| dc.description.abstract | The real estate sector accounted for 6.2% of U.S. gross domestic product in 2018. It's more than the $1.13 trillion in 2017 but still less than the 2006 peak of $1.19 trillion. At that time, real estate construction was a hefty 8.9% component of GDP. Real estate valuation is still a challenge in Nigeria posing a significant challenge to the country's real estate sector. Due to lack of robust valuation approaches, most Nigerian cities are overpriced, which discourages potential investors.According to Uganda Bureau of Statistics, the real estate sector on average contributed about 7.5 per cent to Uganda’s GDP in 2020 as compared to 9.1% in 2017 showing a significant reduction. In the recent past, there has been progress in infrastructure advancement in Kenya. However, in the Kenyan real estate sector, financial performance has been on a declining trend with a slowed down performance of up to 18.4% in 2017, with far reaching implications in its potential contribution to the Kenyan Economy. In Western Kenya Region, real estate sector offered investors with 13% return on investments annually with the income revenue of 4.8% and yearly capital gratitude of 8.5%. This was still low compared to other regions in the country for instance information on the Kenyan real estate sector’s financial performance indicate a slowed down trend with 16.2% in 2016, 15.5% in 2017, 10.1% in 2018 and 13.2% in 2019.In spite of the relative National success in the sector, real estate asset valuation still presentedsignificant problem in measuring industry performance.Incorrectly valued assets can create a number of problems to the investors and the country at large. These could range from negative or stagnant cash flows to shocks in the general economy brought about by inflation. Therefore, the main aim of this study was to examine the effect of asset valuation approaches on financial performance of real estate management investments in Western region, Kenya. Specifically, the study sought to establish contribution of asset-based valuation approach on the financial performance of real estate investments; to determine effects of the Income Approach to the valuation on the financial performance of real estate investments; and to examine effects of Market Approach to the valuation on the financial performance of real estate investments in the Western region, Kenya. This study was guided by the Q Theory of Investment which deals with Market Value and Development costs and the Real Estate Simulation Theory. The study targeted 52 registered real estate agents within the western Kenya region. The study adopted a census technique to gather all the required data from the existing population. The studyemployed a correlational research design and was targeting the real estate agencies registered in Western region of Kenya.Structured questionnaires and secondary data schedules wereused to gather the required data for analysis. Pretesting of survey instruments was conducted as an effort of ensuring that there was both content validity and reliability. Both descriptive and inferential statistics was employed for data analysis. From the study results, asset-based approaches explained 34.3% of variance in financial performance of real estate investments while income based explained 12.1% and market based explained 57.2%. Using returns on investment as measure of financial performance, the three hypotheses were rejected although income based valuation had significant negative effect on return on investment. This implied that increase in market and asset based valuation approach would result to increase in the return on investment while increase in income approach would result to decrease in the return on investment. The study therefore concluded that asset valuation approaches influence financial performance and recommended that real estate firms should use more than once approach during valuation of their assets. | en_US |
