An Examination of Volatility Levels of Development Variables in Uyo

Abstract

This study was aimed at examining volatility level of development variables. Data were sourced from Building and Engineering Price Books, Central Bank of Nigeria annual reports and estate surveyors and valuers in Uyo. Price index and linear regression analysis was adopted to analyse the gathered data. The indices constructed for the four variables showed that the variables were constantly changing. Construction costs and rent were constantly changing, though in a consistent upward manner. Lending rates and yields were also constantly changing but in a very inconsistent manner. The study found that construction cost and rent are functions of year and the estimated trend equation can be used to project the desired value and that interest rate and yield are not functions of the year. Therefore, appraisers in modelling interest rate and yield in risk model should be more cautious on their application and analysis.

Risks in feasibility and viability appraisal process for property development and the investment market in Nigeria

“…Typically, these factors include higher than expected interest rates compared to the estimated rates on non-equity funds for property development investment and changes in demand for such developments. However, it appears that to no small extent that the reports prepared by professional estate surveyors and valuers do not sufficiently consider such factors in their predictions while preparing feasibility and viability appraisals Archibong and Ogunba (2018).…”

“…The concept feasibility and viability appraisal is also generally termed property investment appraisal. According to Archibong and Ogunba (2018), the concept was not widely recognised or adopted in Nigeria before the 1970s. As a result, the property market in the 1970s was so severely underserved that investments in such properties could not fail.…”

“…Furthermore, Archibong and Ogunba (2018) surveyed how estate surveyors and valuers in Nigeria rate, confer and downside risks in property development appraisal to safeguard their clients' interests from the chaos of volatility. The findings emphasised that risk and uncertainty are prevalent in real estate appraisal and are dynamic during project appraisal in property development.…”

“…The study is also restricted to residential housing appraisal because of the high demand for residential property due to the high influx of people into the capital city, Abuja. Since risk involves volatility Ogunba and Ajayi (2017), Archibong and Ogunba (2018) the political structure of Nigeria has been subjected to recollections of risk elements, failed projects and recession. These factors have cumulatively influenced all sectors of Nigeria's economy, including the housing development sector.…”