APPLICATION OF GEOGRAPHIC INFORMATION SYSTEM IN PROPERTY VALUATION Thesis Presented by STEPHEN WAKABA GATHERU F56/69748/2013 Supervised by DR. DAVID NYIKA School of Engineering Department of Geospatial And Space Engineering University of Nairobi
BACKGROUND OF THE STUDY Property valuation is the process of estimating property value for a certain purpose, at a certain time based on the property s characteristics taking into account all factors that can affect property value. In countries with personal ownership of real property, civil law protects the status of real property in real-estate markets and estate agents work in the market of buying and selling real estate. This study will help identify these parcels of land and prepare a database of parcels of land and their attributes using Hedonic pricing method of valuation. Hedonic pricing model was suitable because it incorporates most of the attributes a property possesses. Thesis Presentation 2
PROBLEM STATEMENT There are inconsistent sale prices and values for parcels of lands since prices and values have not been changed over time, which make it difficult for the local authority to charge and collect rates. The property valuation process has been carried out manually since the profession was introduced in this country and this produces poor quality valuation Banks rely on property valuations to lend money to the clients against the collaterals that have been valued. It is therefore important that the values returned are accurate and reliable Reasons for poor quality valuation is lack of proper tools to manage, maintain, explain, view, analyze and make optimal decisions on the massive amount of data involved. GIS is a viable tool to solve this problem. It will enhance timely data update and improve efficiency Thesis Presentation 3
OBJECTIVES To create a Geodatabase of the parcels of land and their attributes by GIS To identify attributes affecting land values therein. To use Hedonic Pricing Method to test the power of GIS method in property valuation Thesis Presentation 4
ITEM Research Design Study site Population Sampling Method Data collection instruments METHODOLOGY DESCRIPTION Descriptive Research Design Ruiru Kiu area of Ruiru Sub County of Kiambu County. The area is between Thika road and The Eastern bypass The population of the study was 40 registered offices each with 10 land valuers, making a total of 400 target population. Stratified Sampling Structured questionnaires were used as the main source of primary data collection tools Data processing and analysis Descriptive statistics was done by use of SPSS Inferential statistics was regression and correlation analysis The Overall model significance was checked using analysis of variance (ANOVA) Thesis Presentation 5
A multivariate regression model Y =β 0 + β 1 X 1 + β 2 X 2 + β 3 X 3 + β 4 X 4 + β 5 X 5+ µ Where; Y =Value of land (price) X 1 = Zone (location) X 2 = Size X 3 = Accessibility to infrastructure X 4 = Accessibility to other amenities X 5 = physical characteristics Monday, June 22, 2015 Thesis Proposal 6 Source: Gundimeda, (2005): Hedonic price
Cont.. In the model, β 0 = the constant term while the coefficient β i i = 1.5 was used to measure the sensitivity of the dependent variable (Y) to unit change in the predictor variables X 1, X 2, X 3 and X 4. µ is the error term which captured the unexplained variations in the model. Monday, June 22, 2015 Thesis Proposal 7
RESULTS-DESCRIPTIVE STATISTICS From the hundred (100) parcels of land analyzed the maximum size was 1 hectare while the minimum size was 0.15 hectare The percentage of respondents who have parcels of land accessible to bypass for the period of study are 61%, while those who have lands close to the railway track are 66%. 53% have lands close to the shopping centre while 35% have lands close to the police station. 51% have land accessible to primary school while 66% have lands in the marshy areas.50% have rocky parcels and 60% have their lands fenced with a perimeter wall or live fence. Thesis Presentation 8
RESULTS-CORRELATION ANALYSIS The value of land and the size of land are positively and significantly related (r=0.463, p=0.000). The value of land and accessibility to bypass are positively and significantly related (r=0. 582, p=0.000). The value of land is positively and significantly related to distance to railway track (r=0.289, p=.004),distance to the shopping centre (r=0. 394, p=0.000) and distance to the accessibility to primary school. (r=0.412, p=0.000). Thesis Presentation 9
CONTINUED CORRELATION ANALYSIS Further the results revealed that the value of land is positively and significantly related to perimeter wall (r=-0.247, p=0.013) The value of land is negatively and significantly related to marshy areas (r=-0.358, p=0.000) The value of land is negatively and significantly related to rocky areas (r=-0.283, p=0.000). Thesis Presentation 10
RESULTS-REGRESSION ANALYSIS The R square=0.517 meaning that the independent variables in the regression explain 51.7 % of the variations in the dependent variable(value of land) ANOVA results indicate that the overall model was statistically significant and the independent variables are good predictors of the value of land(f =10.698,p=0.000).There is a positive and significant relationship between the value of land and size of land, accessibility to bypass, and accessibility to primary school.(r=10.915, p=0.002), (r=6.621, p=0.000) and (r=2.827, p=0.021) respectively. Means that an increase in a unit change of the variables would result to an increase in the value of land. Thesis Presentation 11
RESULTS-HEDONIC PRICING MODEL (HPM) The model included significant variables only The general model was Market price of land (value of land) =f (land size, accessibility to bypass, accessibility to primary school) The specific model was Market price of land (value of land) = 17.187 + 11.724 land size + 6.894 Accessibility to bypass + 3.095 Accessibility to primary school Thesis Presentation 12
SUMMARY Geodatabase of the parcels of land and their attributes was created by putting the values obtained in HPM in an attribute table of the shape file in ArcGIS, GIS software. Attributes affecting land values in Ruiru were found out to be size of land, accessibility to bypass, and accessibility to primary school. The attributes have a positive and significant relationship with the value of land Thesis Presentation 13
CONCLUSIONS Accessibility to the bypass, Land size, and accessibility to the primary school are the significant attributes. HPM is more objective and consistent.it is not influenced by personal feelings and self appraisal, hence free from individual bias HPM is verifiable since people tend to arrive at the same value given the same attributes GIS is a superior tool that enables production of a value map because of its ability to allow for querying capabilities The method of valuation widely used to upraise property is the Sales comparison method Thesis Presentation 14
Query and Results Monday, June 22, 2015 Thesis Proposal 15
Value Map(per Parcel) Monday, June 22, 2015 Thesis Proposal 16
Value map(per Hectare) Monday, June 22, 2015 Thesis Proposal 17
RECOMMENDATIONS HRM should be used in Valuation of Property because of its ability to quantify scientifically the factors affecting Property values A centralized data bank be created capturing sales data and property characteristics Use of GIS in property valuation should be encouraged and introduced to all valuers because it will fasten decision making This method of valuation should be applied in other areas other than Ruiru Thesis Presentation 18
THANK YOU ALL! Thesis Presentation 19