Thesis Abstract

Abstract
This research project aims to conduct a comparative analysis of rental variation in residential properties and commercial properties in Nigeria. The study seeks to explore the factors that influence rental prices in both residential and commercial real estate sectors, identify the significant differences in rental rates between these two property types, and analyze the implications of these variations for property owners and tenants. The research will utilize both qualitative and quantitative research methods to collect and analyze data on rental prices in selected urban areas in Nigeria. Qualitative data will be gathered through interviews and surveys with real estate agents, property owners, and tenants to understand their perspectives on rental pricing determinants. Quantitative data will be collected from real estate listings, property websites, and market reports to compare rental rates for residential and commercial properties. The study will examine various factors that impact rental prices in the residential and commercial property sectors, such as location, property size, amenities, demand-supply dynamics, economic conditions, and government policies. By analyzing these factors, the research aims to provide insights into the key drivers of rental price variations in Nigeria. Furthermore, the comparative analysis will identify the significant differences in rental rates between residential and commercial properties. It will investigate whether one property type commands higher rental prices than the other and explore the reasons behind these differences. Understanding the rental variations between residential and commercial properties is crucial for property investors, developers, and tenants to make informed decisions regarding their real estate investments and leasing agreements. The findings of this research project are expected to contribute to the existing body of knowledge on real estate economics in Nigeria. By shedding light on the rental dynamics in residential and commercial properties, the study will offer valuable insights for stakeholders in the real estate industry, including property developers, investors, real estate agents, and policymakers. In conclusion, this comparative analysis of rental variation in residential properties and commercial properties in Nigeria will provide a comprehensive understanding of the factors influencing rental prices in both sectors. The research findings are anticipated to offer practical implications for property market participants and contribute to the advancement of real estate research in the Nigerian context.

Thesis Overview

1.1   BACKGROUND TO THE STUDY

 

The study of rental variation of real estate investment, whether residential or commercial, is very important at this time when emphasis is on investment performance analysis in many parts of the world. This is even more important in Nigeria where only few studies have been carried out on the rental variation in residential and commercial property achieved by property investment. Moreover the impact of the ongoing changes in the global and local economy on the value of real estate investment is serving to highlight the need for its careful consideration in the investment decision making process (Palmquist, 1980).

Since 1990s, the demand for commercial outlets has risen astronomically in most urban centers in the country. This is as a result of the economic recession which compelled the unemployed and public servants to explore trading activities in addition to their normal jobs. The investors’ reaction to this development has been to increase the number of commercial outlets at the expense of residential property developments. Therefore in many towns and cities of Nigeria, open spaces within the vicinity of public institutions have been irrationally developed to accommodate shops and other retail outlets. The situation is further compounded with the perceived notion among Nigerian property investors that commercial property performs better than residential property investment (Smith, 1986). However, the investors can no longer base their decision on intuitive grasp of the market which Ajayi and Fabiyi (1984) considered inadequate for success in property ventures.

The central theme of this study therefore is to examine the rental variation of residential and commercial property investments in the study area. This will provide for better investment decision and risk management for real estate investors in Nigeria.

Commercial properties are properties generally occupied for the purpose of carrying on a trade or profession in the expectation of realizing profit. They comprise mainly of shops, offices, showroom among others and they command the highest rent out of the other types of properties uses. Rent provides the basis of value for landed property and the trends in Land values are of significance in the prediction and determination of income from real property. Also, the income realizable from real estate is required in evaluating the viability of projects. A number of factors combine together in determining changes which property values undergo which are of great concern to the Estate managers and valuer.

 

1.2   STATEMENT OF THE PROBLEM

 

The issue of fair valuation of residential and commercial real estate properties has been a major challenge in Nigeria. Indeed, not much has been done in the area of valuing residential housing units and commercial/business complex in the economy.

Nevertheless, in recent times, the literature on real estate has seen a number of techniques and models developed in a bid to achieve efficient valuation of residential houses. The use of artificial neural networks has been the most popular and recent in this regards. In the advanced economies, the use of artificial neural networks is now predominant in several fields including tax assessment, medical diagnosis, bank risk analysis, stock analysis & control, traffic control, and real estate valuation etc (Moral - Esperanza, 2004).

In Nigeria, unlike in many other economies, the use of artificial neural networks (ANNs) in actual valuation of housing units has not been done (Eriki & Udegbunam, 2008). It is against this background, that this study examines the fairness or otherwise, of the price fixing mechanism for residential and commercial properties in Nigeria.

1.3   OBJECTIVES OF THE STUDY

 

The following are the objectives of this study:

1. To examine the rental variation in residential and commercial properties in Nigeria.

2. To analyze the factors that influences the value of residential and commercial properties in Nigeria.

3. To determine the reasons for rental variation in residential and commercial properties in Nigeria. 

 

 

1.4   RESEARCH QUESTIONS

 

1. What is the rental variation in residential and commercial properties in Nigeria?

2. What are the factors that influence the value of residential and commercial properties in Nigeria?

3. What are the reasons for rental variation in residential and commercial properties in Nigeria?

1.5  RESEARCH HYPOTHESIS

 

HO: There is no variation in the rental value of residential and commercial properties in Nigeria.

HA: There is variation in the rental value of residential and commercial properties in Nigeria.

1.6   SIGNIFICANCE OF THE STUDY

 

The following are the significance of this study

1. The findings from this study will enlighten the general public on the current value of residential and commercial properties in Nigeria. It will also educate on the factors that enhanced rental variation in residential and commercial properties. It will further educate on the differences between the real estate investments thereby acting as a guide for decision making.

2. This research will also serve as a resource base to other scholars and researchers interested in carrying out further research in this field subsequently, if applied will go to an extent to provide new explanation to the topic.

1.7   SCOPE/LIMITATIONS OF THE STUDY

 

This study on the comparative analysis of rental variation in residential and commercial properties in Nigeria will cover the present value of residential and commercial properties in Nigeria which will form the basis for comparison.

LIMITATION OF STUDY

 

Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

 

 Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

 

 

REFERENCES

Ajayi, C.A and Fabiyi Y.L (1984). “A critique of property investment feasibility and Viability appraisal reporting in Nigeria”. Quarterly journal of administration April/July, 161-169

Eriki PO, Udegbunam RI (2008). Application of neural network in evaluating prices of housing units in Nigeria: A Preliminary investigation. J. of artificial Intell. 1(1): 21-27.

Palmquist RB (1980). Alternative techniques for developing real estate price indexes. Review of Economics and Statistics. 62(3): 442-448.

 

Smith HC (1986). Inconsistencies in appraisal theory and practice. J. of Real Estate Research. Fall. 1(1): 1-17.