RECENT DEVELOPMENT IN INVESTMENT VALUATION: Issues in Annuity Application in Nigeria

Purpose: In recent times, valuers' approaches to value have come under intense criticism. In the light of foregoing, this paper aims at investigating the application of ordinary annuity and annuity due in investment valuation with a view to identifying factors influencing the adoption of appropriate annuity as the occasion demands.

Design/methodology/approach: Data were obtained from 338 consulting valuation firms in Abuja, the capital city; city of Lagos, and Port Harcourt as the country's most vibrant property markets through administered questionnaire. Data from valuation firms were also complemented by the response of 106 valuation lecturers in the universities and polytechnics. Data were analysed using frequency tables, simple percentages and Relative Importance Index.

Findings: Findings show that valuers in private practice in the country typically receive rent yearly in advance and based their valuations on rent in arrears models. Most Nigerian valuers are not conversant with annuity due models and cannot apply them in practice. Most valuation lecturers in tertiary institutions teach ordinary annuity instead of annuity due.

Research limitations/Implications: This study fills existing gap in the body of knowledge by identifying factors impeding shift to more appropriate annuity models in an emerging economy where rent is received in advance.

Originality/value: The study is perhaps the first to examine annuity application between practitioners and academics empirically, on a broader basis in Nigeria.