in an Emerging Real Estate Market:
A Case Study of Uyo, Akwa Ibom State, Nigeria
FEATURED PAPER
By Mbosowo Ebong Ekpo (ANIVS, RSV) i
and
Udeme Emmanuel Udoh ii
i Department of Estate Management and Valuation
Akwa Ibom State Polytechnic, Ikot Osurua, Ikot Ekpene, Akwa Ibom State.
ii Department of Surveying and Geoinformatics
Akwa Ibom State Polytechnic, Ikot Osurua, Ikot Ekpene, Akwa Ibom State.
Nigeria
ABSTRACT
The study aimed at examining the trends in commercial property’s rental value, capital value and returns from 2011 to 2020 in Uyo metropolis, Nigeria with a view to providing information for investment decision making. Questionnaire survey was conducted to collect data on rental and capital values from investments in commercial properties in Uyo metropolis. The data were collected from Principal Partners/branch managers of Estate Surveying and Valuation Firms in the study area. About 103 Estate Surveying and Valuation firms were sampled in Uyo with an average of 2,163 commercial properties in their management portfolios (average of 21 commercial properties in each management portfolio). A total enumeration of the 103 firms was conducted using structured questionnaire. However, only 74 questionnaires were completed and returned for analysis (representing about 72% response rate). Both descriptive and inferential statistics as well as appraisal techniques were used in analysis of the data obtained, hence the use of frequencies; percentages; income, capital and total returns formulae; weighted mean and polynomial trend analysis. The study found that there was a steady and continuous increase in both the rental and capital values of the selected property types throughout the period of the study. This was depicted by the trendline generated from data obtained from the field for office rental values, shop rental values, office capital values and shop capital values. The study also revealed that investment in shops in Uyo is riskier (with a standard deviation value of 12.18%) than investment in office properties (with a standard deviation value of 2.39%). The income, capital and total returns values indicated positive returns values for both office and shop properties throughout the study period. This study was necessary because of the dynamic nature of emerging property markets of developing nations such as Nigeria. Investors may wish to evaluate the trends of returns of commercial real estate investments in order to serve as a guide for investment decision making. This study is unique as it gathered historical data on commercial property investments and made future forecast or predictions of possible investment behaviour of returns values in an emerging property market, such as the case of Uyo, which could serve as a guide to property investors in making investment decisions.
Keywords: Emerging real estate market, investment, property values, returns, trends, Uyo.
Introduction
Every prudent investor would wish to evaluate the trends of returns of commercial real estate investments and its overall performance in order to serve as a guide for informed decision making. Dabara (2015) posited that real estate trend is used to describe any pattern in the general direction of real estate returns. The pattern is said by the author to involve facts and series covering a specified period of time causing a statistically noticeable pattern of change. These changes in real estate returns remain an important factor for intending commercial real estate investors when making investment decisions. Fatoki et al (2010) noted that the evaluation of the performance of investment asset classes over a period of time should be the primary thing done before the investment to avoid any loss. Such performance evaluation shows clearly the past performance of such asset and the possible forecast or future performance which will aid in the identification of assets that perform better from various alternatives.
In order to provide vital investment information to enable investors channel their funds to viable and profitable investment in an emerging property market, this study aimed at determining the trends of returns of shops and offices in Uyo metropolis from 2010 to 2020, with a view to developing models for a forecast of possible investment behaviour of capital and rental values in an emerging property market in the study area. To achieve the stated aim, the following objectives were set:
- to ascertain the returns of shops and offices in the study area.
- to determine the risk of investment in shops and offices in the study area.
- To examine the trends of investment in shops and offices in the study area.
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How to cite this paper: Ekpo, M.E. and Udoh, U.E. (2021). Trends in Commercial Property Values in an Emerging Real Estate Market: A Case Study of Uyo, Akwa Ibom State, Nigeria; PM World Journal, Vol. X, Issue VII, July. Available online at https://pmworldlibrary.net/wp-content/uploads/2021/07/pmwj107-Jul2021-Ekpo-Ebong-trends-in-commercial-property-values-in-emerging-real-estate-market.pdf
About the Authors
Mbosowo Ebong Ekpo
Akwa Ibom State Polytechnic
Ikot Osurua, Nigeria
Mr. Mbosowo Ebong Ekpo holds both the Bachelor and Master of Science degrees in Estate Management from the University of Uyo, Nigeria. He is currently a Doctoral degree candidate in Estate Management in the same university. His area of interest is in Real Estate Investment Valuation. He is an Associate of the Nigerian Institution of Estate Surveyors and Valuers, and a registered Estate Surveyor and Valuer. Mr. Mbosowo is a Lecturer in the Department of Estate Management, Akwa Ibom State Polytechnic, Ikot Osurua and can be contacted at mbosowoebong@gmail.com.
Udeme Emmanuel Udoh
Akwa Ibom State Polytechnic
Ikot Osurua, Nigeria
Udeme Emmanuel Udoh holds a degree in Surveying and Geoinformatics. He is an Associate Member of the Surveyors Council of Nigeria (SURCON). He is currently a Senior Lecturer and Head, Department of Surveying and Geoinformatics, Akwa Ibom State Polytechnic, Ikot Osurua, Ikot Ekpene, Akwa Ibom State.
