Abstract:
From 2022 onwards, Sri Lanka underwent the worst economic crisis in its
history, the origins of which can be traced back several years. The country’s
economy has been affected negatively due to the COVID-19 pandemic, improper
tax and agricultural policies, and political instability, leading to currency
devaluation, escalating inflation, and inadequate foreign exchange reserves. The
atypical behaviour of economic attributes led all the economic sectors into
trouble. The increased uncertainty in the market severely affected property
valuation, which is an essential profession within the real estate sector of Sri
Lanka. The objective of this study is to investigate how professional valuers
adjusted their professional behaviour to incorporate the impact of the crisis into
the process of property valuation. In this investigation, data was gathered via
semi-structured interviews with a purposefully selected group of 12 valuers and
analyzed using thematic analysis methods, employing the 'Prospect Theory' as a
theoretical lens. Results revealed substantial controversy among valuers
regarding the professional practices they adopted, particularly concerning the
reference time periods used for obtaining market data and the extent to which
uncertainty was disclosed in reporting, leading to inconsistencies within the
profession. Therefore, it is recommended to establish a framework to guide
valuers in valuing properties in circumstances with a higher level of uncertainty.
Although the study focused on all types of valuation in general, future studies
could delve into specific categories of property valuations, as well as concentrate
on global economic crises.
