Chioma Oluwaseun Abere, Olusegun Adebayo Ogunba and Terzungwe Timothy Dugeri
Studies on the maturity status of Sub-Saharan African property markets are scanty. The absence of such studies appear to have made African property markets – such as the Nigerian…
Abstract
Purpose
Studies on the maturity status of Sub-Saharan African property markets are scanty. The absence of such studies appear to have made African property markets – such as the Nigerian market – unattractive to foreign investors who require market information to assess the viability of proposed investments. The purpose of this paper is to explore the maturity status of selected city property markets in Southwestern Nigeria (i.e. markets in the capital cities of Lagos, Ibadan and Osogbo), with a view to providing information for enhanced property investment in Africa.
Design/methodology/approach
The study adopted and expanded on property market maturity paradigms suggested by Keogh and D’Arcy (1994), Akinbogun et al. (2014) and Jones Lang LaSalle (2014) to measure the maturity status of the property markets in the Nigerian cities. The study investigated the maturity of three markets in Nigeria by scoring the stated views of a range of stakeholders (estate surveyors and valuers, public land administrators and financiers represented by commercial banks) across a range of ten indicators. The responses were classified by means of a five-point classification scale which expanded on the initial four-point scale developed by Dugeri (2011).
Findings
The three property markets were found to exhibit varying maturity characteristics (with weighted mean scores of 3.07, 2.71 and 2.51, respectively), representing emerging and immature stages of evolution on the maturity path. These results suggest that there is a correlation between the tier of the market and the level of property market maturity.
Practical implications
The study concluded that first- and second-tier city property markets have emerged sufficiently to the point where they may safely attract foreign direct and indirect investment from courageous foreign investors. However, the state governments and real estate professional regulatory bodies in the second and third markets need to undertake substantial remodeling of market structures to make them attractive to international investors.
Originality/value
The value of the paper is in providing much needed information for enhanced property investment in Africa.
Details
Keywords
Oluwaseun Chioma Abere, Olusegun Adebayo Ogunba and Terzengwe Timothy Dugeri
The study investigated the factors influencing maturity levels in the Nigerian property market particularly southwestern Nigeria in sub-Saharan Africa. There is a need to identify…
Abstract
Purpose
The study investigated the factors influencing maturity levels in the Nigerian property market particularly southwestern Nigeria in sub-Saharan Africa. There is a need to identify the factors responsible for the less notable progress in the market in order to proffer measures that will enhance the property market or attract both local and international real estate investors.
Design/methodology/approach
The method of data analysis adopted is weighted mean scores. The study sampled estate surveyors, public land administrators and financier, which are represented by the commercial bank. The respondents were presented a list of 40 factors and asked to rank them on a seven-point Likert scale. In order to reduce the variables responsible for the maturity levels into a few factors, factor analysis was employed.
Findings
The factors identified by respondents as the most responsible for the maturity levels observed (those with the highest weighted mean score of 6.52, 6.35 and 6.31) include government policy on interest rate, safety of property right/titles and insufficient property market information. Using factor analysis, the variables were further grouped into six factors namely monetary policy, property right registration, property professionalism, investor friendliness, property data and economic factors.
Practical implications
On the basis of findings, the study recommends that the government should create an enabling environment for prospective investors/or property owners by taking measures that will improve the ease of doing business at same time enhance the foreign real estate investment. The government should pass enabling legislation that will make real estate financing a feature of the capital market. The Central Bank of Nigeria can help in managing the rate of inflation in order to reduce the cost of the construction materials so that average Nigerian can be able to own property asset. Prominent real estate firms should in conjunction with The Nigeria Institution of Estate Surveyors and Valuers develop property data bank on market fundamentals, e.g. rental/capital values, yields, construction cost indices, etc.
Originality/value
The paper provided the information on the factors that will enhance property maturity levels in southwestern Nigeria.