COMPARATIVE ANALYSIS OF RENTAL VARIATION IN RESIDENTIAL AND COMMERCIAL PROPERTIES IN NIGERIA
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COMPARATIVE ANALYSIS OF RENTAL VARIATION IN RESIDENTIAL AND COMMERCIAL PROPERTIES IN NIGERIA
CHAPITRE ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
The study of rental variation in real estate investment, whether residential or commercial, is critical at a time when many regions of the world are focusing on investment performance analysis.
This is especially crucial in Nigeria, where there have been few research on the rental variance in residential and commercial property achieved by property investment.
Furthermore, the impact of continuing changes in the global and local economies on the value of real estate investment serves to emphasise the importance of thorough analysis in the investment decision-making process (Palmquist, 1980).
Since the 1990s, the demand for commercial outlets has skyrocketed in most of the country’s urban areas. This is due to the economic downturn, which pushed the unemployed and public employees to pursue trade activities in addition to their regular duties. As a result of this expansion, investors have increased the number of commercial outlets at the expense of residential property developments.
As a result, in many Nigerian towns and cities, open spaces around public institutions have been arbitrarily expanded to house shops and other retail businesses. The situation is exacerbated by Nigerian property investors’ perception that commercial property outperforms residential property investment (Smith, 1986).
However, investors can no longer make decisions only on an instinctive understanding of the market, which Ajayi and Fabiyi (1984) regarded insufficient for success in property investments.
As a result, the fundamental focus of this study is to investigate the rental variation of residential and commercial property investments in the study area. This will result in improved investment decisions and risk management for Nigerian real estate investors.
Commercial properties are often occupied for the purpose of carrying on a trade or profession with the hope of profit. They mostly consist of shops, offices, and showrooms, among other things, and command the highest rent among the other categories of property uses. Rent serves as the foundation for determining the value of landed property,
and trends in rent Land values are important in predicting and determining income from real estate. In addition, the money generated by real estate is essential in determining the viability of projects. A multitude of factors interact to determine changes in property prices, which are of major importance to estate managers and valuers.
1.2 STATEMENT OF THE PROBLEM
In Nigeria, determining the fair value of residential and commercial real estate properties has been a serious concern. Indeed, little has been done in the economy to value residential housing units and commercial/business complexes.
Nonetheless, in recent years, the real estate literature has seen the development of a number of methodologies and models in an attempt to achieve effective assessment of residential houses.
In this sense, the deployment of artificial neural networks has been the most popular and current. Artificial neural networks are increasingly widely used in industrialised economies for a variety of purposes, including tax assessment, medical diagnosis, bank risk analysis, stock analysis and control, traffic control, and real estate value (Moral – Esperanza, 2004).
Unlike in many other economies, artificial neural networks (ANNs) have not been used in the actual valuation of housing units in Nigeria (Eriki & Udegbunam, 2008). Against this backdrop, this paper investigates the fairness or not of Nigeria’s price-fixing process for residential and commercial properties.
1.3 OBJECTIVES OF THE STUDY
The following are the study’s objectives:
1. To investigate the rental variety in Nigerian residential and commercial properties.
2. To investigate the factors influencing the value of residential and commercial real estate in Nigeria.
3. To ascertain the causes of rental variation in Nigerian residential and commercial properties.
1.4 RESEARCH QUESTIONS
1. What is the rental variety in Nigerian residential and commercial properties?
2. What variables influence the value of residential and commercial real estate in Nigeria?
3. What are the causes of rental fluctuation in Nigerian residential and commercial properties?
1.5 HYPOTHESIS
In Nigeria, the rental value of residential and commercial buildings is the same.
In Nigeria, the rental value of residential and commercial properties varies.
1.6 SIGNIFICANCE OF THE STUDY
The following are the study’s implications:
1. The study’s findings will inform the general public about the current worth of residential and commercial properties in Nigeria. It will also educate on the causes that contributed to increased rental variation in residential and commercial buildings. It will further educate on the differences between real estate investments, serving as a decision-making guide.
2. This research will also serve as a resource base for other academics and researchers interested in conducting additional research in this sector in the future, and if implemented, will go so far as to provide new explanations for the topic.
1.7 SCOPE AND LIMITATIONS OF STUDY
This study will address the current value of residential and commercial properties in Nigeria as the basis for comparison.
STUDY LIMITATIONS
Financial constraint- A lack of funds tends to restrict the researcher’s efficiency in locating relevant materials, literature, or information, as well as in the data collection procedure (internet, questionnaire, and interview).
Time constraint- The researcher will conduct this investigation alongside other academic activities. As a result, the amount of time spent on research will be reduced.
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