ANALYSIS OF FACTORS AFFECTING RESIDENTIAL PROPERTY DEVELOPMENT PATTERNS IN OSOGBO, OSUN STATE NIGERIA
ABSTRACT
This study set to analyze the factors affecting residential property development pattern and in Osogbo, Osun State – Nigeria, to achieve this aim the researcher evaluate the patterns of property development, identify the various factors affecting property development pattern and rental value of properties and evaluate the effects of such factors on property investment in Osogbo metropolis. The research adopted survey designs which allow the gathering of relevant information using questionnaire, observations, and oral interviews of stakeholders. The data gathered were presented and analyzed using the descriptive statistics. The research reveals that property location, and infrastructural facilities have a very significant impact on residential property development patterns and rental value in the study area. Finally, it is recommended that the government harness development potential within the study area to create enabling environment for property development and urban infrastructures that will enhance property value in Osogbo, Osun State – Nigeria.
CHAPTER ONE
INTRODUCTION
1.0 BACKGROUND OF THE STUDY
Property, in the abstract, is what belongs to or with something, whether as an attribute or as a component of said thing. In the context of this article, it is one or more components (rather than attributes), whether physical or incorporeal, of a person’s estate; or so belonging to, as in being owned by; a person or jointly by group of people or a legal entity like a corporation or even a society. Depending on the nature of the property, an owner of property has the right to consume, alter, share, redefine, rent, mortgage, pawn, sell, exchange, transfer, give away or destroy it, or to exclude others from doing these things, as well as to perhaps abandon it; whereas regardless of the nature of the property, the owner thereof has the right to properly use it (as a durable, mean or factor, or whatever), or at the very least exclusively keep it (Wikipedia, 2018).
Residential property refers to building that is developed for people to live or undeveloped land that is designated for residential use. Residential properties could be a consumption goods, or investment goods (Sratton,2008).As a consumption goods, it is acquired for owners occupation while as investment goods it is acquired for the purpose of deriving optimum return from outright sale or letting of the property. If this is the case, the price or rent of the residential property becomes very important to the seller and buyer or landlord and the tenant. Hence investment in this type of property is regarded as a considerable source of wealth for many investors.
Property development comprises a significant component of total Australian economic output. The property development process involves the continual combination of significant factors of production (land, labour, capital and enterprise). In addition, property development in Australia has been characterized by some significant cyclical influences as the process involves significant risk. It is in the interests of capital markets, market participants and the public sector that property development processes are better understood so as to ensure efficient allocation of physical resources, human resources and capital(Cadman, 1995).
The pattern of property development within the context of metropolitan growth and development has been the subject of an extensive literature. Among the streams of literature have been monocentric and polycentric models, rent gradients and population density, and spatial mismatch and jobs/housing balance. Less examined have been the factors that determine the specific location of residential development from among the number of potentially suitable sites available. Miles (2002) of opined that site selection suggest that factors that are important in locating a residential development include: physical suitability for development, slopes, soils, hydrology, land availability, legal restrictions, government regulations (zoning and other land use controls), existing land use patterns and location of other property development, access, including proximity to interstate highways, distance to employment sources, distance to shopping, availability of amenities (water, restaurants and shopping, golf, parks), neighborhood factors such as age of surrounding housing stock, schools, crime etc (McMillan, 2000).
The price or rent derivable from properties varies as different property command different rent and price (Oni, 2007). Rent and price are yardsticks for determining the value of a property. Since property with high value command high rent or price and properties with low value command lowrent or price vice versa. The value of residential properties are influenced by several factors among which are physical features of a building such as numbers of room, facilities available, size, age, location factors for instance; proximity to work place, market, school, hospital etc, accessibility to various amenities and services, population density of the location of the property and availability of property title (Oni, 2007).Therefore, any investigation in to the nature and behavior of property price must recognize that property as a commodity is not a single goods but a complex bundle of services or potential services which operate in many dimension. (Oyebanji,2003). Nigeria has a large real estate market that has not attain its climax due to limited circulation of information on properties transaction as it relates to properties feature, their actual value and impact on market value, organizations available properties and professional services available in various locations nationwide. These has made it necessary that as real estate developers market their properties they must recognize that in order to achieve success, reliable information of properties market must be documented and made available to property merchant.
The value of access is capitalized into the land value and access is measured through market participants’ willingness to pay. Essentially, this view suggests that accessibility measures may be inferred from land prices. The relationship among accessibility, property values and land use patterns has been the pre-occupation of earliest theorists with indication that travel costs were traded off against property rents and population densities from Central Business District (CBD) to suburbs of a mono-centric city (Oni, 2009).
Quality of the environment is also another factor that affects the rental values of property. Property value does not only depend on the physical characteristics of a building but also the environment that surrounds the building. Developments of various transportation modes have become pivotal to physical and economic developments. Access to major roads provides relative advantages to residential users (Rosen, 2014).
The capital intensive nature of property development has resulted huge gap between demand and supply for properties especially residential properties due to the ever increasing population in many major cities in Nigeria of which Abuja is not an exception in view of this development. This study is carried out to analysis of the factors affecting residential property development pattern in Osogbo in order to provide guide to prospective real estate developers and tenants on residential property transaction.
1.1 STATEMENT OF PROBLEM
The capital expenditure in housing project, high property demand due to ever increasing population and limited supply of properties has made properties developers to source for funds from different financial institutions to engage in the provision of residential houses to meet the high demand. Due to the high demand and good returns on property investment, more investors are showing interest in properties but with little or no knowledge of the factors that determine the property development pattern and rental value and due to this, they have encountered problem in maximizing their returns. This has made it necessary to assist the property developers and landlords with information on factors that affect property development pattern and rental value to enable them make informed decision on property development project
1.3 AIM AND OBJECTIVES
The aim of the research work is analyse the factors affecting residential property development pattern in Osogbo, Osun State – Nigeria.
To achieve this aim, the listed objectives shall be pursued:
- To evaluate the patterns of property development in the study area
- To identify the various factors affectingproperty development pattern and rental value of properties in the study area
- To evaluate the effects of such factors on property investment in the study area.
1.4 RESEARCH QUESTIONS
- What are the patterns of property development in Osogbo?
- What are the various factors affecting property development pattern andrental value of properties in the study area?
- What are the effects of such factors on rental value of real estateinvestment in the study area?
1.5 SIGNIFICANCE OF THE STUDY
This study will contribute to the body of knowledge that is available in public document, literatures, book, magazines and journals. Also it will serve as a reference material for students, scholars and other researchers. In addition, it will help individuals, professionals, investors, communities, change agents, and the society at large on what to look out for when venturing in to property market. Also, this study will help researchers, scholars, and investors to identify various property development pattern and residential properties characteristic that have relatively strong impact on their rental values and to an extent influence the sales or purchase decisions of sellers and buyers in Nigeria.
1.6 SCOPE AND LIMITATION OF THE STUDY
The scope of the study is limited to the analysis of the factors affecting residential property development pattern in Osogbo. The research is also limited toboth commercial and residential properties within the town.
Limitations
The researcher faced various problems when carrying out this field study. Some of these challenges included:
- Some respondents were unwilling to fill the questionnaires since they were suspicious about the study. Many perceived it as sharing very vital information which they were not ready to furnish the researcher with.
- Delays were experienced from the respondents who took very long to complete the questionnaires and constant postponement of the picking date proved to be very frustrating to the researcher.
- At times some of the respondents did not fill in the questionnaires adequately and ignored certain sections that required the giving of opinions which made it difficult for the researcher to make adequate conclusions.
1.7 DEFINITION OF TERM
Property development: Property development, is a business process, encompassing activities that range from the renovation and re-lease of existing buildings to the purchase of raw land and the sale of developed land or parcels to others (Wikipedia, 2017).
Property: This is the embodiment of tangible ownership right or bundles of right in real estate. It could also be described as a concept of right which can be held separately (Babatunde, 2003).
Rental Value: This is the worth or value of property in an open market. It is also the value arising out of the lease or renting out of a property on a periodic basis usually yearly.
Residential Property: it is a building that is used or suitable for dwelling purpose. They are dwelling house such as bungalows, duplex, detached houses, semi-detached houses, etc. (LBTT 4010)
Value: This is the monetary worth of a thing. It is expressed as the value of a goods or services measured by the amount of other goods and services for which it will exchange. It is a determination or quality of an object, which involves any sort of appreciation or interests. Such appreciation involves feeling and ultimate desire or tendencies. Value is basically the worth of a thing (Olayonwa 2006).
Pattern:according to Collins English Dictionary defined pattern as the repeated or regular way in which something happens or is done or an arrangement of lines or shapes, especially a design in which the same shape is repeated at regular intervals over a surface.
1.8 THE HISTORICAL BACKGROUND OF THE STUDY AREA
The early history of Osogbo is essentially the legendary account of the spirit-world; it is the history of the early people whom we call the spirits and fairies. This is in line with Yoruba traditions, which use mythical stories to explain the origins of the ruling families of an early Yoruba state.
Osogbo according to Yoruba oral history had been founded as early as Oduduwa period. Oso-igbo, the goddess of Osun River, was the Queen and original founder of Osogbo. She was credited with many important achievements, which helped to establish the settlement.
Osogbo the capital of Osun lies on coordinates 7°46′ North 4°34′East with an area of 47kmsq. According to the 2006 Population and Housing Commission Census, the city has a population of 156,694 people. Osogbo shares boundary with Ikirun, Ilesa, Ede, Egbedore and Iragbiji and is easily accessible from any part of the state because of it’s central nature. It is about 48km from Ife, 32km from Ilesa, 46km from Iwo, 48km from Ikire and 46km from Ila-Orangun.
Osogbo is a commercial and industrial centre. This started in 1907, when the British Cotton Growing Association sited an industry for growing and ginning of cotton. The Nigerian Tobacco Company (NTC) built its first factory in Osogbo. In this same year, a major turning point for the city which helped in its industrial and commercial development occurred. The railway tracks were constructed linking it to other parts of Northern Nigeria. This attracted people from far and near.
The Ataoja of Osogbo is the traditional title of the King and he is the political and spiritual heads of Obas and Chiefs in Osogbo and Olorunda Local Government Areas.
Osogbo is famous for the annual Osun Osogbo Festival which attracts tourists from different part of the world.