Title: Application of discounted cash-flow (DCF) models in the valuation of investment properties in Nigeria

Authors: Mohammed Ishaq Mohammed; Modupe Morenke Omirin; Ibrahim Musa Singhry; Umar Auwal

Addresses: Department of Estate Management & Valuation, Faculty of Environmental Technology, Abubakar Tafawa Balewa University, Bauchi, Nigeria ' Department of Estate Management, Faculty of Environmental Sciences, University of Lagos, Lagos, Nigeria ' Department of Estate Management & Valuation, Faculty of Environmental Technology, Abubakar Tafawa Balewa University, Bauchi, Nigeria ' Department of Estate Management & Valuation, Faculty of Environmental Technology, Abubakar Tafawa Balewa University, Bauchi, Nigeria

Abstract: The purpose of this paper is to assess the level of application of the Discounted Cash Flow Models among Nigerian valuers. A questionnaire survey was conducted in 2011 where sample of estate surveying firms was drawn from Lagos and Abuja, using stratified and snowball sampling techniques. A total number of 240 questionnaires were administered out of which 161 were retrieved and analysed using the Statistical Package for Social Sciences (SPSS) version 17. The study revealed that there is very low usage of the DCF-based models by Nigerian valuers. The impression that requirement of valuation clients in Nigeria do not warrant the use of the models, the non-inclusion of the models in the country's higher educational institutions curricula, the perceived difficulty of the models and the failure of regulatory body to enforce their usage were identified as major factors hindering the adoption of these models among the surveyed respondents.

Keywords: DCF models; discounted cash flow; property valuation; state valuers; Nigeria; investment properties.

DOI: 10.1504/IJBEAM.2016.080542

International Journal of the Built Environment and Asset Management, 2016 Vol.2 No.1, pp.25 - 36

Received: 19 Nov 2015
Accepted: 14 Feb 2016
Published online: 29 Nov 2016 *

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