A Critical Examination of Valuation Methods for Vacant Land in High Income Residential Neighbourhoods in Nairobi, Kenya

Abstract

The need to examine critically the methods being used to value vacant land in Nairobi, Kenya arose upon observation that these methods were often subjective and inequitable. The objective of this examination was twofold: 1. To investigate the adequacy of existing approaches to estimating land value 2. To offer an improved and more efficient methodology for calculating land values. In investigating the adequacy of existing approaches to assessing land value, estimated land values for vacant plots and sale values for the same plots were compared. To meet the second objective, regression analysis was carried out and proposed as a better method of estimating the value of land. Land value was regressed against distance to the CBD, the existence of a flood area on the plot, plattage, distance to the nearest shopping centre and tenure. Fifty-one!(51).-plots in high income residential neighbourhoods that had been assessed and sold were identified. For each of these, the independent variables-distance to the CBD (krns), existence of flood area on the plot, plattage, distance to the nearest shopping centre (kms) and tenure, were recorded. The volume of empirical evidence compiled upon regressing land values against the independent variables listed supported the view that regression analysis would be a better method of assessing the value of land in high income residential neighbourhoocls.