Rental Values and Students’ Satisfaction in Private Hostels Proximate to the Federal University of Technology, Akure, Nigeria

Property rental values are readily influenced by a multitude of interrelated factors such as the state of the economy, neighbourhood amenities and property characteristics. However, there is always an expectation that rental value reflects the occupier’s satisfaction from the neighbourhood and property. As such, this study examines the satisfaction of students with private hostel facilities surrounding the Federal University of Technology Akure (FUTA), and the effect these facilities have on the rental values of the off-campus students’ hostels. There are 17,307 students who reside in the private hostels off-campus, of which 392 students were randomly selected from the total population of residents living around FUTA South Gate and given questionnaires. Of the 392 questionnaires administered, 390 were retrieved for analysis, thus representing a 99.5% response rate. The data collected was then analyzed using the Weighted Mean Score (WMS), T-test Statistics, Spearman Rank Correlation and the Multiple Regression Analyses. The findings reveal that there is a significant difference in the rental price paid by satisfied and unsatisfied students. Thus, the satisfied students pay higher rents than the non-satisfied students for a single, self-contained apartment. These occupiers are found to be satisfied with facilities such as the toilet, bathroom, fencing and water supply system in the building. There is a positive relationship between students’ rent satisfaction and their satisfaction with hostel facilities provided. The regression analysis further reveals that rental value is a function of neighbourhood amenities and property characteristics. The study recommends that private hostel developers make adequate provision for functional facilities as these can increase students’ satisfaction as well as enhance residential property rental values.

Forecasting Performance of Commercial Property Investments in Lagos Metropolis

Investors rely on statistical forecasts to guide their investment decisions. Given the relative opportunity cost associated with these decisions, and the huge financial implication of commercial property investments, such insights are invaluable; because investors can choose investments from an informed position. Despite this recognised benefit of forecasting, there has been little focus on forecasting the performance (total returns) of commercial property investments in Lagos Metropolis. This paper, therefore, aims to forecast the total returns of two commercial property investment types (shops and offices) in five sub-markets (Yaba, Ikeja, Ikoyi, Victoria Island and Lagos Island) within the Lagos property market. In doing so, the study uses longitudinal data for the capital and rental values of commercial property investments in Lagos between 2006 to 2018 alongside a simple regression model for 2019-2021 predicted total returns. Autocorrelation was used in testing the predictive validity of this data set. Furthermore, multiple-forecasts were evaluated simultaneously for accuracy and, together, they illustrate the difficulty of compiling a robust dataset in the absence of a central database. This paper suggests that the sampled total returns for the five sub-markets fluctuate and tend to decline as seen in the Ordinary Least Square Regression technique for 2019 to 2021. The results also suggest a low autocorrelation in most of the sub-markets, which indicates that the observed pattern of returns may not continue. This paper recommends that investors be wary of commercial property investment in Lagos Metropolis, due to the observed poor performance (low and fluctuating total returns). It is also recommended that a property database be constructed to improve property data reliability and allow for the application of complex quantitative forecasting techniques.

Organisers’ Announcement: Future Leaders of the African Real Estate Society

The African Real Estate Society (AfRES), founded in 1997 seeks to promote networking, research and education among property professionals across Africa. In recent years AfRES has witnessed a number of challenges to its objectives. One of the most critical of these challenges is the decline in new members and an aging membership. In this paper we highlight the creation of the Future Leaders of the African Real Estate Society (FLAfRES). The inauguration and creation of FLAfRES is to promote active participation among early career academics, researchers and professionals; and promote volunteering and create a structural pathway to mentor the next crop of AfRES leaders. We examine the need for FLAfRES, the structure, its fit within AfRES and strategies to explicitly involve younger members in the succession plans of the society.

A Review of the Property Data Challenge in Nigeria

Data on Nigeria’s property sector tends to be inadequate and inaccessible. While the government produces statistics for its own activities, such as GDP and inflation rates, other sectors function with insufficient information. This is particularly true for Nigeria’s property sector and its data which have been given a lesser status despite an increasing economic importance for investment opportunity, GDP contribution and attraction of foreign investment funds. The gap in data creates a challenging situation for property valuers, but also, an opportunity for property researchers. This paper, which reviews existing literature on the subject, is a contribution to the debate as well as an effort towards a solution. The literature stipulates that poor accessibility to property data leads valuers to enact coping mechanisms rather than best practice and that property data is synonymous with market transactions which makes it invaluable to valuers. Also, there is a convergence of views in the reviewed literature that a central data bank offers opportunities for a solution. Conversely, it is here argued that focusing on market transactions is a narrow understanding of data as property data extends beyond such transactions. This school of thought believes that the users and uses of property transaction data extend beyond valuers and valuations and that the central data bank recommendation requires examination as to its feasibility. Accordingly, this paper broadens the definition of property data by recognising the existence of non-market data, by identifying its other users and uses as well as its role in socio-economic policies. The considerable doubts associated with the central data bank recommendation leads the study to make recommendations which are novel, but nevertheless, hold holistic methods for addressing Nigeria’s property data challenge.

A Land Value Capture Property Tax Schedule for Municipal Infrastructure Financing in Lagos State, Nigeria

This study develops a land value capture property tax rates schedule for use in Lagos state, Nigeria, in order to aid sustainability in municipal infrastructure financing. With the poor state of infrastructure in Lagos, the LVC property tax is advanced as a sustainable means of infrastructure reform through equitable rates. Using a sample from Alimosho - the largest local government area in Lagos - a hedonic regression model is used to determine the financial contributions of municipal infrastructure in property values to show their varying influences. From the regression analysis, the schedule is then derived, which is broadly premised on a quid pro quo basis. This stems from the fair notion that the pecuniary influences of municipal infrastructure should be recovered in the form of property taxes for public gains. Not previously done in the region, the schedule determines rates payable on property taxes and are reflective of the monetary influences that municipal infrastructure confer on property values. The proposed rates schedule also take into account varying distances of locational infrastructure and their impacts on property values. The use of Geographic Positioning System (GPS) in the study represents an advancement of previous Nigerian studies on infrastructure and property values where fewer infrastructure types have been considered or less precise measurement indices have been used. The study concludes that this LVC property tax approach will engender a sustainable, equitable, and efficient source of local financing for infrastructure delivery and operations. This is because it builds a veritable rates base and it enables ratepayers to face the actual costs of benefits received from infrastructure services.

Editorial

Welcome to volume five, issue two of the Journal of African Real Estate Research (JARER). As noted in the editorial of the first issue this year, JARER continues to be a significant medium through which research on African real estate markets is disseminated. We are witnessing an increasing trend in the rate of submissions and the review turnover timing is becoming more encouraging. Our appreciation goes to our reviewers and editorial board who have, despite the unforeseen challenges this year has brough, have dedicated their time and efforts to make this issue possible. We thank the board members of the African Real Estate Society, the Library services at the University of Cape Town, and Managing Editor, Luke Boyle from the Urban Real Estate Research, who has been working diligently in managing the publication process. In addition, we appreciate the support provided by IRES, ERES and Prof. Karl-Werner Schulte and his team from the IREBS at Regensburg University. The special issue focussing on showcasing real estate related research spearheaded by African women is progressing nicely. The special issue has attracted a number of submissions, mostly from new authors, and we are encouraged by the broadening support of the journal that this has demonstrated. Guest editors, Karen Gibler and Geci Karuri-Sebina, have worked tirelessly in coordinating the special issue and providing mentorship to the authors. Most of the articles are in their advanced stages and the issue is on track for publication before June 2021.

Editorial

Welcome to the Volume 4 (2019) Issue 2 edition of the Journal of African Real Estate Research (JARER). So far, JARER has been providing valuable resources supporting academics and professional researchers throughout the African continent. The journal continues to offer an exciting platform for the dissemination of scholarships and the different types of applied research within the real estate sector in Africa. JARER reflects one of the objectives of the African Real Estate Society (AfRES) to promote research and education among property professionals and academics across the continent. We have undergone some recent changes at JARER with the reconstitution of the Editorial Board to bring in greater diversity to the journal. This issue represents the final issue with the existing Editorial Board, and I would like to take this opportunity to show my gratitude to the hard work and dedication that it has demonstrated in ensuring the success of JARER to date. The achievements we have accomplished could not have been down without them. Thank you.

A Machine Learning Web Application to Estimate Listing Prices of South African Homes

Due to the heterogeneous nature of residential properties, determining selling prices which will reconcile supply and demand is difficult. Establishing realistic listing prices is vitally important for sellers to prevent prolonged time on market. Sellers have several resources available to assist in this endeavour, all of which involve understanding current market dynamics through analysing recent sales and listing data. Property portals which aggregate real estate agencies’ data, hosting it on online platforms, are one such resource, along with individual real estate agencies. Leveraging this data to develop solutions that could aid sellers in listing price decision making is a potential business objective that could not only add value to sellers but create a competitive advantage by increasing traffic to an online real estate platform. Using data provided by a South African online property portal, this paper creates a web application using machine learning to estimate listing prices for different types of homes throughout South Africa. This study compared log linear and gradient boosted models, estimating residential listing prices over a four-year period. The results indicate that although log linear models are suitable to account for spatial dependency in the data through the inclusion of a fixed location effect, the assumption of linear functional form was not satisfied. The gradient boosted models do not impose explicit functional form requirements, making them flexible candidates. Similarly, these models were able to handle the spatial dependency adequately. The gradient boosted models also achieved a lower out of sample error compared to the log linear models. The findings show that over observation periodperiod, larger properties consistently experience a diminishing return at some point over the marginal distribution of physical characteristics. The web application details how sellers are easily able to obtain mean listing price estimates and gauge the growth thereof, by simply inputting their property interest criteria.

The Structure, Conduct and Performance of REITs in Emerging Markets: Empirical Evidence from Nigeria

Purpose: This study examines the correlations between the structure, conduct and performance of Real Estate Investment Trusts in Nigeria (N-REITs) with a view to providing information that will enhance and guide real estate investment decisions on N-REITs. Design/Approach: The study population consists of all three REIT companies in Nigeria, namely: Skye Shelter Fund, Union Home REIT and UACN Property Development Company (UPDC) REIT. Secondary data on dividends and share prices of N-REITs; Total Business Revenues (TBR) and Total Individual Expenditure (TIE) on conduct variables were sourced from periodicals of the respective companies covering the period from 2008 to 2016. The data series for the study were analyzed by means of the Kwiatkowski-Phillips-Schimidt-Shin (KPSS) unit root tests, Philip-Perron (PP) unit root tests, Granger Causality tests, and the Ordinary Least Square (OLS) regression. Findings: The study shows a Herfindahl Hischman Index (HHI) that ranged between 41.81% (recorded in 2010) and 100% recorded in 2008. This suggests a high concentration in the N-REITs industry. Similarly, the Granger Causality Test conducted reveals a bi-directional causal relationship between the structure, conduct and performance of N-REITs. Practical Implications: The study provides essential information (on the HHI, return performance and causal relationships) for stakeholders in the real estate sector regarding the influence of structure and conduct on the performance of N-REITs. This information will be valuable for equipping asset managers, insurance companies, pension funds and individual real estate investors in making informed investment decisions. Originality/Value: This study is unique as it is the first to draw a link between the structure, conduct and performance of REITs in an African emerging real estate market; something that has not been considered in previous studies.

The PropTech Revolution: The Imperatives for Nigeria’s Estate Surveying and Valuation Professionals to Catch Up or Get Left Behind

Information and Communication Technology (ICT) has become the bedrock of modern societies with activities being streamlined to technologically meet the needs of individuals willing to adopt it in their day-to-day lives. The emergence of ICT has influenced the activities of real estate practitioners all over the world. Despite sectoral shifts and the introduction of innovative technologies, real estate professionals have been quite conservative towards industry modernisation (whether it is information provision, transaction or management), which threatens to limit their influence in society. PropTech, or property technology, has commanded this movement by promising more efficient portfolio management, faster ways of renting accommodation and more accurate techniques of carrying out property appraisals. It has provided innovative solutions for an industry yearning for change. This paper, therefore, describes the emerging property technology industry known as PropTech. It illustrates how its development has brought changes to global perceptions of real estate. The paper also critically examines the challenges that Nigerian estate surveyors and valuers face in the advent of fast-paced information technology. It strongly proposes that professionals must learn to utilise this emerging trend or face becoming redundant in the real estate industry.