Understanding Market Value in Kenya

Market Value is defined by the International Valuation Standards Council as the estimated amount for which an asset should exchange on the valuation date between a willing buyer and a willing seller in an arm's length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.

Each phrase in that definition carries weight. 'Proper marketing' assumes the property has been exposed to the market for a reasonable period. 'Without compulsion' excludes distressed sellers. This is why a forced sale value is a different figure entirely, typically expressed as a percentage of market value and used where a lender may need to realise security quickly.

In the Kenyan context, market value must be supported by comparable evidence drawn from the same locality and the same property class. Asking prices circulating on listing portals are not transaction evidence. A registered valuer will verify comparables through agents, transfer records, and direct market enquiry before relying on them.

Where comparable evidence is thin, as is common for specialised industrial or institutional property, the valuer moves to the income or cost approach and states clearly in the report why the comparable method was not the primary basis.