Surveying & Built Environment Vol. 22 Issue 1 (December 2012)

circumstances. It also draws attention
to the continuing contradictions in
the methods and suggests ways of
overcoming them. The paper shows
that, unlike in more developed real
estate markets where the Market
Comparison Approach is normally used
for the valuation of real property, it is
the Cost Method that is the dominant
approach in Ghana. It traces this feature
to the complex land tenure system and
the pervasive problem of asymmetric
information in the land sector mediated
by weak land sector agencies.
The rest of the paper is divided into
three parts. The first provides an
institutional background and describes
the land tenure system in Ghana. The
next discusses valuation practice in
Ghana, focusing particularly on the
Cost Approach. Then, finally, the paper
highlights some of the deficits in the
Cost Method used and suggests some
possible remedies.
INSTITuTIoNAl
BACKGRouNd:
lANd TENuRE ANd
REGISTRATIoN
The land tenure system in Ghana is
complex. In relatively developed real
estate markets, such as Hong Kong’s,
the land tenure system is usually made
up of registered freehold and leasehold
interests (see Lai, 2005; Lai and Lorne,
2006). The system in Ghana is rather
different. There is a dual system of
land tenure, one customary, the other
state based. Only 22 per cent of land
is owned by the state, either alone (20
per cent) or jointly with communities
(2 per cent). Most of the state land
was obtained through compulsory
acquisition for public use. The rest of
Surveying and Built Environment Vol 22, 37-60 Nov 2012 ISSN 1816-9554
the land is held under the customary
land tenure system which constitutes 78
per cent of all land in Ghana (Kasanga,
2003). It is the more indigenous of the
two systems and hence the source of the
allodial interest, which is the highest
title to land in Ghana.
The allodial and freehold interests are
similar. However, unlike the latter,
which is usually held by individuals
in more developed economies, the
allodial or paramount interest is vested
in traditional land owning institutions
(chiefs or priests), families, and clans
(Woodman, 1996; Ministry of Lands
and Forestry, 1999). So, unlike in
countries such as Hong Kong where
land tenure is mainly a relationship
between state and individual and
between individuals (Lai, 2005, p.18),
in Ghana the community is central in
land tenure relationships.
Two key features of customary land
tenure are pertinent to this paper.
First, the allodial interest in different
parts of Ghana, the lesser interests
deriving from them and their incidents
differ according to local customs and
practices. Second customary land
tenure in Ghana is usually unregistered,
consistent with the unwritten nature of
customary land law: customary interests
in land know no writing (Abdulai,
2006; 2010). However, since 1843, the
state has taken the position that some
writing or documentation is crucial
to ensure clarity in land management
and provide the ingredients for private
ownership of land. Realising that
aspiration would facilitate the valuation
of landed property. It is known that an
effective land administration system,
characterised by ample information
about landed property transactions
such as the names of the parties
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