Predictive Modeling Of Office Rent In Selected Districts Of Abuja, Nigeria

Abstract

This study examined the drivers of office rents in selected districts of Abuja, Nigeria. These districts are Asokoro, Maitama and Utako. Primary and secondary data were utilized for the study. Primary data include office rental levels and office space data in the study areas for the period 2001-2012, and were obtained through structured questionnaires administered to real estate surveying and valuation firms which are active in the commercial property markets in the study areas. Secondary data for the study were obtained from the National Bureau of Statistics (NBS) and the Central Bank of Nigeria (CBN), and consist mainly of macroeconomic variables in Nigeria during the study period. Using single-equation regression analysis, the developed office rent model accounted for 76%, 72% and 75% of the variation in office property rents in the commercial property market of the Asokoro, Maitama and Utako districts respectively. The study also revealed that real GDP growth and vacancy rate are the major determinants of rental growth in the office property market in the districts of Asokoro and Maitama, while real GDP growth is the major driver of office rents in the Utako district. The socioeconomic implication of the findings is that the government can generate substantial revenue from property rate through sustained commercial property rental performance in the study areas. Such revenue can be deployed to provide and maintain public infrastructure, thereby improving the wellbeing of the citizenry.

Housing construction costs and house rents fluctuations in an emerging property market: the case of Osogbo, Nigeria

“…Ojetunde also found that interest rate has a significant negative correlation with housing rents while an insignificant negative correlation was found between inflation rate and housing rents. In addition to this, Udoekanem et al (2015) revealed that although inflation rate granger causes rental movements, the authors, however, found evidence that inflation rate does not have a significant influence on rental values of office property in Abuja, Nigeria. This lack of consensus in the literature regarding the correlation between the identified macroeconomic variables and the real property market could be attributed to factors such as differences in property markets/geographical locations, varying timeframes and fluctuating economic conditions.…”

Valuation accuracy in the residential property markets in Minna and Abuja, Nigeria

“…In addition, clients influence valuation accuracy in so many ways amongst which are "shopping for valuer" that will apportion the desired value to the appraisal, threatening to withhold payment of fees and closing the door on future patronage (Amidu and Aluko, 2007). Several related studies (Effiong and Mendie, 2019;Ayedun et al, 2010;Udoekanem, 2018) have established the existence of client pressure in the Nigerian valuation industry and how it corrodes the objectivity of valuers as they upwardly adjust values to suit their clients. Besides, a critical review of the studies carried out locally showed that they focussed more on the property markets in Southern Nigeria (Ogunba and Ajayi, 1998;Ogunba, 2004;Ajibola, 2010;Babawale and Ajayi, 2011;Oduyemi et al, 2016;Abidoye and Chan, 2018) in terms of geographical scope and none tested the ability of valuation to predict transaction price in the residential property market apart from Ogunba (2004) and Abidoye and Chan (2018)…”

“…Valuation accuracy is measured through the margin of error principle. The margin of error is the bracket of acceptable percentage error (PE) in valuations (Crosby, 2000;Udoekanem, 2018;Dou et al, 2021). Quantitatively, PE in valuation is measured as the ratio of the absolute difference between the actual price of the property realised at the market and valuation to the actual price, expressed as a percentage.…”

Commercial Real Estate Rental Variation in Ilorin, Nigeria

“…Assessing rental patterns of commercial real estate helps in guiding investors to make better investment decisions. It can be used to predict the dynamics of the real estate market (Born & Pyhrr, 1994;Tonelli et al, 2004;Udoekanem et al, 2015b). The parameters for measuring rental performance are most often seen in the discounted cash flow models for property appraisals (Boon & Higgins, 2007).…”

“…The study revealed a progressive upward movement in rental values of office premises which by implication indicated that office rent in Minna performed strongly as a hedge against inflation. In another research, Udoekanem et al (2015b) attempted the modelling of office rents for the Asokoro, Maitama, and Utako districts of Abuja. The study revealed that the real GDP had a significant influence and remained the major driver of all commercial property rents throughout the study areas.…”