Factors Influencing Investment on Commercial Property Development

Factors Influencing Investment on Commercial Property Development

The following are factors influencing investment on commercial property development are:

i. Technological Factor
These are concerned with the availability of skill labour force within the metropolis and the country at large these have not constituted problem to the development of shopping complex because the existing ones are designed and excused by skilled indigenous contract and building materials are obtainable locally.

ii. Physical and Environmental Factor
These related to the topographic and the site configuration, its location accessibility and problem associated with safety, water supply and electricity.

iii. Financial Factor
This refers to the finance involve in investment either through capital or bank loan. Most commercial and development bank are willing to advance loan for investments in commercial properties such as shopping centers.

iv. Economic Factor
This influence investment in shopping center in term of occupation and the effect of general economic climate.

v. Legal Factor
This relate to town planning and building development. Town planning division any prospect investor will be permitted to undertake the construction of shopping.

a. Investment Market
The investment market is a market for purchase, sale and rising of finance for the creation of new investment, different investment have different investors. The participant in the investments market include lenders and borrowers who are private individual. Olayonwa (2000) same holder of surplus each will purchase same investors may which to turn their investments back into cash and conversely, some holding cash may wish to invest it.

The function of the investments market is to adequate these two opposing activities. If the supply of an investment at a particular time is greater than the demand for it at the prevailing price, then the price will fall and the yield will rise in consequence this will probably stimulate increase demand because of the improvement yield.

It might also have the effect of reducing the supply of investment available for purchase because the lower the price would determined existing owners of these investment from selling. This process would continue until supply and demand become equal.

At a time of economic uncertainty there may be a tendency to retain surplus capital than invest it. This may result in depress and enhance interest rate. The level of interest rate will also be influence by the minimum lending rate.

b. Land and Property as an Investment
In legal term “land” means the topsoil and all the strata below and the air space above it, a building or road or path are constructed upon land, they become practice to refers to land and building. The term real property is also used to signify “land and building”.

Real property as a medium for investment differs considerably in its quantities and characteristics compared with the other investment outlets previously mentioned.

It is naturally limited in supply and it would be extremely difficult and expenditure to create additional land to meet expanding requirement no two piece of land are exactly alike or the same in every respect. They will in size, topography, locality and condition. Real property will not be available in regular unit for investment as a stock and share. The size of the investment in the real property market may be such that, generally, it will exclude the small investors unless he wishes to invest in property, the prospective purchase must usually be considering terms thousands of thousands. Because this type of investments is on a large scale.

c. Change in Taste Demand
The rental value of a building may be reduce because the purpose of the building no longer satisfied it demand. An investor must attempt to anticipate whether or not the building will continue to be functional in its present form, and this will affect the yield he may expect from the investment.

Example of changes in the use of building in recent years are the decline in the use of local hall, the need for public houses to provide more comfortable accommodation and entertainment, in shopping trends. As the result of all this there will be need to take shopping center of the investments market. Ifediora (2009).