Valuers' perceptions of depreciation models in DRC valuations

Abstract

Purpose

The paper aims to address concerns that valuers' choice of depreciation models in their cost approach to value is not sustainable (is incapable of preserving patronage in present and future generations).

Design/methodology/approach

The paper draws up conceptual expectations regarding how seven UK and US depreciation models pass or fail four identified sustainability indicators: reliability, consistency, usability and separate treatment of depreciation components. Valuation surveyors in Nigeria were offered as a case study of how valuers in one country respond to such conceptual investigations.

Findings

The study found that cross‐sectional models, the breakdown model and hedonic modeling are the depreciation models perceived as most sustainable. However, popular model use follows easiest models rather than most sustainable models.

Practical implications

The paper suggests that the pursuit of sustainability in valuation modeling should involve provision of institutionalized best practice guidance beyond that currently provided so as to assist valuers/appraisers in more sustainable choices.

Originality/value

The paper is probably the first to address both UK and US depreciation models and to assess each using defined sustainability criteria.

Citation

Ogunba, O. (2011), "Valuers' perceptions of depreciation models in DRC valuations", Journal of Property Investment & Finance, Vol. 29 No. 2, pp. 190-209. https://doi.org/10.1108/14635781111112792