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You read ‘Valuation of contaminated land in nigeria’ in category ‘Essay examples’

1 . two NATURE AND EXTENT OF PROBLEMS INTENDED FOR RESEARCH

According to Gibson , Nwuba (1994) ‘Property possessions that is, area and structures are a important resource for all types of organization, which include local authorities and public areas. They are primary to lifestyle of life.

Contaminated land can be challenging for businesses as it can create uncertainty for the potential clean-up and regulating liabilities and resultant costs which may must be met Rich, T (1996).

As financial systems of the world globalize and capital becomes more mobile, valuation gains impetus in importance for privatization, joint undertakings, mergers and acquisitions, restructuring to create value. Yet value is much more tough in these environments because sellers and buyers face increased risks and obstacles than they do in developed market segments James , Koller, (2000).

According to Coming Clean, Supra be aware 7, in 1-2 ‘Most of the nations around the world contaminated property is found in a vicious cycle of decline as thus:

(a) The landowner is unable to sell off the area.

(b)Vacant properties deteriorate and invite arson, illegal dumping, and criminal behaviour.

(c) Unaddressed contamination might spread further more eroding the land benefit, escalating expense of clean up and threatening the economic stability of various other adjoining houses.

(d)Potential investors are facing uncertainty costs and legal liabilities, look for development chances elsewhere.

(e) Contaminated property becomes undesirable, legal and regulatory, and financial problems in the community and the nation.

This can be now the situation of property contamination in Lagos Point out. Lagos State is a Mega city, a standing conferred onto it by the United Nations as a bodily smallest nevertheless the most filled state near your vicinity, with around population of about 10 , 000, 000 people, which can be about 10% of the total population of Nigeria Iwugo, K (2003).

Presently, Lagos Mega town is estimated to have a human population of 17 million individuals out of a national approximate of a hundred and fifty million, and projection of 24. some million people by the 12 months 2015 therefore becoming another largest town in the world Community Bank Statement (1996).

Relating to Ademola , Onishi (2006), ‘No where in West The african continent is the level of urbanization in the last number of years as unmatched as Lagos city, the economic focal point of Nigeria. As the economic nerve-center, it makes up about over 70% of Nigeria’s industrial and commercial establishments that makes up up to 70% of the country’s manufacturing value-added’.

This quick population surge and estate in Lagos poses several serious problems such as superb pressure for the land, shortage of housing, regarding slums and shanty, heavy traffic, downtown sprawl, professional pollution, and failure from the urban community to adopt to changing conditions caused by the incessant inflow of migrants to its institutional and social companies.

According to Goldberg, (1970) ‘rapid and continued rise in housing and land prices are expected in cities with transport improvement, and speedy economic and population growth’.

He mentioned that the inhabitants increase includes a direct impact on the property use as well as the resultant require on area. Some of the problems arising from this are the serious encroachment in conservation region and effects of industrial sectors. There is a massive reclamation performs carried out in areas such as Lekki Peninsula, Festac Town, Victoria Isle and Ogudu foreshore which destroys fauna and botánica. Encroachment has additionally occurred in areas zoned conservation belt in the grasp plan by desperate non-public developers.

Real property was suddenly seen in a new mild, no longer as a thing to leave behind to the kids, but as quick money- rotating venture. Much like the development globe (especially, United states and the United Kingdom), home has been known as money making enterprise. Hence the industry can be undergoing stiff competition coming from all facets ranging from Property Agency, Real estate management, and quantity Surveyors.

The inference is that the Nigerian Estate Surveyors and Valuers are now faced with not only elevating client requirement of valuation, value accuracy, but also firmer competition by related specialists. These twice issues necessitates valuers as a solution with pacesetting levels of accuracy and style in the valuation. Besides, there is a likelihood that the open public may get away from the services of the Estate surveyors in favor of the accountants plus the engineers who may be able to provide more concise and dependable valuations.

55 not restricted to Nigeria by itself, internationally Accountants, Management Consultants and Expense Managers happen to be competing pertaining to Asset managing briefs. The present economic environment helps it be practically impossible to confine professionals to their areas of specialised.

It is therefore imperative that the Nigerian valuers ought to sit up, and wake up for the challenges ahead and take valuation critically.

Equally, Ogunba and Ajayi (1998) each of our conventional valuation methods will be shrouded in mystery and indefensible for the extent that valuers in Lagos aren’t interpreting their very own market with anything remotely close to the reliability of their equivalent in Britain.

Baum, (1998) raised mistrust that: ‘ Property valuation is now a mystery, fine art or scientific research devoted to the practice of estimating market price subject to a number of often ridiculous assumptions. Home valuers is unable to value properly. non-e with this would matter if it experienced no influence on the market. But it does, and we increasingly understand that the property market affects the economy’.

Simply by studying and outlining the many techniques that can be used for valuing contaminated properties and investigating the magnitude to which they may be used in Nigeria, investors and practitioners can easily gain a better understanding of the chance they encounter and have a set of tools on which to basic a more convincing judgment about investment actions.

1 ) 3 The aim, and Goals of the study.

The key aim of this kind of study is usually to determine how valuation techniques are being used in the value of infected land and to establish a finest practice approach for Nigeria.

? To determine Stigma attached to infected land.

? To look for the valuation techniques used in Nigeria for infected land and determine how risks and uncertainties are integrated in the valuation process.

? To look for the level of awareness and experience of practitioners regarding valuation approaches to contaminated lands.

The investigator is thinking about doing this examine because there are a large number of properties which includes vacant lands that are contaminated in Nigeria. The reseasrcher is going to execute interviews of key stakeholders in the estate and value industry and case studies because data collection methods. The location of lagos metropolis is to be used for the situation study of the work plus the analysis of interviews and case studies will show how to evaluate contaminted land in Nigeria.

CHAPTER TWOBOOKS REVIEW

This gives an overview of literature and earlier research work related to these areas. It gives background information required for the understanding of the entire work.

Relevant literature information from intercontinental and local periodicals, textbooks, relevant government agencies statement (RICS), paperwork from Environmental protection Firms and nongovernmental and community based companies, internet websites are being used in this analyze.

There have been quite a few suggestions simply by professionals and academicians across the world on solutions to the problem of valuation of contaminated land, but no single solution seems to meet all requirements. The essential reasons for performing valuation plus the procedures engaged need to be very well discussed and understood.

In respect to Syms, P and Weber, N (2003) In most cases, neither the literature neither current assistance from professional bodies suggest recognized methods and tactics for the value of polluted land and no clear indication of when or to what degree they would be used if there were any.

In accordance to Kilpatrick, John (2007) ‘Normal appraisal techniques regularly fail and appraisals must rely on more advanced techniques, such as contingent value, case studies or statistical analysis’.

What investors, regulators and users of valuation services require are persistence, reliability, clarity and transparency in value reporting globally A single worldwide standard needs to encompass or recognize real estate laws, tenures, accepted rules of perform, languages, ideas and ‘best practice’ standards Edge, ( 2000).

Property remains one of the primary investment assets closely accompanied by shares and bonds Hoesli , Macgregor (2000).

Valuation plays an essential role inside the property industry either for bank loan purposes, sale transactions. And portfolio managing or efficiency measurement. Ajibola, M (2010)

According to Ajibola, M (2010) The role of valuation as the basis of transaction physique, should not be compromised, with the organization and multiplicity of industrial and commercial economic activities, and coupled with excellent role real estate holdings enjoy especially as collateral for the release/production of capital funds. Nevertheless , since most interactive human activities happen to be fraught with dispute, statements and countertop claims, the valuation practice is no exemption.

The case of inaccuracy manifested recently in the valuation from the assets of Nigerian telecommunication Limited (NITEL) for privatization/disposal purposes once members of staff from the company, stakeholders and the public freely voiced away their concerns against exceedingly low valuation estimates the estate surveyors ascribed for the assets with the company. It was based on this kind of complaints the fact that federal Government underneath President Olusegun Obasanjo cancelled the whole privatization exercise, and ordered a re-valuation.

Whilst Accountants, traders and other monetary consultants had been progressive in refining all their financial analytical techniques to fulfill and meet their changing client’s requirements, this can not be said of estate surveying field which has been slow and lukewarm inside their attitude and approach towards accuracy changes in valuation practice. OJO, (2004)

In his paper ‘Showing Whatever you Know’, Weber (2001) states that: ‘Appraisers need to demonstrate reasoning lurking behind their benefit opinions simply by discussing essential spatial human relationships and their likely effect on benefit. Geographic Details Systems (GIS) can be used to evaluate these human relationships and to present why a customer should select an appraiser who has this kind of level of information’.

Valuers in Nigeria commonly are not skilled in the art of determining the extent and degree/nature of contamination which may exist in a given property.

Bond (2000) states that problems faced by valuers of contaminated property may be the difficulty and inability of values to spot contamination within a given web page, lack of specialized skills to look for the extent of contamination, as well as the cost of remedying it.

Appraisers should have specialised and fundamental knowledge of contaminants types, nature, its amount and the effects it is able of leading to. This should become added to the essential curriculum from the appraisers in schools. This really is just one reasons why knowledge in the area of ground impurities as it pertains to property valuation is important.

The application of these tactics enables properties to be regenerated and went back to an economically feasible, socially suitable and productive use.

One of the most popular areas in america for Brownfield development can be Pittsburgh Philadelphia, which efficiently transformed several former metallic mill sites into expensive residential shops and offices. Reclamation of Brownfield may become a major advantage to a city and significant part of new urbanism. In numerous of the most populated areas of the region, it is a requirement that plays a critical position in countering suburban sprawl.

2 . 1 PRECISELY WHAT IS LAND TOXIC CONTAMINATION?

SOMETHING SPECIAL FROM THE EARLIER

There is no general definition of contaminated land. The definition of is managed differently in various countries.

Contaminated land can be described as general term to describe sites or larger areas of property where raised concentration of chemicals or perhaps other element (Contamination), generally resulting from male’s use of the land, might exist. That focuses on contamination resulting from previous practice, that is certainly historic or perhaps legacy contamination CARINET, (2002).

State of the Environment report (2007) identifies Land Contaminants as land that has a pollutant above background concentrations leading to, or with all the potential to cause, adverse affects to man health, environmental surroundings or any environmental value.

Content 3 with the Waste Work defined infected land since: ‘All terrain the physical, chemical or perhaps biological features of which have already been negatively modified by virtue of the presence of dangerous components of human origin, in concentrations such that that they pose a risk to human health or the environment according to the conditions and requirements set forth by government. This kind of definition excludes natural contaminants and occurs according to the specifications set forth in each case by the federal government. This description leads us to conclude that not all basically contaminated land may be legitimately considered infected.

The Planning Plan uses a different definition of infected land which is not based sorely on the legal definition decide with Part2. A larger range of contamination and receptors is relevant to planning. The look Regime uses the wider term ‘Land affected by Contamination’. This is designed to cover all cases where: ‘ the actual or suspected presence of substances upon or within the land which might cause risks to people, man activities and the environment, whether or not or certainly not the land meets the statutory description in Part 2A.

This is the United Kingdom legal notion of land toxins. According to section 78A(2) of Environmental Protection Act, 1995: Infected land is ‘Any terrain which seems to the local power in whose area it can be situated being in such a state, by reason of chemicals in, upon or underneath the land, that-

? Significant injury is being caused or we have a significant prospect of such harm being caused, or

? Polluting of the environment of managed waters is being caused or perhaps is likely to be, brought on.

The key element of UK classification is the Source-pathway-Receptor pollutant addition concept. All three elements of the pollutant linkage need to be present for generally there to be a risk of any degree. Without the obvious identification coming from all three elements of the pollutant linkage, terrain cannot be referred to as contaminated terrain under the regime.

It has as been used as a unit for ecological impact, plus the right appraiser should be current with its improvements.

Equally, the use of the word significant in the main definition of contaminated area narrows it is scope considerably” Denner and Lowe, (1995).

Information from Syms’s reviews in January 2001 shows that this definition refers to most seriously polluted land, almost certainly no more than 10% of all infected land in britain.

One implication of this strategy is that only a few land containing contaminants therefore is infected, and the description relies upon the concept of problems for human and the environment and it clarifies as to how significant the harm should be for the land to become defined as ‘contaminated’ thus environment a high threshold before area will belong to the plan. The aim of the united kingdom definition of polluted land in part 2A should be to focus only on difficult land, and also to avoid accidentally catching non-problematic land.

The principle difference between the UK and Planning definitions of contaminated area is that beneath the planning system, risks must be assessed based on the new or intended use of the land, rather than the existing use.

However , the principles root both routines are essentially the same namely- the identification and remediation of property that may cause a risk to man health and /or the environment. The Part 2A works with contamination risk from a website in its current use, but the Planning Program requires that the proposed use is considered. And so the remediation necessity under the planning system could be wider than under Component 2A.

It has to be taken into account that a contaminated land is likewise referred to as ‘Brownfield’. United States Environmental Protection Agency (EPA) defines Brownfield as: ‘abandoned, idled or underutilized commercial commercial establishments where growth or redevelopment is challenging by genuine or recognized contamination’.

2 . 2 WHAT ARE THE CAUSES OF LAND CONTAMINATION?

Area may be impacted by contamination due to historical property use, principally from commercial processes, waste disposal and unintended spillages.

Table 1 data some of the most typically encountered impurities, the sites where they are prone to occur, and the principal dangers they produce.

CONTAMINANTLIKELY TO TAKE PLACEPRINCIPAL HAZARDS

INORGANIC “Toxic alloys e. g. cadmium, business lead, arsenic copper, nickel, and radionuclide. Steel mines, Straightener and metallic works, foundries, smelters. Electroplating, Anodizing and galvanizing functions. Engineering performs. Harmful to wellness of individuals or family pets if consumed directly or indirectly. Might restrict or perhaps prevent the regarding plants.

ORGANIC-combustible or burnable substances like coal and coke particles, methane, Petroleum products, fuel, pestcides, additives and extreme substances just like sulphates, chlorides, acids and asbestos. Gas works, electrical power stations, train land, landfill sites, substance works, refineries, tar distilleries, industrial complexes and garbage disposal sites. Subway fires and explosions within just or underneath buildings, substance attach on building materials elizabeth. g concrete foundations, contaminants of normal water supplies. Hazardous if inhaled.

BIOLOGICAL-bacteria, viruses, yeast, mold, mycoplasma. Are or were living creatures which can traverse the air. Transmitting by people, plants and animals. Natural growth is usually supported by nutrition and dampness. Triggers allergies from repeated exposure. Infectious diseases happen to be transmitted through the air. Produces disease creating toxins that can damage vital organs.

SOURCE- ICRCL GUIDIANCE NOTICE 59/83 SECOND EDITION SEPTEMBER 1987.

installment payments on your 3WHY IS USUALLY CONTAMINATED AREA IMPORTANT?

Contaminated land has induced major concern, critics possibly viewed the challenge as a poisonous time blast in land Pearce, (1992).

According to Oldershaw (2001), where there is contamination, the impact on overall health, the environment and development would depend on:

(a) contaminating substance(s)

(b) The ability to migrate(depending on neighborhood geology and hydrogeology) and

(c) The intended utilization of the land.

He as well stated that these problems stems from the fact that there is a famous lack of treatment over industrial and waste materials management, inadequate planning or failure to realize that terrain might be put to other uses in the future.

Additionally, there are fairly significant economic failures due to the decrease in area productivity due to contamination plus the ensuring impact on world food security.

Based on the Environment Organization (2011) Land contamination and also the possibility of it is a material organizing consideration. Therefore the planning power must consider the potential inference of toxins both in planning development ideas and when taking into consideration applications for planning authorization. The development period therefore is among the most cost-effective the perfect time to deal with the challenge. Town and country planning system handles dev elopement and the make use of land in the wider public interest. Community planning authorities are in charge of for making certain land contaminants is handled through the organizing system and that remediation occurs where it truly is required.

Relating to ( Patchin 1988, Spencer 93, Syms, 1996b) ‘The reality the property is contaminated needs a valuer to experience a thorough understanding of land toxic contamination issues which include regulations below relevant environmental laws, the nature of contamination upon land, the sort of remediation necessary and the marketplace conditions, etc . As far as value is concerned, the primary difficulty may be the lack of available data’.

The appraiser need to diligently understand and report all forms of contamination with an environmental analysis process.

2 . 4EFFECT OF PROPERTY CONTAMINATION UPON VALUE

The primary aim of valuation should be to determine worth which is a viewpoint, an unbiased activity that is based on market place evidence, no matter what form or state the property is in Antai, I (2003).

According to Chalmers (1993) ‘Contamination or the risk of contaminants can result in diminished utility for any property. The sort of impact in this diminished energy may be of a short term character and will decide the particular value technique to be used.

The value of a property can be defined as the expectation from the remuneration, accruable to that real estate, to be derived in the future. (Appraisal Institute 2001, Appraisal of Real Estate, twelfth Ed.

Inside the extreme circumstance, the owner might not be able to permit or promote the property or perhaps use it while security to get loan. The land for that reason has become a responsibility to the owner. Furthermore, terrain contamination may affect the easy putting the land to another best use thereby affecting the value generally.

Patchin, (1991) noted the fact that decline in value is normally greater than the cost-to-cure. “There is virtually no chance of obtaining mortgage auto financing for a critically contaminated property

According to Wiltshaw, G (1996), ‘Stigma has been referred to as a key factor in lowering the significance of land which is actually or perhaps potentially contaminated’

According to Bond (2000) ‘Stigma is the blighting influence on property worth caused by perceived risk and uncertainty- uncertainness which pertains to inability to affect an overall total cure, likelihood of failure of remediation, risk in within legislation, difficulty in obtaining financing, or simply, a fear of the unknown’.

Stigma may have an effect on polluted land worth before, during or after clean up process Roddewig, (1996). In addition to the environmental dangers, they also worry about the likely future economical and legal liabilities.

Mundy (1992) identifies two main problems that impact such homes as the marketability results which try to determine the loss of financial results on the house due to the identified damage as well as the income results, which quotes the present benefit of this damage from insufficient marketability.

Hence, it is important to remember that a property might be affected by either one or both equally influences (loss of value as a result of cost of clean-up and lack of value due to stigma).

Examining the affects of the product on a property, Fisher et al uses the formula below to estimate loss in worth.

VA= PHOTO VOLTAIC of predicted NOI + PV of expected NSP-PV of predicted remedial cost.

Where PV- Present Value

VA- Value of a home contaminated with asbestos.

NSP- Net Revenue price.

NOI- Net Regular Income.

In effect from the offered equation, losing in benefit is portrayed as

Damage in worth = PV of property with asbestos-PV of home without the product.

installment payments on your 5EFFECT OF TERRAIN CONTAMINATION AROUND THE ENVIRONMENT

According to Chan (2001) ‘contaminated property is a significant environmental issue apart from triggering actual or perhaps potential hazards to human being health and the environment, contaminated area also causes liabilities and financial loss in kind of costs to satisfy legal requirements with regards to clean-up, and long term monitoring expenses’. Furthermore, they may be failures due to a drop in market value/rental of the real estate, longer openings periods, high remediation and monitoring costs.

According to Environmental Company: Guiding Guidelines for Area Contamination (2010), ‘ Terrain contamination has the potential to cause considerable trouble for ecosystems, individuals, property and pollution of controlled oceans (including fish ponds, groundwater, lakes, coastal drinking water and area watercourses) because of the existence of substances in, on or perhaps under the ground’. There is wide loss of suitable for farming soil, pollution of air and drinking water, degradation of farmland, injury to aquatic ecosystems, destruction of wildlife and biodiversity all of these cause critical health problems to humans.

As a result, removing environmental contamination from the land not only removes the contamination in the land, this prevents toxic contamination from entering the food web. State of the Environmental Survey (2007).

2 . 6FACTORS AFFECTING VALUATION

The value of any given real estate is not arrived at in isolation, it truly is highly dependent on factors because demand and provide. Valuers should certainly assess styles in these makes while aiming to determine the velocity, direction, strong points and restrictions of these trends. Some of these factors known to impact the value of your property with respect to either the need for or the supply of a house are:

Economic Forces

This is one of the most key elements to be deemed when performing valuation method. The economic prospect and forecast are a vital part of analysis in value willpower. The predicted trend in the economy, the physical area and many other different aspects of the economy are incredibly important once carrying out value assignments. These includes salary, inflation, job, purchasing electric power and standard price levels, interest and bank lending rates, availability of mortgage credit, construction costs, vacant and improved houses.

Social Forces

The value of real estate property is one of those areas remarkably predisposed by simply social makes. This involves the social framework of the world that can affect the way the societies perceive things. These kinds of forces include age syndication, marital position, lifestyle, places, education, legislation and within society type all may affect benefit of home. These results could both be positive or perhaps negative according to what contemporary society is tending towards at that point in time.

EnvironmentalMakes

This refers to the natural and man-made environmental conditions from the area where the land is situated. Climatic conditions, system, topography and soil, impurities such as the product and radon, natural boundaries to more development must be considered before valuation.

GovernmentalForces

The provision of governmental features and providers around the management areas may affect terrain use habits and thus impact the value of properties close to them. Closeness to great public cultural services can affect the worth of any given property elizabeth. g. protection, zoning, public service, interaction, conformity to building requirements, fire assistance, fiscal guidelines in the three tiers of government, rent regulations and restrictions on types of ownership and so forth

installment payments on your 7 HOW COME THE VALUATION OF INFECTED LAND CAN BE DESCRIBED AS COMPLEX METHOD

Relating to Javadi A and Bello- Dambatta (2008) ‘Contamination and its supervision are very complicated, risky and uncertain a comprehensive processes while using high cost overruns and rigid time limitations, that count on inputs coming from not only wide range of expertise, but from several groups of stakeholders, making it nearly impossible for just about any group of authorities or stakeholders to efficiently manage contaminated land problems on time, and on budget’.

Lapinskas (1998) explained that the heritage of previous polluting techniques has resulted in contaminated sites, which today present complicated and difficult problems. Any solutions will require a a comprehensive approach merging civil executive, chemistry, geology, hydrology, toxicology, Geographical Info System, /micro station and environmental technology.

According to Antai, I (2003) ‘the entire means of placing a benefit on a real estate is a very sophisticated process’. This is due to it utilizes inputs and data by a variety of economical, demographic, management and architectural sources to come up with concise and reasonable quotes for a presented property. This technique becomes much more difficult when the land is definitely identified as staying contaminated. Furthermore, the value process may be significantly afflicted with a number of makes covering numerous of individual and professional interaction. This ranges via social, economical, environmental, and governmental. Therefore understanding the total context of Real Estate Value is essential especially as fast growing changes can be taking place in and around the valuation of infected property such as the laws, strategies and rules are continuously undergoing changes.

The problem due to land contaminants in relation to the problems concerning the degree of contaminants, the way in which the contamination is definitely perceived, the results to utility of the house, the appropriate requirements concerning the contaminants type plus the remediation procedure Chalmers et al., ( 1993). This kind of also demonstrates the valuation process is actually a complex work out.

There is always some uncertainty when faced with infected property. This is because when faced with contaminated land, one particular never understands what selection or school of toxic contamination might be within it, the uncertainty with the element type/s that might be creating contamination, i. e. what is it, how much, and how dangerous.

In accordance to Reddy et ‘s (1999) a contaminated property poses exceptional problems because many are located in heavily inhabited urban centers, therefore added attention should be paid to using web page characterization and remedial methods that will allow for the often rigid nature of urban sites. Specialist knowledge can be therefore essential because of

? The property market is an imperfect one-supply and require are always changing and are different in every location, and then for each house and information about transactions is normally restricted

? Every individual property plus the interest in it tend to be unique, or at least never exactly the same as others

? Legislation- The complicated and inter-related laws associated with property will be forever changing, and only a professional with full knowledge of all of them which has to be constantly current can effectively interprets them correctly.

The profession is now international in scope, and challenges encountered in the future are derived from increased make use of information technology, global clients, marketplace, and the effects of climate alter on value.

Developed countries such as Uk and Usa Sates have got a long background in applying valuation techniques, and a desk research will explore these and relate these to current practice in Nigeria from the point of view of those implementing and delivering it.

CHAPTER 3

a few. 1 Sixth is v ALUATION APPROACHES AND APPROACHES FOR CONTAMINATED LAND: AN

INTERCONTINENTAL COMPARISON.

This chapter compares various other developed countries such as United States of America and United Kingdom method of valuation of contaminated land to that particular employed by Nigerian practitioners plus the lessons to become learnt. These types of countries happen to be chosen since they have a lengthy history of industrialization and that there is need in both countries to re-use Brownfield land on a fairly intensive basis. Additionally, earlier advantages of environmental legislation in those countries made these people a perfect guide guide.

Problems about land contamination problems were strong with the introduction of legislation governing the environment for example , the 1986 Superfund Amendment and Reauthorization Take action (SARA) in the US, and the 1995 Environmental Work (EA) in the UK. Together, these kinds of statutes include brought contaminated land issues to the brain of valuers, and have featured the need for those to take contamination and stigma into account in calculations valuable.

By determining and learning other countries valuation tactics, one can assess how it is usually applied to Nigerian situation. This will enable valuers to understand a few of the implications involved in the valuation of contaminated property, and to assess British and American study practice get back of Nigeria. This eventually gives the visitor a larger view of current concerns and greatest practice.

There may be need therefore for a group of interviews and exploratory case studies focusing on the challenges presented in the grass around Lagos State.

3. 2 CONTAMINATED TERRAIN: THE UNITED KINGDOM WAY

Relating to Higgins (1998), the legacy of the industrial expansion in the United Kingdom continues to be an issue which has taxed political figures and regulating bodies substantially over the last 10 to 15 years.

Because the initial industrialized region in the world, it is estimated that as many as 370, 000 sites covering an area of 4 hundred, 000 hectares are potentially contaminated land. A legacy of the industrial revolution plus the mining industry. To date, some 67, 000 hectares had been identified with over 34, 000 hectares successfully remediate in UK alone.

The Parliamentary Business office of Research and Technology in its report Contaminated Terrain (1993) estimated between 55, 000 and 100, 500 potentially contaminated sites across the United Kingdom, with estimates of the extent of land varying between 95, 000 and 200, 1000 hectare.

UK is speedily becoming a global center. An important investment in research and development enables them to offer a wide range of cutting-edge, impressive and transferable contaminated area management and remediation around the world.

This sector is worth? you billion yearly and contains 220 companies including experts and a comprehensive consultancies and laboratories all complimented by expert legal, financial and insurance organizations CLR1.

According to DETR(2001), 60% of recent housing to become provided upon previously produced land or through transformation of existing buildings and Brownfield property to be gotten back at a rate of over one particular, 100 hectares per annum simply by 2004, recapturing 5% of current Brownfield land by 2004 and 17% by simply 2010. Statistics released by DTLR in May 2002 indicate that the focus on is currently staying exceeded with 61% of recent housing built on Brownfield site.

In accordance to CLR1, typical prestigious sites and events such as 2000 Gatwick Commonwealth Games, the 2014 Glasgow Commonwealth Games, the Millennium Dome and Birmingham gateway Dock have been and/or due to will be developed upon contaminated area. The ultimate reconstruction project is 312 hectare London 2012 Olympic Playground, where above 800, 000m3 of infected land has become treated for reused to supply development program.

Regulation in britain is based on ‘Polluter pays principle’. The key power of the UK contaminated area sector is definitely the ability of its environmental consultants and lawyers to know diverse regulatory regimes across the globe and how these types of impact on responsibility.

There is significant role of legislation, and the highly organised use of lawful control to manage land contamination in both the United Kingdom as well as the United States to induce dependable attitudes and behavior towards the environment and serves as a highly effective instrument for environmental safety, planning, air pollution, prevention and control.

In respect to CLR1 ‘Due for the UK’S very long industrial historical past, its consultants have been confronted with broad range of contaminating industries and the full scale of contaminants in both man-made and intricate natural garden soil and earth water settings. Equally, the united kingdom financial services sector is competent in money of however, most complex contaminated land remediation jobs especially in forming successful public private partnerships to deliver regeneration and their insurance firms have presented policies around the world to provide risk cover for environmental liabilities and projects utilizing a range of professional products and solutions.

3. three or more NEGIGENCE VALUE OF CONTAMINTED PROPERTY IN THEUNITED EMPIRE

Relating to (Miles, 2001), due to the complex mother nature of the valuation of contaminated assets, various practicing valuers in the global world may possibly still certainly not be discharging their specialist duty to an adequate degree.

In the United Kingdom, a valuer who will be on detect of the possible presence of contamination, performing nothing is a hazardous alternative, there is a duty to make the client at least aware of the matter and, in which appropriate, the advantages of further help (RICS, 1999).

Thus supplied the valuer advices for the existence of contamination issue and the requirement of any qualified advice, this cannot immediately be said that a duty ‘to follow the trial has been neglected.

three or more. 4CONTAMINATED LAND: THE UNITED STATES WAY

‘ON THE BROWNFIELD’S OF YESTERDAY, WE WILL BUILD SAVING MONEY INDUSTRIES OF TOMORROW’. PREDIDENT BUSH, 04 5, 2001.

The United States of America Basic Accounting Workplace estimates that there may be as much as 650, 500 underutilized or abandoned real estate across the country as a result of perceived or actual discharge of harmful materials.

The sheer enormity of the Brownfield dilemma has drawn that into the national spotlight, invoking the United States meeting of mayors to declare the situation since ‘an emergency’, a ‘dead zone’ as ‘pockets of disinvestment, overlook and skipped opportunities that exist within American cities.

According to Browner, C (1998), the current calculate places the cost of cleaning up the country’s Brownfield for $650 billion. Brownfield’s as well represents a lot of unreached tax dollars and millions in lost pay.

The value practice is usually regulated by the various states best known because the Evaluation Institute and everything the real estate valuers must be state licensed and certified.

The method most widely used to get remediation may be the “Multiple-for-use strategy which takes a high regular of clean up which normally allows terrain to be employed for most functions.

Reusing land in the United States can be described as fairly fresh trend. This is due to manufacturing is somewhat more recent right now there and also for the reason that land mass is more extensive, thereby lowering the need to repair on previously used land.

Right up until recently, clean-up in the United States has been to the highest standards helped by superfund.

The land may also remain stigmatized since it was once contaminated even though eventually cleaned Chalmers, (1993).

Consequently, there is a maneuver towards an even more realistic method to decontamination such as the ‘suitable to get use’ approach in the United States as well.

The focus of exploration in this field on both countries is caused by the need to reuse Brownfield arrive at a comparatively considerable level.

In United States, usage of information with regards to land, it is contamination as well as subsequent value is publicly available as opposed to the United Kingdom and Nigeria.

In the United Kingdom, data concerning property transactions are cured as secret and there is not any public entry to such information.

three or more. 5 CARELESSNESS VALUATION OF CONTAMINATED PROPERTY IN THE UNITEDSTATES OF

AMERICA

To reduce responsibility, the appraiser must understand the impacts that contaminants can have on the property and exactly how their results on market value should be approximated.

Jackson and Powel (1997) opine that ‘appraisers should keep themselves acquainted with what the law states and changes in the law so far as his skills are influenced.

In the United States of America, the main legislation of contaminated terrain is the Extensive Environmental Response Compensation and Liability Take action (CERCLA) which dates via 1980 plus the United States of yankee Environmental protection agency.

What the law states states that before a valuation of contaminated area or real estate can be done, the environmental risk analysis must be performed. Also, legislation requires the valuer to complete an environmental review check list type or a similar property state questionnaire at the time of a essential field inspection leading to the completion of an appraiser survey. Without ideal qualifier, the valuer can be exposed to unnecessary liability.

Typically sites are rezoned to ‘higher uses’ such as high density housing to offer land an increased value in order that after deducting clean up costs there is even now an incentive for a developer to acquire the terrain, clean it up, redevelop it and sell that on.

3. sixVALUE IN NIGERIA AND THE PROBLEMS FACED SIMPLY BY VALUERS

Recently in Nigeria, it really is notable that other related experts such as Accountancy firm, Bankers and Engineers will be gradually, not merely encroaching in to areas typically preserved to get valuers, tend to be claiming to be much more competent. The intrusion of unqualified estate and land providers, and their actions has a adverse effect on home valuation. This is because they do not be familiar with factors required to be considered to ascertain property principles and do not access the property principles based on virtually any sound financial analysis. Additionally they charge expensive fees as commission for services and sometimes inflate this sort of values to be able to increase their take-home pay regardless of effect this might have for the general degree of property beliefs. The values of lot properties in Nigeria are therefore in private assessed and are also not controlled by any formal valuation common. Moreover, Nigerian valuers find it difficult to identify if contamination is out there on a area, specialized abilities required to decide extent of contamination and cost of remediation, identify the presence, degree and life long post-remediation judgment is difficult due to limited market revenue data.

This constraint can be described as problem that cuts across the use of all the methods. The structural technique of data collection in the country can be weak and provide satisfactory information on which to foundation valuations. This makes it difficult to help to make critical research and achieve a sound basic for values using the open market values. Many values carried out as a result do not stand for the true available market value from the property.

Adair et al (1996) emphasize that info deficiencies frequently lead valuers to work with secondary and imperfect information. The uniqueness of every property means that a high level of data availability and analysis is needed to facilitate progressively analytical techniques. The value task turns into more difficult, offered the extreme limitations within the availability of details.

Parker (1998) remarked that if value have simply slim possibility of accuracy, clientele are likely to query the necessity of values and this renders the professional advice of

Valuers worthless. This remark is very not the same as the United Kingdom and United States.

There may be equally lack of a developed property marketplace in Nigeria. Though there is certainly open trading of houses done informally, and knowledge about the property companies are scrappy, there are no crystal clear legal basis amd procedures on trading on houses. Property owners particularly in urban areas assisted or unaided by value professionals sell and identify their own conditions without alternative to any set up formal guideline on real estate values or perhaps valuation concepts.

Michael Malison also reported that ”some valuers work themselves out of careers by hugging to outdated methods¦ and if nothing is completed soon, surveyors are going to encounter sand”.

The Nigerian Company of House Surveyors and Valuers in a single of its editorial remarks NIESV (1998) noted that “despite the education in the company of higher learning in more energetic methods of value which are able to take consideration of various marketplace conditions, we still refer to traditional strategies in practice. We all continue to foundation our practice on comparable evidence with out taking into account local and national trends, market factors, buyer expenditure yet others.

This method turns into more traditional, ineffective and unreliable when it comes to the various investment vehicles (securitization, unitization) which will dominate finance market within the next millennium.

Addititionally there is general deficiency of dedication to duties and willingness to out of employment soon after registration because of low salary and substantial rate of unemployment. Doing work in Banks, expansion companies and oil businesses are better choices for most valuers in Nigeria.

three or more. 7 CARELESSNESS VALUATION OF CONTAMINATED AREA IN NIGERIA

The regulatory body in Nigeria include the Metabolism of the Federal government Republic of Nigeria (1999), National Environmental Standards and Regulations Enforcement Agency (NASCREA) Act 3 years ago, the Terrain Use Action 2004.

It might be noted that the Nigerian legislation and dangerous contaminated terrain does not have similar level of governance driving the advance of polluted land.

When concerns inside the developed countries attach increased significance to environmental risk, remediation and valuation methodologies in infected properties and possible neglect that may happen while carrying out valuations, you will find indications suggesting that little or no emphasis is manufactured in this regard in Nigeria.

Confirmed from reject dumps located at Abule Egba, Oke-Afa(Isolo) and Ojodu in Lagos metropolis, Bello, (2005) founded that rental values in the properties adjoining these spots have been decreased by as much as 37% in Akur Afa(isolo) to get block of flats and 33% in Ojodu pertaining to tenement properties. Similarly, the reduction in capital value of adjoining empty plots varies from twenty percent in Abule Egba to 33% in Ojodu.

Significantly, these findings indicates that although empirical evidence supports the damaging a result of these impurities on land value, the Nigerian estate surveyors and valuers generally ignored this kind of in their value.

There is no documented case of negligent value in this area reported against any kind of practitioner possibly with the Nigerian Institute of Estate Inspector and Valuers or together with the Estate Surveyors and valuers Registration Table of Nigeria.

For example , there is absolutely no specific legislation at this time around the use of, and certain effects of asbestos use regionally. No such litigation proceedings have been brought to the legal courts to the most of our understanding owing to the prevalent use of asbestos for construction reasons.

This shows the lack of knowledge of consumers of their rights and the reality negligence valuation has not believed an worrying proportion. Nevertheless the case, Nigerian valuers ought to brace to the challenges ahead in the best interest in the profession.

3. almost 8 WHAT ACTIONS IS CONSIDERED ONCE TOXINS IS DISCOVERED

When potential sites have been well-known, they will be documented and examined based on their particular potential risk, allowing houses to be rated into a great order of high to low priority. Exploration will start on excessive priority sites, in-depth site information will probably be collated and sampling will probably be required before a decision could be made regarding the degree of toxic contamination on web page.

Once the character of contamination is ascertained, how it can be perceived or evaluated by relevant portion of the public must be understood.

According to Syms P (1996) Perceptions and policies will be therefore associated and have the probability of impact on one another, with the resultant implications to get valuation plus the redevelopment of contaminated area.

According to Guiding Rules for Terrain Contamination (2010), understanding the risks from toxic contamination is the 1st stage along the way of properly managing this. Risk plus the need to have an exact valuation of land, and this risk is a crucial part of sorting the problem.

These are generally the three levels of polluted land investigation and administration that may be taken on once contaminants is determined:

Office Study (Preliminary Risk Assessment)

The document in different contaminated land assessment that has fast get a statutory necessity (under PPS23) to go along with a planning application for a sensitive expansion such as casing. This involves the collation of relevant environmental info for this website such as traditional mapping, high photographs, drinking water quality data, landfill data, coal mining, ground instability and geology.

Site inspection/Walkover

This involves going for walks over the land to establish if perhaps any toxic contamination is present as well as to establish or confirm the potential pollutant path ways or receptors. A site walkover survey needs to be made to what is information accumulated by the workplace study.

Site/ earth Investigation

This is targeted on important risks with the use of latest non-invasive ways to raise confidence at minimum cost (e. g. geophysics, soil vapor extraction).

This will always start off with a table study in order that consideration may be given to well being, safety and environmental problems prior to fieldwork commencing.

Internet site investigation generally involves huge expense, and if the analysis is not really well planned, considerable methods may be lost. Consideration ought to be given to the kind, quantity and quality from the data necessary before any investigation, sampling and tests takes place.

The combination of these types of three procedures- preliminary analysis, desk examine and internet site investigation will increase the likelihood of finding contamination at an early stage, allowing examination and remediation to occur.

Remediation

This is clean-up focused on key liabilities and ‘suitability intended for use’ need in order to deal with risks by minimum expense. Remediation actions usually requires some form of treatment to be carried out to reduce the risks and can also include a change in the recommended use or perhaps layout with the development. This kind of changes tend to be the most cost effective solution.

Insurance

This means partnership with independent risk management advisers to provide cost-effective, tailored risk alternatives of enough duration and assign capacity for permanent peace of mind.

Monitoring (Aftercare)

This refers to monitoring and performance assessment to meet regulatory requirements.

This is imperative to ensure the decision either to forerun; go before with unchanged development plans or to consider remedial actions remains justifiable.

It is recognized that Nigerian valuers don’t have the necessary essential skills to look for the existence and extent of contamination, or to estimate the cost involved in remediation. The resultant perceived economic and expense risks must be accounted for within their estimates of value.

3. 9 VALUATION TECHNIQUES OF CONTAMINATED LAND IN NIGERIA

There is need to provide a critical evaluation of the procedures currently used by valuers as linked to valuation strategies in Nigeria. The study is not sold with wide analysis of valuation methodologies, neither does it make an attempt to prove which is the best approach to adopt in valuing infected lands.

In Nigeria the valuation methodologies are used for costs properties and the methods varies from the price method, the direct assessment method to the income approach.

Sound value measures can enhance a firms risk management operations, better preparing and positioning the business enterprise for the economic, regulatory uncertainty that lies in advance.

COST APPROACH

In respect to Acks, (1995), this is based on the premise that the value of the house is approximated by the investment necessary to exchange the property.

The price of replacement includes land purchase, the cost of the website and building improvements, and an allowance for the developer’s earnings, less accrued depreciation Acks, (1995).

This is mainly used to assess unique types of properties such as hostipal wards, churches, libraries schools and new projects. This is because it is difficult to find recently sold similar properties from your market, and public properties do not earn income, so the cash flow approach can not be used either. Generally, the fee approach thinks what the terrain, devoid of virtually any structures, might cost, then this cost of in fact building the structures is definitely added and depreciation is definitely subtracted.

Marchitelli (1992) questioned the use of the approach, and suggested that the method should be deserted in the valuation process in many situations because depreciation Which is one of the elements used in price approach is difficult to evaluate especially when the land is definitely close to environmental hazards.

Relating to Pat (1994), as contaminated real estate are exclusive, they have to become valued while other unique properties are- principally making use of the cost strategy which he admits that Is ”probably the least vulnerable to distortions as a result of environmental impairments”. But January deRoos, , Rushmore, S (2010) agreed that the Price Approach supplies a reliable estimate of value regarding new houses, but as properties and other advancements grow older, and commence to weaken, the resulting loss in value turns into more difficult to quantify effectively. The danger this is overstating the cost of remediation or that attributed excessive benefit loss from stigma.

INCOME STRATEGY

In many ways the Income Approach is the most fundamental in the valuation methods. It is the potential of the advantage to generate future income. This underlying feature ‘Intrinsic’ value of the asset captured by the ability to directly or indirectly generate a positive cash flow. This cash flow when appropriately discounted is the root premise in the income method.

According to Connor, P (2009) normally, this is given primary emphasis when ever appraising ad advertisement real estate accustomed to generate income. Estimates of value through income approach are highly hypersensitive to within revenue, expense and capitalization rates. Nevertheless , correctly preparing the research requires 3 criteria:

? An awareness on the kind of value

? Accurate data

? correct application of the income approach.

An identifier ‘should look over the eyes” of market participants when selecting an in Profits approach Technique. Although a bit complicated, this process is an essential element for the valuation of any house, it is almost always employed by financial expense professionals the moment valuing possessions.

The potential revenues is calculated first by analyzing rental and rental comparable info then subtracting vacancy and expenses, after which capitalizing the net in arrive. This is done by dividing the web operating profits by the capitalization rate.

The Income technique while very analytic is usually quite very subjective, while care is required for all those valuation strategies, the subjectivity involved in the Profits method could be especially difficult.

REVENUE COMPARABLE STRATEGY

Product sales Comparison Technique is utilized by thoroughly analyzing industry of related properties and comparing these properties towards the subject house thus

Worth of subject matter property =Price of similar and competitive properties &? Adjustments for differences.

Relating to January deRoos, Sophie Rushmore (2010) factors such as the lack of latest sales info, the numerous insupportable adjustments which have been necessary, as well as the general capability to determine the actual financial conditions and man motivation of comparable-transactions typically make the benefits of this technique questionable.

DISCOUNTED CASHFLOW

It turned out viewed as a ‘Modern’ strategy and is another solution approach to Investment Method. Very low long great use simply by accountants and financial institutions and for real estate evaluations in the United States.

Whenever using Discounted Cash Flow (DCF), identifiers aim at establishing the present worth of a land based on appraisal of how much it will be well worth after a selected period of time. The logic behind the use of DCF valuation is founded on the time value of money.

DCF is the best and a lot widely used and effective valuation technique. Considering that any company in this world aims at creating a return in investment and free income after functioning expenses happen to be deducted.

A significant role of DCF in real estate appraisal is it is ability to determine value or worth nevertheless requires a number of intricate measurements which would need to be reworked each time one of many variables was altered.

DCF can be calculated as:

DCF= CFI & CF2 + “+ CFn

(1+ r)1(1+r)2 (1+r)n

CF= Cash Flow

R= Discounted charge

PART FOUR

‘YOU ARE NOT RIGHT NOR WRONG SINCE THE CROWD DISAGREES WITH YOU. YOU ARE RIGHT BECAUSE MOST LIKELY DATA AND REASONING ARE RIGHT’- BENJAMIN GRAHAM.

4. one particular RESEARCH METHOD

This kind of reflects on the methodology useful to achieve the goal of this exploration.

The research uses Qualitative strategy together with circumstance studies.

The study population includes Estate Surveying and valuation firms in Lagos locale which has more than 50% head office of this sort of firms in line with the directory of the Nigerian institution of Property Surveyor and Valuers (2002).

Lagos metropolis is the economical nerve-centre in the country and, currently home most of the nations around the world head offices, branches from the Estate Surveying and Valuation companies and also the financial institutions. The study was conducted out of the fact that the study inhabitants is found aggregating about these economic areas where there exists high expectancy of a very active home market.

Mobile phone interview of key stakeholders, municipal company directors, managers/partners experienced as representatives of the home industry. These kinds of thirteen crucial people are expected to have increased experience and knowledge of valuation practice and procedure.

4. twoRESEARCH STYLE

The qualitative research procedure, data collection instrument, quality, reducing investigator biases and the target human population will be used in the paragraphs to follow.

4. 3QUALITATIVE EXPLORATION APPROACH

The focus of this study is definitely Qualitative Way. The data collection methods, the goal of the research result have no measurable results.

This method is based on phone discussions. The approach viewed the issues with regards to the valuation of contaminated property from the govt perspective as well as the interviews were conducted with officials, every single focusing on a unique area of concern.

Qualitative research is a very flexible method, it can be used nearly anywhere, which is capable of manufacturing data of big depth.

Then results are considered through assumptive generalization, ‘deep, rich and meaningful’.

Quantitative Approach had not been used in this kind of study since the research technique, data collection instruments as well as the method used on analyze the information were not well suited for the target human population and concentrate of the this examine. The strategy is circumstance free and quite often conducted in an artificial or laboratory establishing. Data collection is by means of structured questionnaires and interviews and the outcomes have considerable results.

4. four DATA COLLECTION INSTRUMENTS

According to Gay , Airasian(2003), ‘the two primary threats towards the validity of interview research are the observer’s bias, as well as the observer’s effect. They also view an interview like a purposive discussion between several persons, with all the researcher trying to obtain info from the player.

The interview method utilized as they are far more personal form of research than questionnaires. The researcher works directly together with the respondent and has the possibility to probe and ask follow up queries for quality.

The researcher tries to gain new insight from the subject’s point of view also to uncover the meaning of their knowledge.

They are generally easier pertaining to the participants, especially if precisely what are sought are opinions or perhaps impressions. The questions happen to be kept simple and simple. The interview various in length by 20 to 30 minutes per head.

Three top rated stakeholders in the Estate Surveyors and Valuers made up of thirteen Directors, Managers, and Brain of Departments were asked to take part and all had been certified and licensed experts. They were acknowledged to acquire ideas about how contaminated property is valued in Nigeria especially in Lagos Metropolis. Virtually all the value methods mentioned in phase three were mentioned.

The data obtained during the interview was transcribed in field paperwork describing area contamination in Lagos as well as to answer questions

4. a fewLIMITATIONS AND STRENGTHS OF THE STUDY

Mobile phone interviews are time consuming and therefore are resource intense besides the ability to access the Directors/Managers of a few of the ministries and parastatals posed a great problem due to their occupied and limited schedules as well as the financial implications.

Because the researcher cannot view the respondent to gauge his reactions and response the researcher are unable to see or perhaps respond to respondent’s non-verbal tips which are often crucial in interpretation how to reply properly.

Likewise the interviews needed to be retained relatively brief otherwise the respondents will certainly feel imposed after as opposed to face-to-face interview.

Period of time is also a limitation while there was too little time to reach most of the certified respondent in the vast Lagos metropolis.

Specialist bias is additionally a limiting factor while the personal tendency of the specialist should be appropriated until the studies completed. The private bias is that Nigerian valuers are not skilled enough inside the valuation of contaminated houses.

The strong points of the study is the genuineness and reliability of the info as it email lists all the authorized certified identifiers of real-estate in Lagos and consequently the results from the information could be generalized for the whole Nigeria.

SECTION 5

5. 1 HISTORY OF PARTICIPANTS

The thirteen essential stakeholders will be the Directors of presidency ministry, Minds of section local government power, managers of private practice under your own accord participated inside the study. This is the representative sample of the property and estate planning sector in Nigeria with all occupying senior positions in normal or regional firms and municipalities. Not all those who embark on the valuation exercise in Nigeria are Estate Valuers, only those registered/certified by simply ESVRABON to practice and determine the financial worth of interest in any real estate at any element of Nigeria are legally recognized as Estate Surveyors and Valuers are the kinds to appear to provide professional specifics and opinions of value in a law legal courts in Nigeria. These key stakeholders were used as they are involved in the preparing, implementation and decision making procedure, and have an interest in the opportunity, conduct and outcome of the study. Their meaningful advantages is a key to the successful outcome with this research

Zero specific requirements were utilized to nominate the participants except that they are certified practitioners with between several and over 12-15 years of knowledge resided in Lagos City. The issue of functioning experience was going to ensure the respondents may have had memorable amount of valuation knowledge within the market.

They range from the Directors of ministry of Land and Town preparing, Managers of personal practicing organization, Head of department local government council and Director of Planning and Environment. The interview lasted approximately thirty minutes per person. Interview questions are given in bout II, 1II, IV and V.

The responses indicated that 70 percent of the participants have 10-25 years operating experience with the Government, central, city and county or regional in general practice, while 15 % did from 6-9years in personal practice as well as the remaining 15% has among 3-5 years experience. This kind of shows that the majority of the respondents evaluated have had substantial experience as appraisers. It also shows that Nigerian Estate Surveyors and Valuers have not specialized which could influence not only their general performance in the industry although also valuation in particular.

Effects show that the experience of participants as signed up and authorized appraisers of property in Lagos. 60% of the participants had more than 15 many years of experience, whilst 16% got between 10 to 15 years and 6-9 years of experience. Just 8% had been practicing intended for between 3-5 years. (Table 3. 1).

PHASE 6

6. 1 CASE STUDY one particular

A property located in Calabar city of Nigeria currently utilized for the manufacture of chemical substances requires value. It was originally integrated 1994 and closed its operation in 2006. The cost of the building and installation of these improvements was? thirty five million in 1994. This website has many expensive high-technological improvements which were expensive to install and operate. For instance ,:

? Sound security alarm

? Electrostatic launch floors

? Central vacuum program

? Hazardous waste disposal system

? Pressurized air system

? 12, 000sq ft of vibration handled floor

? 40, 000 sq ft of fresh rooms and

? Temperature and humidity manipulated system.

THE FACTS

A site analysis revealed that the home was extensively contaminated by metal elements from prior uses just like nickel, copper mineral, zinc which can be phototoxic and other chemical wastes like hydrocarbon from the chemical works.

Difficulties health problem could be the result of hydrocarbon vapors coming into the utilities of the property.

The groundwater aquifer was contaminated and clean-up was set intended for 4 years.

The unimpaired value from the property ahead of contamination was? 100 , 000, 000 (100. 1000, 000)

The impaired benefit was 65million (65, 500, 000) which includes building toxic contamination expenses. Someone buy closed in June 2008 together with the buyer a multinational designer intent on financing the exact property through corporate and business bonds.

Reduction in benefit is as a consequence of stigma. Liabilities for the clean-up and monitoring costs was funded by the owner. The total along with the value of the property reflecting both the physical and non-physical effects of toxic contamination is judgment factors.

6. a couple of CASE STUDY 1A

One other 100 hectares adjoining real estate to circumstance study1 in Calabar town consists of a empty land mapped as mild industrial with sewer solutions. It has the same source of contaminants as example 1 but less large technology features was formerly appraised by? 1 . a few million every hectare ahead of the owner appealed and it was settled by? 750, 500 per acres. The owner announced the site surplus and put it up for sale since impaired at asking price of? 1 , 000, 000 with a key real estate company handling someone buy. This has been the third year, but no provide has been generated for the property regardless of the large advertising.

THE FACTS

The property owner was accountable for the cleanup costs. The internet site investigation showed the property has got the same method to obtain contamination since case study1 but the fact that value damage as a result of stigma factor features less percentage stigma than case study1. Reason for the divergence in the amount of stigma is usually that the same theory of substitution prevailed.

The multinational creator buyer was willing to operate property A in its contaminated state since it has high- technological features that acquired no alternatives while house in case examine 1A had none.

6. 3CASE STUDY two

A software manufacturing plant located near Abuja the capital city of Nigeria also offers a lot of expensive installation of high- technology advancements such as Computer cabling program, Compressed surroundings system, Fibers optics cable connection system, Electro-static discharge flooring surfaces, sound security alarm, waste disposal system, Central cleaner system and 8, 1000 sq feet clean flooring.

The owner bought it with the intention of reconstructing an additional 150, 1000 sq ft building. The plant closed procedure in 2005 and was put up for sale in 2005. The site will be leased to a laptop company. The website area is 740, 245 sq foot and gross building place is tips, 665 sq ft. The home was located on a ex – foundry which will leaked harmful contaminants in to the soils and groundwater.

THE FACTS

The owner of the exact property and the local local expert are collectively responsible for the clean up and monitoring costs. It was discovered that a small amount of groundwater contamination from the same supply reappeared 5 years ago which is getting cleaned-up.

A sizable construction company fixed a purchase contract for the unimpaired value of? 16. 2 million in money and was later cancelled because of the debts associated with the control of a contaminated property.

The impaired benefit of the land is? doze. 8 million bought by a multibillion organization with the intention of renovate and expand to execute a permanent lease.

The discount is likewise attributed to judgment. If any other clean up or perhaps monitoring costs are incurred, the cost will probably be borne by Primary Dependable party (PRP) first before the neighborhood authority if this fails. The multibillion firms therefore have two giant financial organizations standing for doing it as far as cleanup costs is involved.

six. 4 CASE STUDY ANALYSIS

The basic principle of substitution plays a substantial role in the amount of stigma value loss.

The case study1 an incident study1A signifies that real estate with popular and short supplies possess fewer stigmas than those with many substitutes.

A vacant land suffers greater stigma damage than improved land because illustrated by two circumstance studies (1 and 1A). This is because, many enhanced real estate has no replace and generate income/value used in spite of marketability and mortgability problems. This income stream of increased property mitigates the impact of stigma damage.

Case Study 2 highlights a number of the reasons why potential buyers would avoid contaminated real estate at all costs, except in a few instances where the greatest and greatest use and locality of your given property is the selecting issue.

Intended for both case studies, Neustein, (1992) évidence the use of the formula to obtain the value diminution of a property because:

1-L/ 1+ RISK

Wherever L is usually lowered cash flow ratio resulting from dividing the internet operating profits of the impaired condition simply by that of the unimpaired condition. This for that reason makes the case for the use of the cash flow approach less difficult when using Revenue Comparison Approach.

ANALYS IS OF THE INTERVIEW

DATE 2: 05: 2011

Form the interviews conducted, the typical atittude of Nigerian Real estate Surveyors and Valuers is always to ignore contamination and worth as though uncontaminated in their values. Even the Government does nothing at all on these kinds of land except if a advancement plan for the house is drawn up. If this sort of land is usually substantially contaminated, the authorities goes into discussion with the purchaser on remediation action and cost, otherwise, it is distributed lower than industry value. To describe it in because it is hard to identfiy, determine the nature and extent of contamination, as well as the cost to remediate.

Once contamination is suspected over a property, site walkover also known as site inspection is performed to establish proof of contamination to confirm potential pollutant pathways or receptors. Table study may be the next step which in turn builds on site walkover stage good results . a greater amount of research and qualitative risk assessment. An intrusive function is undertaken in web page investigation including soil, drinking water and gas sampling analysis is completed. Determination of contamination can be a long and complex procedure before the nature and extent of contamination is known inorder to remediate.

There is burial plot urban catastrophe associated with property contamination in Lagos. Environmentally friendly implication is extremely serious and a risk to human health and the natural and built environment which likewise hampers redevelopment. It is very unsightly, and some countries have been made uninhabitable, unmarketable and uncultivable owing to toxins.

Most of the participants concurred that stigma is an extremely important inference of toxins on terrain. It not just affects homes that are possibly contaminated, although also the value of properties that are not contaminated however in close closeness to a method to obtain contamination. Stigmatizing effect could also continue possibly after clean-up as a result of residual contaminants and uncertainties coming from introduction of recent legislationor ammendment of existing one over legal the liability for polluting. The position of lenders, shareholders, developers and valuers is still unclear.

From the interviews conducted, it can be generalised that Nigerian valuers don’t realize and as such will not use the contemporary valuation approaches which were created by the UK countries in accordance to theiur socio-economic environment, and when applied to our highly volatile and unstable overall economy brings discripancies in the value. Some of the ones frequently used simply by Nigerian valuers are out of date and has so many flaws such as:

TheExpenseMethod” provides estimate of capital worth that is below the market prices thereby requiring constant modification to the parameters.

TheSalesComparisonMethod” this can be useful for analysing risk and stigma the moment there is satisfactory data accessible to undertake the valuation.

TheProfitsMethod” this is used for commercial and homes that is creating future income through lease contract and letting and that can be very sophisticated and complicated to use.

TheCostApproach” this really is used for exceptional properties that is not sold in industry. It thinks what the land would price, the cost of building the structures deducting depreciation. Difficulty to work with because it is difficult to measure downgrading especially when the land is close to environmetal hazard.

TheCheaperCashFlow” A contemporary technique which figures value or perhaps worth. Costly accounting strategy that can be used for appraising and comparing between investments. It requires a series of complicated calculations which would need to become reworked every time one of the parameters was modified.

CHAPTER SEVEN

several. 1CONCLUSION

The main target of this research was to decide the value techniques followed by the Nigerian Estate Surveyors and Valuers on polluted land in Nigeria. Based on the findings of this study, the following conclusions can be sketched

It is noticeable that there is not any comprehensive analyze explaining the various valuation tactics among the house industry. Past researches protecting this examine have were known to identify the different valuation tactics, both traditional and convetional approaches, although there is no indepth study on when, or perhaps how each technique is utilized in the current financial state.

Each of the value techniques has its unique strengths and weaknesses. Thus they can be not perfect substitute for the other person. Valuers in Nigeria should endervour to purchase valuation procedure that is perfect for their needs. Moreover, combination of several techniques and comparing the results may produce a more accurate valuation.

A lot of well known creators like Patchin(1988, 1991a, 1991b, 1994), Mundy(1992a, 1992b, 1992c), Wiltshaw(1998), Roddewig (1996), and Chalmers , Roehr(1993) reviewed the way in which contaminants can affect value of a house, and the appropriate use of the Sales Assessment and Salary Approaches to calculate the value of a contaminated house.

The participants from the telephone interview precise the fact that out of the affects of contaminants on area, Stigma is the biggest and most damaging influence on the property. Sitgma is identified as a reduction in worth due to the improved risk connected with a contaminated propertyeven after remediation. Homes sold inside industrial zoning are often cheaper substantially by market pertaining to various reasons such as limited alternative foreseeable future use, cost of clean-up, and potential the liability from staying close to a contaminated site.

Stigma was then created from determining the unimpaired worth of a home and subtracting the reduced value plus the costs of claen-up. This is evident within the following cases of the case research.

Case Study1 and case Study1A- It was analysed that homes with popular and improved features does not have substitute and hence its stigma impact can be low.

Circumstance Study2 ” Stigma resulting from proximity to contaminted site was used being a bargaining follow negotiate the final price.

EXPERIENCE IS DEFINITELY INEVITABLE, LEARNING IS NOT.

six. 2RECOMMENDATION

Nigerian professionals need a wider and more powerful academic backup in theory and systematic emperical research about areas including urban economics, environmental risk assessment, marketplace, and feasibility analysis.

Simple knowledge of environmental contaminants and risk examination as appraisal cases regarding contaminated houses spans several traditional field of examine and as such must be treated using inputs by all taking part bodies. Qualification of valuers is consequently essential and definitely will go a long way to limit prolification into the market

More job is required in continous specialist development teaching to improve valuers access to value literature, and communication among those who commission and those whom undertake analysis.

Bridging the gap between your conventional value techniques used by Nigerian valuers and their reluctance to throw away them for the more contemporary strategies to imrove the quality of their values. There is truly low level z awareness, understanding and using these new techniques by Nigerian valuers and this inability to underatand the theoritical basis actual their use is related to their educational background.

The application of risk research and statistical valuation approaches have been effectively used in countries like UK and USA Sipan , Rahman(1996).

The Nigerian govt should evenly double all their efforts to boost its environmental laws particularly in the areas of adjustment and monitoring. There is no doubt that the Nigerian express ands authorities have passed environmental laws that can be competitive favourably with those of UK And USA, but generally there weakness alway lies upon enforcement and implimentation.

Both federal and state governmnet in Nigeria should avoid the formulation of rigorous environmental policies which in turn fails to take into account the indigenious social, economic attributes in the country leading to confusion rather than clarity. Many of these policies are fragmented and formulated with out contributions coming from informed mass es or based on nationally generated base data. Engagement of the persons in plan formulation and implementation is usually lacking in Nigeria. Implementation and monitoring are wishy-washy and din-don affairs crippled by widening and deepening data corruption. Implementation and monitoring agencies should be re-organised and re-oriented for better performance.

APPENDIX you: LETTER OF INTRODUCTION AND NOTIFICATION

INTERVIEWS: VALUATION OF CONTAMINATED AREA IN NIGERIA

Intro and Notice

Dear Player

This research forms a part of a research task for a Professionals Degree to sum up university with the intention of gaining a comprehension of the valuation of polluted land in Nigeria. Make sure you feel free to add and give your candid opinion on this commendable topic. Information will be treated as very confidential and participoants are not identified.

Thanks for participating.

Ugochinyere Ozurumba(MSC student).

APPENDIX 11: INTERVIEW WITH MIND OF DIVISION OF A COUNTY COUNCIL IN LAGOS.

Sir, According to UNEP(1992) estimate of 2 billion dollars hectares of land that was once successful has been extremely contaminated before 100 years, and new toxic contamination is being made everyday.

What is your opinion how these terrain are staying identified as well as the action taken once contamination has been absolutely identified in the local government(objective 3).

Mind of Division: potential sites are determined from numerous primary sources, including traditional maps, airborne photographs and geology after which assessed and prioritised according to an atributed ranking of risks. There are basically three stages of site exploration in Nigeria

PHASE 1 ” Office Study. The resultant details enables an initial risk assessment to be conducted.

PHASE 11- Intrusive analyze. Site investigation is completed by an environmetal expert. Risk is then examined inorder to look for the potential for problems for receptors when playing site and off-site by known pollutants. Sampling and anal, ysis are required on other phase1 and phase 11 exploration. Remediation is now planned, focusing on key financial obligations and ‘Suitability for use’ requirement inorder to manage the risks at lowest cost. Monitoring and performance assessment to meet regulating requirements.

Sir, How do you think risk and uncertainties are integrated in the valuation process?

Head of Department: Risk varies inversely with the knowledge of and concern concerning remediation costs, damage in value, liability to get clean-up, potential off-site affects and other factors. The outcome of any valuation is only specific if the future is effectively predicted. This is not always possible as you can an element of risk and uncertainty that the genuine value varies from the expected estimate.

Sir, I want to use this opportunity to communicate my gratitude to you pertaining to granting me personally this period of energy by giving an answer to my queries very clearly. Your contribution is going to be of utmost importance to my own study. Many thanks.

Representative: You are welcome.

APPENDIX 111: INTERVIEW WITH ALL THE DIRECTOR OF MINISTRY OF LAND AND TOWN PLANNING IN LAGOS.

Sir, what is their impression around the valuation methods currently used by Nigerian Estate Surveyors and Valuers(Objective 2 and 3)

Manager: Yes, I was expecting this kind of question. In all honesty with you, the vast majority of Nigerian practitioers are not only unacquainted with, do not understand, together not been using any of the modern methods. In the beginning, Nigerian experts who were been trained in the United Kingdom designed their practice according to the RICS guidaince and they were completed successfully due to their dedication and brighter economic climate to satisfy the clients. Today, due to the low level of financial activities resulting from the economic recession, low occupancy rates and high cost of building materials, valuers could no more use the Investment method of value. The reason was your economic unpredictability and unstability to support the Investment technique. The Investment method supplies capital value estimate that is lower than the marketplace prices therefore requiring changes of constituent variables to generate accurate capital values.

The Depreciated Replacement Cost method creates estimates nearer to market rates and is as a result more realistic method of valuing Income producing properties in the modern economic climate.

The Investment Value method in Nigeria features perculiar concerns. The brought in valuation desk widely used assumes annual hire paid in arrears while rent is often paid in two to three years in advance. There exists discrepancies inside the valuation number arrived at employing theories based on UK literature and the genuine values produced by local marketplace evidence.

The Sales Comparability Approach could be useful in analysing risk and stigma, nevertheless most often is definitely severely hampered by the lack of sufficient data.

Friend, I want to utilize this oportunity expressing my serious gratitude for your patience thoughout the course of this interview. Your efforts would be extremely helpfull to my exploration.

APPENDIX 1V: INTERVIEW WITH THE DIRECTOR OF PLANNING CASING AND THE ENVIRONMENT IN LAGOS METROPOLIS.

Sir, We are at this point bearing the price of becoming an industrialised region. What are the impacts of land toxins on the home industry in Nigeria

Representative: The environmental effects of terrain contamination is quite serious posing a potential threat to man health, the natural and built environment, and a risk to investment and regeneration particularly in cities. Severe cases has rendered land uninhabitable and severely constrain land use choices for decades. Addititionally there is decrease in terrain values, too much demand upon available area for advancement and consequently within land rates. Properties which might be close to polluted sites will be stigmatized producing sale of this kind of lands difiicult.

About 80-85% of the companies in Nigeria are located in Lagos Locale. With this kind of high concentration of companies and business activities, the state faces grave urban catastrophe associated with property contamination.

Finally, Is there virtually any regulations set up governing the health of sale, and use of infected land?

Director: Certainly there is regulation in place regulating the use and sale of area that is contaminated. But these rules are not sufficiently enforced. Many buyers of commercial property have got environmental internet site assessment ready but not intended for residential property. A buyer of your commercial real estate that would not have risk assessment completed quantify the risk of contmaination is not knowledgeable which is usually the case.

Sir, I wish to thank you exclusively for your as well as your great contribution for this study. Thanks a lot.

Director: You are pleasant and all the best.

APPENDIX Sixth is v: INTERVIEW WITH MANAGER OF PHYSICAL PLANNING AND URBAN DEVELOPMENT

Sir, The biggest injury in valuation of contaminated property is the presence of judgment. How do you determine stigma mounted on a contaminated property(objective 1)

Manager: Stigma is definitely the residual damage in worth after all costs of remediation, including insurance and monitoring costs had been allowed.

Stigma is a market resistance because of the fear of health and wellness risks, legal and economic liabilities. The reason is , even following clean-up, the market value is going to take longer a chance to return to the clean land value level, and for the impact of the stigma to diminish. There is also changes in price and rent of other properties in close proximity to the spot. Stigma can be derived from determining the unimpaired value of the property and deducting the impaired value and the costs of clean-up. The unimpaired value was derived from either a purchase arrangement that got failed due to the discovery of contamination, a previous sale, or even a valuation.

What is the typical attitude of Estate Surveyors and Valuers on infected properties? (Objective 3).

Manager: The general attitude of practitioners is usually to ignore toxins and the potential for contamination inside their valuations. The us government equally does nothing upon contaminated property until if a development policy for the property is usually drawn up. If you have substatial toxic contamination on a marketed property, the municipal enters into negotiation with the customers on the remediation action plus the costs. Usually, the land is sold lower than the market value instead of remediating before providing. This is usually because of the problem of determining the the nature, degree and degree of toxic contamination and the costs for remediation.

Sir, I wish to communicate my outstanding gratitude to all or any who have took part in this study.

Thank you.

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