EXAMINATION OF THE EFFECT OF LOCATION ON RENTAL VALUES OF RESIDENTIAL PROPERTIES
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EXAMINATION OF THE EFFECT OF LOCATION ON RENTAL VALUES OF RESIDENTIAL PROPERTIES
ABSTRACT
This study looked at the impact of location on the rental value of residential units in Ikeja, Lagos State.
The majority of the data used came from secondary sources such as papers such as published literature, official records, and media accounts. Questionnaires were distributed to registered Estate Surveyors and Valuers, Estate Agents, landlords, and residents of the study region to collect primary data.
The purpose of this study is to analyse and determine the roles of location and neighbourhood characteristics in the determination of rental value of residential properties.
To accomplish this, attempts were made in the conceptual background to this study to evaluate the role of location and neighbourhood factors in the determination of house prices.
The second chapter also looked at the numerous property qualities that have a relatively substantial impact on market values (prices) and, to a lesser extent, influence the rent, sales, and purchase decisions of Nigerian accommodation seekers, sellers, and buyers.
The third chapter describes the method and procedure used to complete this project. The fourth chapter gives the findings of empirical and comparative evaluations of the effect of location on the value of residential properties in Lagos State’s Ikeja Local Government Area.
When smaller geographical housing units are analysed, it is discovered that neighbourhood and location qualities have a greater impact on property values. Given the characteristics of such housing units, the suggestions of this study should help individuals,
Real Estate Professionals, investors, and other stakeholders to make reasonable assessments of the market values of residential properties in Ikeja Local Government Area of Lagos State. This would facilitate rapid value, help to enhance housing quality, and allow for mass property evaluation.
CHAPITRE ONE
BACKGROUND AND INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Residential property is an excellent for both consumption and investment (Sratton, 2008). It is purchased as a consumer good for owner occupation.
Furthermore, the investment (property) may be made to maximise the best possible return from outright sale or rental. In this circumstance, the price of the residential property becomes extremely important to both the landlord and the tenants.
As a result, many people perceive investing in this type of property as a significant source of wealth. The physical qualities of the property, such as the number of bedrooms, age, size, various amenities and services, have been noted to assist landlords in determining rental pricing for residential properties.
Furthermore, external factors such as population, income, traffic congestion, proximity to job, access to public transport, proximity to a higher education institution, and environmental qualities can all have a substantial impact on rent (Oni, 2007).
As a result, any meaningful inquiry of the nature and behaviour of residential property prices must acknowledge that property as a commodity is a complex bundle of services or potential services that act in multiple dimensions (Oyebanji, 2003).
Nigeria has a significant untapped real estate market due to a lack of knowledge regarding property attributes, true value, and impact on market values, organisations, available properties, and professional services available in various places around the country.
As real estate consultants and practitioners market their properties, they recognise that in order to achieve success, their information must be widely disseminated, and this information must be available, accessible,
dependable, and affordable to property buyers, sellers, and investors with speed, precision, and accuracy, and at the precise moment when the client requires the information.
Location has a tremendous impact on the home market. Because housing units are set in place, they differ in terms of their surroundings, the type of community in which they are located,
and their proximity to areas of employment and retail. Location also implies that a home’s surroundings may be quite important in determining its value.
For decades, real estate was viewed as a legacy that a parent leaves to their children. However, with the realisation that real estate is a key source of capital appreciation and a solid hedge against inflation, the real estate market is approaching the money and capital markets in popularity and importance.
Today, real estate property is a crucial indicator of a person’s wealth. Real estate has continued to play an important part in the development of economic activities as they have become more sophisticated over time.
Rental values of residential properties in Lagos State have risen steadily throughout the years. This is due to the fact that Lagos, Nigeria’s largest metropolis, is located along the West African coast. Lagos has 9,197 roads, which include carriageways, cul-de-sacs, lanes, streets, avenues, ways, and crescents (Lagos Street, Map, 2008).
Furthermore, the large financial transactions involved, high property demand, ever-increasing population, and limited supply, particularly in major cities such as Lagos, Ibadan, Abuja, and Port Harcourt,
have made the real estate sector vulnerable to abuse by many dishonest property developers, greedy landlords, unregistered agents, and swindlers who engage in a variety of illegal practises to the detriment of practitioners, citizens, foreigners, stakeholders, and the noble profession.
Investors have recently redirected assets into real estate development due to the security of returns and the market’s profitability (Kauko, 2003).
Furthermore, due to the intense rivalry in the residential property market, there has been an expansion and increase in the quality of residential properties offered by investors in order to fulfil demand.
Several variables influence residential property values in Nigeria. These include, among other things, geography, demand and supply, accessibility, institutional, and economic factors. Nonetheless, there is still a short fall in the market, which is causing rent and capital prices to rise (Eriki & Udegbunam, 2008).
Regardless of these benefits, real estate practitioners, financiers, and investors in residential properties face a scarcity of data on the effect of location on the value of residential properties and the level of rental income that a development project could reasonably be expected to generate in a transaction involving willing and able parties.
1.2 STATEMENT OF THE PROBLEM
Despite obstacles such as inadequate finance, insufficient infrastructure, high building material costs, a lack of government policies, and unethical standards, the real estate sector has contributed to the growth and development of the Nigerian economy.
The goal of this study is to evaluate and identify the relative roles of location and neighbourhood factors in determining the value of residential properties in Ikeja L.G.A, Lagos State.
Another issue is determining a suitable model for valuing residential dwelling units in the Nigerian property market.
In addition, using primary and secondary sources, this study will determine the property qualities that have a substantial influence on property market values.
Furthermore, this study will establish whether location is a significant role in residential property valuation in Nigeria, as well as the lengthy bureaucratic delays connected with getting land and government approval for property development.
These will be accomplished by the collection and analysis of primary and secondary data, with the goal of delivering relevant information to professionals, investors, and stakeholders.
1.3 SCOPE OF THE STUDY
The purpose of this research is to analyse and investigate the effect of location on the rental value of residential properties in Ikeja, Lagos State.
1.4 RESEARCH QUESTIONS
In order to offer a scientific context for this investigation, the following research questions were asked:
1. What are the elements influencing residential properties in Ikeja?
2 What impact does geography have in determining the rent of residential units in Ikeja?
3. What is the relationship between property market value and location?
4. What impact do these determinants and policymakers have on investment decisions?
1.5 OBJECTIVES OF THE STUDY
The following are the study’s objectives:
1. To identify numerous location characteristics that influence residential properties in the study region.
2. Investigate the factors that influence the rental value of residential properties in the research region.
3. Investigate the link between location and residential property values in the study region.
4. Explain how real estate investors and policymakers can benefit most from locational benefits.
1.6 THE SIGNIFICANCE OF THE STUDY
This research will add to the corpus of knowledge available in print and broadcast media. It will also serve as a resource for students, scholars, and other researchers interested in the impact of location on residential property rental values.
Furthermore, it will assist individuals, professionals, investors, communities, change agents, media professionals, and the general public in identifying residential property qualities and how they effect property values in Nigeria.
This research will also assist academics, scholars, and investors in identifying numerous residential property characteristics that have a reasonably substantial impact on market values (prices) and, to a lesser extent, influence the sales and purchase decisions of sellers and purchasers in Nigeria.
Given the characteristics of such dwelling units, this study should enable real estate experts and investors to establish reasonable assessments of the market prices of residential real estate properties. This would facilitate rapid value, help to enhance housing quality, and allow for mass property evaluation.
1.7 STUDY OBJECTIVES
The research focuses on residential homes in Ikeja, Lagos State. Ikeja has a high density of residential dwelling units. The study focused on Ikeja as a location to investigate its impact on residential property rental values.
A site has numerous characteristics such as accessibility, facility provision, environmental aesthetics, security, and business potential.
According to preliminary research, there are many types of residential properties in the study region. These are terrace buildings, maisonettes, bungalows, flat blocks, and tenements.
Because of the size, terrain, and complexity of Lagos State, the study will concentrate on residential properties in Ikeja intra-city. Ikeja is the most populous part of Ikeja Local Government, which is one of four zones recognised within the broader Lagos metropolitan area.
The four zones (Lagos Island, Apapa, Lagos Mainland, and Ikeja) constitute commercial hubs of the Lagos metropolis, revealing activity areas where employment, commerce, transit terminals, and other enterprises are concentrated (Oni, 2008).
1.8 OPERATIONAL DEFINITON OF TERMS
PROPERTY is defined as “anything, tangible or intangible, in which a legal relationship exists between a person and the State enforcing a possessory interest or legal title in that thing” (Famuyiwa 2012).
RESIDENTIAL PROPERTY: The several types of residential units that give shelter. It is also the building that is mostly used for dwelling purposes.
RENTAL VALUE: This is the projected monetary return on an investment over a year (Babawale 2013).
PROPERTY MARKET: This is a means for exchanging bundles and clusters of rights and interests in property (land and landed properties).
LOCATION: This is an economic feature of real estate that consists of immobility, constant change, and a special distribution factor. Wikimedia Commons (2015)
VALUE: The current worth or value of future rewards. It is also the money obtained from a willing and able buyer when an article is offered for sale by a willing seller during a suitable period of discussion (Babawale 2013).
LAND: The uppermost layer of the earth’s crust, as well as anything related to it, either temporarily or permanently beneath or above, that can be utilised to provide income and interests.
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