An Examination of Valuers’ Perceptions on Property Valuation during an Economic Crisis: Evidence from Sri Lanka

Abstract

Uncertainty, an inherent characteristic of property valuation, is a common phenomenon that cannot be avoided. Nevertheless, the material uncertainty in property valuation should be treated with special professional consideration by valuers. Most recently, Sri Lanka faced a severe economic crisis, increasing the likelihood of presence of material uncertainty in the valuation process. This paper aims to investigate whether there was an abnormal uncertainty in property valuation during the economic crisis of Sri Lanka and to identify the behavioural changes of professionals prompted by the crisis. Data for the study was collected through semi-structured interviews with 12 professional valuers who were selected purposively and analyzed using thematic analysis techniques in conjunction with the theoretical lens of prospect theory. The findings revealed that the valuers indeed experienced abnormal uncertainty in property valuation due to the economic crisis, leading to behavioural changes in valuers which were more subjective in nature. This paper recommends establishing a framework for addressing abnormal uncertainty in property valuation to ensure consistency within the profession. Furthermore, it recommends further investigations into abnormal uncertainty regarding specific property categories and valuation types, including statutory valuations.