A COMPARATIVE ANALYSIS OF RESIDENTIAL PROPERTY INVESTMENTS IN LAGOS METROPOLIS, NIGERIA

Abstract

Residential real estate possesses not only the value of utilisation in owner-occupation but also the value of investment in leasing and disposal. In the gamut of investment choices generally, investors need to be adequately informed and properly guided on attributes of expected returns to enhance optimal creation of wealth. This research examined decision-taking factors in residential property investments, the trends of rental values on leases and capital values of residential properties from 2001 to 2010 and factors influencing returns in investments in residential real estate in the Lagos metropolis. Out of the 168 and 199 questionnaires distributed to Estate Surveyors and Valuers, and registered real estate developers in Lagos State respectively, 154 and 186 were retrieved respectively. Data on influencing factors, perceptions, rental incomes and sale/purchase prices were analysed using descriptive statistics, correlation and trend analysis. Income flow, capital outlay and growth are the main enabling attractions to investors in embarking on residential property investments while the state of the economy and location are the main factors attributed to shaping the returns on residential real estate investments. Between 2001 and 2010 in the Lagos metropolis, returns on blocks of 4 No. 2-bedroom flats ranged from 3.29% to 7.96%; blocks of 4 No. 3-bedroom flats from 2.71% to 7.16%; blocks of 2-wing 4-bedroom duplexes from 3.56% to 6.13%, 5-bedroom detached houses from 2.57% to 5.53% and 3/4/5-bedroom bungalows from 2.58% to 8.62%. Results from the study showed that returns from investments in residential real estate do not conform to straight-jacket defined boundaries. It is recommended that services of Estate Surveyors and Valuers are better engaged by residential real estate developers from the conception of investments in residential real estate to rightfully determine the optimal type of residential property for envisaged or already secured locations and the best location for a predetermined type of residential property.