AN ASSESSMENT OF THE EFFECT OF INFRASTRUCTURAL FACILITIES ON RESIDENTIAL PROPERTY RENTAL VALUE IN GWAGWALADA
ABSTRACT
Infrastructural facilities are generally believed to enhance the rental values of residential properties. This study aims at assessing the effect of infrastructural facilities on residential property rental value in Gwagwalada. The
researcher adopted the use questionnaire to collect data from the
research population which consists of tenants, landlords, property
developers and real estate firms that resides in Nasarawa town. The use
of tables, percentages and descriptive statistical tools were used to
analyzed the data. The results of analysis indicates that the
availability of urban infrastructure positively affect the rental value
of residential property this is shown clearly in the rental values of
properties located in rural areas where there are no infrastructures and
those found in urban areas where infrastructures such as electricity,
portable water, medical centers etc are found. The study
recommended among others, that property developers and the government
should put in place those housing infrastructural facilities that
influence rental values of residential properties in order to maximize
returns from their property investment.
CHAPTER ONE
1.0 INTRODUCTION
1.1 Background of the Study
Residential properties have continued to
attract the investment interest of real estate developers. This is
because of the increasing demand for residential properties in the urban
centres (Olujimi and Bello, 2009); and because of the increase in rent
(value), which is usually attached to the property (Oduwaye, 2007).
Several factors exist that determine value of residential real
properties. According to Britton et al (1989), determinants of
individual property value include location, time, property interest,
state of repair, accommodation details and services/facilities. These
factors affect properties thereby causing either “appreciation” or
“depreciation‟ in its values. Adebayo (2006) affirmed that
infrastructures is one of the factors can cause property value to
appreciate and depreciation may occur in property values due to
infrastructural degradation.
Nubi (2002) describes infrastructure as
the aggregate of all facilities that allow a city to function
effectively. They include housing, electricity, pipeborne water,
drainage, waste disposal, roads and sewage among others. The importance
of infrastructural facilities in a residential property and indeed human
life cannot be overemphasized. According to Babarinde (1998), the
efficiency of any form of human activity system largely depends on the
provision of adequate infrastructural facilities. Studies have shown
that the level of availability of infrastructure in most developing
countries is drastically low. For instance, Iremiren (2001) observed
that a significant proportion up to 34% (in some cities) of the houses
had no access to electricity, water, descent and safe waste disposal
systems and unconnected by motor able roads.
Babawale (2004) and Odudu (2003) decry
about the deplorable conditions of electricity, water, roads, and
drainage systems in Nigeria urban areas. The lack of and deplorable
conditions of adequate infrastructural facilities have the tendencies of
hindering the attainment of physical and moral health; discourage
social stability, work efficiency, development of the individuals and
generally affecting the quality of life. This study therefore, seeks to
examine housing infrastructural facilities with a view to determining
the infrastructural facilities that greatly influence the rental value
of residential properties
1.2 Statement of the Problem
The level of deficiencies and the degree
of deterioration of infrastructure in Nigerian urban centres is becoming
more alarming and worrisome due to the inability of the public sector
to meet up its social responsibilities to the people. The problems of
deteriorated infrastructure are particularly pronounced in the old,
indigenous core areas of the cities while the non-availability of
infrastructure is peculiar to the outer spontaneous settlements that
accommodate the low-income population. This led to the prevalence of a
generally unwholesome and unhygienic environment in most Nigerian cities
that pose a greater danger to the health of the inhabitants. In
addition to its health implication, Olanrewaju (2000) has earlier
qualified areas in cities with deteriorated infrastructure as poor areas
that are characterized by spatial concentration of low-income
population, which are possible sources of urban crimes and violence. The
effects of infrastructural deterioration and their non-availability on
the quality of lives and residential property value can not be
undermined. Floyd and Allen (1998) have reiterated their importance in
the local development process. Thus, concluding that unavailability of
infrastructure facilities have undesirable effect of residential
property rental value. Therefore, it is the focus of this study to
assess the effect of infrastructural facilities on residential property
rental value in Gwagwalada.
1.3 Aim and Objectives
The aim of this study is to assess the effect of infrastructural facilities on residential property rental value in Gwagwalada.
The following specific objectives are pursued:
- To Identify the types of residential properties in Gwagwalada;
- To identify the types and conditions of infrastructural facilities provided in the residential properties;
- To assess the impact of infrastructural facilities on the rental values on the residential properties; and
- Analyse the relationship between infrastructural facilities and the rental value of residential properties.
1.4 Research Question
The following research questions shall guide the researcher towards achieving the set aim and objectives:
- What are the types of residential properties in the study area?
- What is the type and condition of infrastructural facilities provided in the residential properties in Gwagwalada?
- What are the impact of infrastructural facilities on the residential property rental values?
- What is the relationship between infrastructural facilities and residential property rental values?
1.5 Significance of the Study
This project is an attempt to assess the
effect of infrastructural facilities on residential property rental
value in Gwagwalada, the study discuss the types of residential property
in the study area, identifies the types and condition of available
infrastructural facilities available and tries to establish the
relationship between infrastructural facilities and residential property
rental value. The result of research will help developers, investors,
real estate managers and valuers and the government to know the
relevance of infrastructural facilities to residential properties and
its effect on rental value thus given them a better chance to an
informed decision.
The study will assist public authorities
in putting more efforts in infrastructural investment and as well take
full advantage of the income that can be generated from such investment.
This study will also serve as a reference
material for subsequent research related to the effect of
infrastructural facilities on residential property value where
researchers, students and scholars will tap into the wealth of knowledge
provided in this study.
1.6 Scope and Limitation of the Study
The research work is confined to the
study of the assessment of the effect of urban infrastructural
facilities on residential rental value in Gwagwalada. It deals with
rental value of residential properties such as single room, two bedroom
flats and three bedroom flats which are the common types of residential
properties found in the study area.
There are several limitation encountered
during the conduct of this research. These limitations include: non
availability of adequate data which played a major limitation to this
write up because of non-cooperative attitude of some respondents who
were not willing to give information and data needed to aid findings,
time was another major factor which affect the study as the researcher
do not have enough time to make detailed investigation on all the
aspects of the study. And the general unwillingness of some respondents
to fill the questionnaire provided for the research made it difficult to
gather data needed for this research study at the most appropriate
time.
1.7 Operational Definition of Terms
Residential Properties: Oxford
advanced learners dictionary defined residential properties as
properties suitable for living in, consisting of houses rather than
factories, or offices.
Property: Property is by
property dictionary as anything that is owned by a person or entity,
which be divided into “real property” and personal property.
Infrastructure: This is
seen as a wide range of economic and social facilities crucial to
creating an enabling environment for economic growth and enhances the
quality of life, Nubi (2002).
Value: Value is basically the worth of a thing which depend largely on the basis of assessment and unit of measurement.
Property Value: property
value according to Millington (1981) is the money obtainable from a
person willing and able to purchase property when it is offered for sale
by a willing seller, allowing for reasonable time for negotiation and
with the full knowledge of the nature and uses which the property is
capable of being put.
1.8 Historical Background Of The Study
Gwagwalada is one of the
six local government area councils of the Federal Capital Territory of
Nigeria, together with Abaji, Kuje, Bwari, and Kwali; and the Abuja
Municipal Area Council (AMAC). Gwagwalada is also the name of the main
town in the Local Government Area, which has an area of 1,043 km2 and a population of 157,770 at the 2006 census.
Before the creation of Federal Capital
Territory, Gwagwalada was under the Kwali District of the former Abuja
emirate now Suleja emirate. Gwagwalada Area Council was created on 15
October 1984. Its official population figure of 158,618 people at the
2006 census. The relocation of the seat of government from Lagos to
Abuja in 1992 and the recent demolition of illegal structures within the
Federal City Center brought a massive influx of people into the Area
Council being one of the fastest growing urban centers in the FCT. The
population of the Area Council has grown to over 1,000,000 people.
Gwagwalada Area council is one of the five Local Government Area
Councils of the Federal Capital Territory of Nigeria, together with
Abaji, Kuje, Bwari, and Kwali; the FCT also includes the City of Abuja.
Gwagwalada has an area of 1069.589 km2.
Gwagwalada Area Council is administered
by an Executive Chairman elected through adult suffrage. The Council is
composed of 10 elected councilors representing the ten wards of the
council, namely: Zuba, Ibwa, Dobi Kutunku, Tunga Maje, Gwako,
Paikon¬kore, Ikwa, Quarters & Central.
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