Different Types of Properties 30-32
CHAPTER FIVE 33-35
5.0 Summary, Conclusion and Recommendation 33
5.1 Summary of Finding 33
5.2 Conclusion 33-34
5.3 Recommendation 34-35
1.0 BACKGROUND OF STUDY
According to Baun & Mackin define valuation as the act and science of estimating the value of interest in property.
Valuation is a science and art: Its is science because it is involves the use of scientific method and technique d it is an art because it is not science and also involves the use, its imagination to express ideal. Valuation involves attributing vale to land and landed property. It involves computation valuation van be required for many purposes. Valuation is carried for specific period so from these facts valuation can be comprehensively defined as the science and art of attributing value to land and landed property through the process of collecting data, and computing it, for specific purpose and for a particular period of time.
Valuation can be carried out for residential, commercial, agricultural, industrial and specialized properties. Therefore valuation requires expertise’s, skills and technical competence of the practitioner which make the valuation report to be a type of technical report.
As a result of these requirement, a valuer needs to process sound knowledge and undoubted skills, furthermore, substantial portions of the private, corporate and private wealth of the world consist of real estate. The very magnitude of these fundamental resources in our society creates a need for informed valuation to support decision pertaining to the use of and deposition of real estate and the right inherent in the ownership.
Specialized properties are of various categories depending on the applicable valuation techniques. Profit and account method is normally used for such properties as hotels, cinemas,, town halls, hospitals, while petrol filling station and agricultural properties have their own approaches as well. Other category of specialized property can be valued using replacement cost method.
1.1 STATEMENT OF RESEARCH PROBLEM
Valuation of specialized properties often poses a lot of problems because of its uniqueness in nature and due to the fact that they are not always sold and bought frequently in the market. Apart from these two facts, they still back mental evidence and comparable. As a result of these facts a lot of skills are required in its valuation. And also all the valuation process must be duly and thoroughly followed.
1.2 AIM AND OBJECTIVES
This project work aim at examining the challenges associated with valuation of a specialized property.
1. To identify the various type of property in the study area
2. To examine the structural component of property in the study area.
3. To access suitable method to carryout the valuation of property in the study area.
4. To access the problem associated with the valuation of the property and recommend a reasonable subjection in solution to the problem.
1.3 SIGNIFICANT OF THE STUDY
The significant of the study is to find solution to the challenges associated with valuation of specialized property.
Secondly, the recommendation will serve as solution to the problem encountered in the valuation of specialized property.
It’s also a course or research materials for other researchers who want to study on challenges associated with valuation of specialized property.
Furthermore specialized properties valuation involves a lot of challenges and posed a lot of problems for the person and who face the task of estimating its value i.e the valuer.
1.4 SCOPE OF THE STUDY
There is always a limited scope in any research work. The scope of the research is therefore based on the challenges associated with valuation of specialized property using HOPE ALIVE TRUST HOSPITAL Idofian as a point of reference.
1.5 LIMITATION OF THE STUDY
This dissertion has been subjected to a lot of clog and constraint among which are:-
a. Lack of adequate fund
b. Lack of adequate time for collection of data and analysis.
c. Inadequate of previous work on the thesis of data and analysis.
d. Lack of proper record.
1.6 STUDY AREA
Ilorin is located about 256km. north east of Lagos and 80km, from the NigerRiver at Jebba. It is strategically located as the “gateway” between the northern and southern part of Nigeria. The city was formally part of the ancient old Oyo Empire (Oyo Ile) under the Alaafin of Oyo.
Ilorin is believed to have been founded between 1600-1700AD there is no element on the origin of the town while some believe it was founded by “Ojo Isekuse” a hunter from Oyo Ile, otherscontended that it was founded by lettering, afonja’s grand father.
The name of the town, Ilorin came from either “Ilo-irin” (sharpening of iron) of from “Ilu-irin” (the town of the elephants). This conjecture is based on the presence of a rock traditionally used for the sharpening of iron in the city and the presence of elephants in the area in the past.
Idofian is a populated placed in Kwara State Nigeria with the region forth code of Africa, middle East. It coordinates are 80 22’60N and 40 43’0E in degree seconds 0r 8.38333 and 4.71664. Idofian is located in Nigeria about 319km west of Abuja the country’s capital town, the local time zone is named Africa/Lagos. Idofian town is first hamlet with few houses before it is developed a little as it is. In Idofian today we can see schools, hospitals, radio station, hotel, guest house, churches, mosques e.t.c that is why Hope Alive Trust word Assembly is choosen as a case study for my project.
Hope Alive trust hospital is located within hope Orphanage Home, an off shoot of word Assembly church in Idofian, Ifelodun Local government area of Kwara state around Ilorin axis. Hope orphanage home is a house provided for the children that are abandoned or that their parent don’t have the power financially to take care of them. This children, some of them have health challenges that is why hospital is built within the Home that is hope orphanage home for the care of the children and it is also a benefit for the town Idofian.
Hope alive trust hospital building, foundation was laid in April 2012 at Idofian, Kwara State Nigeria (a predominantly Muslim community). By April 2015 however, the front half of the hospital was completed and useable stocked with initial medical equipment that same year and medical outreach was held at the hospital using the front half. This hospital is to remain opened post- Hope alive trust mission with volunteer staffing.
Word Assembly itself is a founder of Pastor and Mrs. Omolehin that also have a lot of the church and orphanage home round the globe.
1.7 LOCATION SKETCH
1.8 DEFINITION OF TERMS
There are some common terms used in valuation however some of the pertinent terms are discussed below.
1. Value:- this is the highest price estimated in terms of money which a property will bring of expose to sale in the open market allowing a reasonable time to find a purchase who buys with the knowledge of all the uses to which the property is adopted and from which its capable of being used (Ring 1970).
2. Rental value:- this is the annual or periodic payment for the use of land and buildings. In fixing rental values, the valuer not only put into consideration the rent on the subject property but also rent on comparable properties within the vicinity. But it is essential that the appreciates the economic factors governing the rents, which will enable him understand fluctuations in rental values and on advising on the reasonableness or otherwise of existing rents and market price. (Bola, 1999).
3. Income:- is the amount realized at the end of a transaction (Sunday 2001).
4. Outgoings:- costs incurred by the owner of an interest in property. Usually calculated on a yearly e.g management, repairs, rates, insurance and rent payable to the holder of a superior interest, as appropriate to his contractual or other abilities it’s prudent to make annual provision for future items involving expenditure at intervals of more than one year. (Kuye 2000).
5. Virtual rent:- is the rent paid plus the annual equivalent of any capital sum that may have expended on the premises from time to time. Thus virtual rent is a term use to designate the equivalent annual cost of property to occupies in cases where capital has been paid in live off or addition to rent. Ifediora 1998.
6. Premium:- according to oxford dictionary define premium as an amount to be paid for a contract of insurance.
7. Risk rate of return on capital:- this is an important “clause which any reasonable investors be it in landed property or not, would likely to consider in a process of going into any investment. The fact is related to the capital yield which gives an indication of the degree risk attacked to an investment. (Alabi 2012).
8. Depreciation:- (Alabi 2012) define depreciation as a method of allocating the cost of tangible asset over its useful life. When a new building, plant or machinery is built or purchased, the value will be depreciating year by year
9. Obsolescence:- according to Merriam Webster described as when an apparent of an estate has little or no value its existence. This could be classified into three types which a physically, functional and economic obsolescence. (Kuye, 2000).
10. Open market value:-the best price at which an interest in a property might reasonable be let or sold in the market by private treaty assuming, there is a willing seller and willing buyer, a reasonable period to negotiate the sales and the property will be freely exposed to the market. (Ifediora 1998).
11. Plot:- a small portion of land that is used or intended for a special purpose. Any one of the marketable parcels into which a treat of land is divided upon plotting. (Olayowa 2002)..