VALUATION ACCURACY AND INVESTMENT DECISIONS: EVIDENCE FROM COMMERCIAL PROPERTIES IN ABEOKUTA, OGUN STATE

Valuation accuracy has long been recognized as a cornerstone of real estate investment, shaping the perceptions and choices of investors, financial institutions, and policymakers alike. The accuracy of property valuation is particularly important in developing economies where real estate constitutes a significant proportion of national wealth but is often hindered by fragmented markets and inadequate data infrastructure (Ajayi, 2003; Bello & Ogunba, 2014). As Baum and Crosby (2007) aptly put it, “without credible and consistent valuations, the real estate market risks becoming opaque and unattractive to serious investors” (p. 15). In Nigeria, the reliability of valuation reports has repeatedly been questioned, with practitioners and scholars identifying notable discrepancies between assessed values and transaction prices (Ayedun & Omirin, 2012). Such discrepancies may have dire consequences, including capital misallocation, overpricing, or loss of investor confidence. This study examines the relationship between valuation accuracy and investment decision-making in the context of commercial properties in Abeokuta, Ogun State—a medium-sized but rapidly urbanizing Nigerian city with a growing commercial property sector. The research adopts a mixed-methods approach involving both quantitative and qualitative techniques. Data were sourced from practicing estate surveyors and valuers, as well as from property investors and managers. Statistical analyses, including correlation and regression modeling, were employed to determine the extent to which valuation estimates aligned with actual market transaction prices. In doing so, the study provides empirical evidence from Abeokuta, a context often overlooked in valuation studies that have traditionally focused on larger urban centers like Lagos and Abuja (Ogunba & Ajayi, 1998; Olusegun, 2013). The findings reveal that while the majority of valuations fell within the generally accepted tolerance range of ±10% (IVSC, 2017), a considerable proportion exceeded this benchmark, with some deviations above 20%. Such outcomes suggest systemic weaknesses in valuation practice in Abeokuta, ranging from inconsistent methodologies to poor access to reliable transaction data. Investors indicated that substantial discrepancies negatively influenced their confidence in the property market and sometimes redirected their investment choices toward alternative sectors such as equities and government bonds. This confirms prior assertions that valuation reliability is closely linked to market confidence and investment flows (Gallimore & Gray, 2002). The study concludes that valuation accuracy, though relatively robust in Abeokuta, is undermined by contextual challenges inherent in Nigerian property markets. By integrating theoretical insights from the Efficient Market Hypothesis (Fama, 1970) and Agency Theory (Jensen & Meckling, 1976), the research demonstrates how information asymmetry and conflicts of interest exacerbate valuation inconsistencies. Practically, the study underscores the urgent need for enhanced professional standards, technological adoption in valuation processes, and the establishment of a centralized property transaction database in Ogun State. As Ayedun and Omirin (2012) observed, “improving valuation accuracy is not merely a professional necessity but an economic imperative for building trust in Nigeria’s real estate markets” (p. 27). Ultimately, this study contributes to the broader discourse on valuation reliability in emerging economies by offering context-specific evidence from Abeokuta. It fills a research gap by spotlighting a fast-growing urban center outside the dominant Nigerian real estate hubs, thereby enriching both academic debates and professional practice in valuation and investment decision-making.