ABSTRACT
In recent time rental value of a property has been an
unsustainable increase particularly commercial properties. This was attributed
to the fluctuation in the purchasing power of naira cause by socioeconomic
forces.
This project seeks to examine the effect of fluctuation in the
value of naira on rental value of commercial properties in Lagos Island by
examining the causes of fluctuation in the value of naira on rental value of
commercial properties, the trends in rental value of commercial properties and
highlight the factors determining the rental values of commercial properties in
Lagos Island.
The research method adopted for this research is the secondary and
primary sources of data and carried out by random sampling method.
It was recommended that office centres should be incorporated in
development plans for regional economic development and that government should endeavour to envisage full impact of
their economic, fiscal and monetary policies on the various sectors of the
economy before embarking on such policies.
In conclusion the fluctuation the value of naira has effect on rental value of commercial
properteis because it leads to high rental value as a result of high cost of building materials and demand and
supply as factors.
TABLE OF CONTENT
Contents pages
Project title page i
Certification ii
Dedication iii
Acknowledgement iv
Table of contents v
List of Tables ix
List of figures x
Abstract xi
CHAPTER ONE
GENERAL INTRODUCTION 1
1.1 Introduction 1
1.2 Statement of problems 2
1.3 Aim and objectives 3
1.4 Research hypothesis 4
1.5 Scope of study 5
1.6 Significance of study 5
1.7 Limitation of the
study 6
1.8 Definition of terms 7
References 9
CHAPTER TWO
LITERATURE REVIEW
2.1
Introduction 10
2.2
Historical background 12
2.3
Relevant theories and model
on the topic 14
2.3.1
Concept of rent to land 14
2.3.2
Rent theories 18
2.4
Factor affecting rental
values 26
2.4.1
Demand factors 26
2.4.2
Supply factors 28
2.5 Commercial properties 30
2.5.1
Classification of commercial
properties 31
2.5.2
Concept of goodwill 35
2.5.3
Factors affecting locational
decisions 36
2.6
Causes, effects and ways of
minimizing fluctuation 41
2.6.1
Causes of inflation in Nigeria 42
2.6.2
Effects of inflation 44
2.6.3
Ways of minimizing inflation
46
2.6.4
Causes of deflation 49
2.6.5
Effects of deflation 50
2.6.6
Ways of minimizing deflation 51
2.7
Effect of fluctuation on
rental value 51
2.8
Current – literature 54
References 55
CHAPTER
THREE
Research methodology and study area (case study)
3.0 Introduction 58
3.1
Restatement of research
hypothesis 58
3.2
Sources of data 59
3.2.1
Primary source 59
3.2.2
Secondary source 60
3.3
Characteristics of the
population of study. 60
3.4
Sampling techniques 60
3.4.1
Sampling design 61
3.4.2
Sampling procedure 61
3.4.3
Determination of sampling
size 62
3.5
Questionnaire administration
62
3.5.1
Questionnaire design 62
3.5.2
Questionnaire distribution 63
3.5.3
Collection of responses 63
3.6
Techniques for data analysis
64
3.7
Limitations of the research
methodology 65
3.8
Study area/case study 65
References. 68
CHAPTER FOUR
4.0 Data presentation and
analysis 69
4.1
Introduction 69
4.2
Presentation and analysis of
data based on
research objectives 70
4.3
Analysis other relevant data
75
4.4
Presentation and analysis of
data according to
responses the research hypothesis 84
References
CHAPTER FIVE
5.0
SUMMARY OF FINDINGS,
RECOMMENDATION,
AND CONCLUSION FOR FURTHER STUDIES
5.1
Summary of findings 93
5.2
Recommendations based on
research findings 94
5.3
Conclusion 95
5.4
Suggestion for further
studies 96
References 97
Bibliography 98
Appendix
LIST OF TABLES
4.1
Questionnaire administered
4.2.1
Extent of the effect of
fluctuation on rental value of commercial properties
4.2.2
Which of the following
factors are the most determined factors of rental or capital value of property
in this locality.
4.2.3
Why are some of residential
properties in commercial centres been converted to commercial properties
4.2.4
How has the trend been?
4.3.1
Factors responsible for
concentration of developers on commercial properties in Lagos –Island.
4.3.2
How often the rental value
of the properties change.
4.3.3
Which of the following
commercial dominate in the area, most viable and attract more rent.
4.3.4
State the area of
specialization of the firm.
4.3.5
Types of specialized properties
4.3.6
Status
4.3.7
Justification of rent paid
on commercial property in Lagos Island
with any other commercial property in the state
4.3.8
Effect of fluctuation on
trend of rental value
4.4.1
Does fluctuation on the
value of naira on rental value affect commercial properties
4.5
The annual trends in rental
value of commercial properties in Lagos
Island
4.5.1
Percentage rate of inflation
4.5.2 Exchange rate of Naira
to Dollar
LIST OF FIGURE
2.1. Bar chart for
plot development
2.2 Bar chart on yield
capacities
2.3 Pattern of urban land
values i.e. rental value
2.4 Graphical illustration
of rent curves
4.1 Bar chart on questionnaire administered
4.2.1 Bar
char on the extent of the effect of
fluctuation on rental value of commercial properties
4.2.2 Bar
chart on the factors are the most determined factors of rental or
capital value of property in this locality.
4.2.3
Bar chart on the reason why
residential properties in commercial centres been converted to commercial
properties
4.3.1
Bar chart of the developers of commercial properties in Lagos Island.
4.3.2
Bar chart on how the rental
value of properties changes.
4.3.3
Bar chart on the commercial
properties that dominate most viable and
attract more rent in the area.
4.3.4
Bar chart on the area of
specialization of the firm
4.3.5
Bar chart on types of
specialized properties
4.3.6
Bar chart on status
4.3.7
Bar chart on justification
of rent pay in Lagos
Island
4.3.8
Bar chart on effect of
fluctuation on trend of rental value
4.4.1 Bar
chart on how fluctuation on the value of naira on rental value affect commercial
properties
CHAPTER ONE
GENERAL INTRODUCTION
1.1
INTRODUCTION
Lagos is a state that is notable among states on Nigeria as seen
on in commercial activities.
The rental value of commercial properties resulting from
differences in location has engaged attention of scholars for year. The need to
determine the rental value inherent in commercial properties is very essential
and cannot be over emphasized. The rental value of commercial properties has
various mandatory factors which affect their increase this factors includes
demand and supply, property’s physical state at present, location of the
property, uses to which the property can be put.
Fluctuation can be defined as the rate of inflation and
devaluation of money (naira). It is upward and downward movement of naira as a
purchasing power on Nigeria
to acquired commodity.
The fluctuation of naira can be tagged to increase demand of
imported building material as a result to meet modern building technology by the supplier/developers.
Devaluation can only set in if supplier or developers always depend on the use
of locally building material manufacture and it will enhance the value of
naira.
The high inflation rate has further compounded the problem of huge
capital normally needed for real estate developed as manifested in astronomical
prices of building materials and cost of
labour.
Hence there is a great correlation between the fluctuation in the
value of naira on rental value of commercial properties which need serious
attention or point of consideration as the case may be.
1.2
STATEMENT OF PROBLEM
The economy of Nigeria
over the years has been in a jeopardy which is evident on the rapid increase in
price of goods and services in the country. The unstable nature of price value
of goods and services which has always been on the increase is synonymous to
the fluctuation in the value of naira.
Rental value is one of the categories of such commodities that is
greatly affected by the instability or fluctuation that has always occurred in the
value of naira.
Commercial properties tend to be so greatly affected by this
development because it is ranges from place to place and it cover a great proportion of the total physical development
in Lagos Island.
The following pertinent questions about fluctuation in the value
of naira on rental value are as follows:
(i)
Why is it that there is
always an increasing fluctuation rate in the value of naira?
(ii)
Why does this fluctuation
affects rental value and how does it affect the rental value?
(iii)
Of all types of properties
why is it that it is commercial properties that is mostly affected?
1.3
AIM AND OBJECTIVES
The aim of this dissertation
is to assess the fluctuation in the
value of naira as it effects the
rental value of commercial properties in the study area.
The general objectives of this research work are to determine the
effects of the fluctuation on the value of naira on rental value of commercial
properties in Lagos
State.
The specific objectives are:
i.
To examine the cause of
fluctuation in the value of naira on rental value of commercial properties.
ii.
To examine the trends in
commercial properties rental value.
iii.
To highlight the factors
determining rental values of commercial properties.
iv.
Finally to proffer
suggestions to the problems posed by inflation on rental values of
commercial properties in Lagos Island.
1.4
RESEARCH HYPOTHESIS
Ho: There is no significant relationship between fluctuation in the
value of naira and rental value of commercial property.
H1:- There is a significant relationship between
fluctuation in the value of naira and rental value of commercial property.
1.5
SCOPE OF STUDY
The scope of the study is to cover some selected commercial
properties in the five local government areas of Lagos Metropolis namely:-
Lagos Island, Ikeja, Ikoyi, Oshodi and Agege
The neighborhoods in Lagos metropolis are classified according to
national population commission as low density, medium density, and high
density commercial neighborhoods, certain
areas were selected based on population, where questionnaire were
distributed to collect information.
Rental values of commercial properties for a decades (1993-2003) were also gathered.
1.6 SIGNIFICANCE OF STUDY
This study is intended to examine the overwhelming effect of
fluctuation in the value of naira on rental value of commercial properties and
provide a provisional guide to private investors as to the type of property
investment best suited for a particular location. It will also assist the
various participants in the real estate investment sector to make decisions as
to which area is badly affected and to be able to make futuristic decisions.
It will also serve as database for
student and various participants in the sector for the present and future.
1.7 LIMITATION OF THE STUDY
The constraints encountered during the course of this research
include:
-
The inadequacy of text books
and written materials on the relevance of the topic and visitation of the case study
had to be done several times, despites the fact that other courses and
assignment demand time too.
-
The uncooperative attitude
and dodging of question from the respondent and lack information from the
residents of the commercial proprieties.
-
Inadequacy of proper records
on rental values of commercial properties
1.7 DEFINITION OF TERMS
1.7.1 Rent
Olusegun (2000) defined rent as the annual or periodic payment
made by a tenant or user of a property to the landlord in consideration of the
rights in land and landed properties granted to the tenant under a lease or
tenancy agreement. It is a major condition necessary for the solidification of
a lease or tenancy agreement. It can be collected annually, quarterly,
Bi-annually, monthly or weekly based on the agreement.
1.7.2 RENTAL- VALUE
Olusegun (2000) defined rental value as the amount of money which
a willing and able tenant can pay for his occupation of a particular property.
From another point of view, it implies the rental price at which a property would
be let in an open market if the property is duly advertised.
1.7.3 PROPERTY
Thorncroft (1965) defined property as the exclusive right of
ownership given, that anything which belongs to a person giving the exclusive
right of enjoyment e.g. land and building. It is the exclusive right
possession, enjoyment and disposal or right of control an individual has over a
thing.
1.7.4 PROPERTY MARKET
Olusegun (2000) defined property market as the medium through
which a cluster or bundle of rights in
land and landed properties are exchanged
between buyers and sellers. It can also be said to be a type of an investment
in which capital sum in given up in realization of a return to be received over
a period of time.
1.7.5 FLUCTUATION
Andy (2001) defined fluctuation as the rate of inflation and
devaluation of money (naira). It is upward and downward movement of naira as a
purchasing to acquire commodity
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