The residual method of valuation is employed to value vacant land having development potential or a site which may be due for development. In economic aspect, the lands are considered to be under-utilised because there will be an increase in land value when factors of production are injected in the development process. However, it is also accepted that various professionals and the Lands tribunal have been doubtful about the use of the method due to the tendency of the variables to fluctuate and their effects on the resultant figure. It then becomes the intention of this dissertation to examine the creditability of the valuation method which has long been applied to value potential lands. First of all, the objective, scope, methodology and limtation of the study will be tabulated. Secondly, there will be an explanantion of the concept of property development. This covers the process of development and the need to carry out a valuation to ascertain the highest and best use of the land within the framework of legal, planning, physical, economics and social constraints. Then, the writer shall introduce the residual method of valuation in terms of its philosophy as well as the circumstances requiring such valuation. In order to give a better picture of the valuation process, a valuation example is included to observe the primciples that are being put into practice. Next, of course the study will also look into the criticisms and comments on the method by related professionals in the property development sector. After that, the writer shall analyse and if needed recommend necessary refinements and improvements. This will be looking intothe possible use of cash flow approach and sensitivity analysis to off-set the deficiencies found ini the conventional residual method of valuation. In the concluding chapter, the writer shall attempt to examine the creditability and sufficiency of the residual method of valuation for assesing the present worth of development potential lands and proposed whatever measures that are needed to be taken in the development of the valuation method in particular and the valuation practice in general.