SOLD BY: AN ASSESSMENT OF FACTORS AFFECTING RENT IN ENUGU
ABSTRACT
This project assess the factors affecting rent in Enugu, the study specifically seek to identify the types of residential properties in Enugu, ascertain the trends in rental value of residential properties, ascertain the various factors that influence rental values of residential properties and evaluate the effects of such factors on rental value of residential properties in the study area. The research method used was survey. The sampling techniques adopted for this study is the random sampling techniques, the techniques give every member of the population the opportunity to be selected without any form of preferential treatment. A total of one hundred (100) copies of questionnaires were administered, and out of these, 85 copies of the questionnaires were correctly filled and returned. The researcher make use of statistical tools such as tables, percentage and descriptive methods to presents and analyzed the data gathered from the field survey which was considered appropriate for the research. The findings of the study shows that the characteristics of the residential properties such as available facilities in the properties, urban infrastructure, locational factors among others affect the major factors affecting rental value of residential properties in the study area. Finally the study recommend that to sustain residential property market and ensure higher rental value in the study area, it is suggested that prospective property developers should take cognizance of locational, structural and neighbourhood factors that significantly affect property value in the study area as this would help the marketability and viability of the investment.
Key Words: Rental Value, Residential Properties
CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
Property is a multi-dimensional product and the number and nature of factors that influence its value are equally of different kinds. Property and land values tend to increase in areas with expanding transportation networks, and increase less rapidly in areas without such improvements. Rapid and continued rise in housing and land prices are expected in cities with transportation improvements and rapid economic and population growth (Goldberg, 2017).
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, 2017). Several factors exist that determine value of residential real properties. According to Britton (2019), 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 (2016) affirmed that infrastructures as one of the factors can cause property value to appreciate and depreciation may occur in property values due to infrastructural degradation. Nubi (2012) describes infrastructure as the aggregate of all facilities that allow a city to function effectively. They include housing, electricity, pipe borne 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 (2018), 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.
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 in residential property. Residential 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).
Modern business, industries, trades and general activities depend on transport and transport infrastructures, with movement of goods and services from place to place becoming vital and inseparable aspects of global and urban economic survival. Bello, M.O and Bello V.A (2007) stated that the factors affecting property values are generally classified into external and internal factors.
1.2 Statement of Problem
According to Egbenta (2012), housing is one of the basic needs of life together with food and clothing. When demand for it increases in an area, rental values in such areas are bound to increase just like every other economic need. Nasarawa have attained urban status and a very fertile ground for investors in residential real estate development with the establishment of Federal Polytechnic Nasarawa and its proximity to Abuja the Federal Capital Territory, the city have been facing tremendous influx of people which poses serious stress on the existing residential properties. These have cause an increase in the rental values of residential properties over the years. Demand had by far outstripped supply of residential accommodation units and this had continued to impact positively on rents of different types of residential properties. The market failures had pushed market rents of residential properties up to an alarming degree. Consequently, there have been perceived fears among users and operators of properties in Enugu that very soon rents of housing accommodation will rise above the affordability level of the people, this fear was founded on the fact that there was demand pressure on residential properties. It is on these bases that this research seeks to assess the factors affecting rent Enugu.
1.3 Aim and Objectives
The aim of this research is to assess the factors affecting rent in Enugu. To achieve this aim, the specific objectives shall be pursued:
- Identify the types of residential properties in Enugu
- To ascertain the trends in rental value of residential properties in Enugu
- To ascertain the various factors that influence rental values of residential properties in the study area
- To evaluate the effects of such factors on rental value of residential properties in the study area.
1.4 Research Questions
- What are the predominant types of residential properties in Enugu?
- What are the trends in rental value of residential properties in Enugu?
- What are the factors that influence rental value of residential properties in the study area?
- What are the effects of such factors on rental values of residential properties in the study area?
1.5 Significance of Research
This research work will tend to enlighten the prospective developers and investors in the study area in view of the various factors influence in rental values in residential property.
The research will be of great significant to the government especially the Enugu State Government in ascertaining the right tax and rates to be collected on residential properties founds within the area having known the various factors determining the rental values of such properties.
The research will also serve as a resource material to other researchers who are interested in making further research in this domain as the research contributes to the wealth of knowledge.
1.6 Scope and Limitation of the Study
The scope of the study shall be restricted to assessing the factors affecting rent in Enugu with particular reference to rental value of residential properties so as to bring the research work to a manageable size and to avoid complication.
Nevertheless, genuine efforts were made to ensure that a thorough work was carried out based on the observation and data obtained from different sources. Hence, all the data collected and presented on which all references and conclusion are made, were made as accurate as possible.
1.7 Definition of Term
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, 2013)
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.
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 2016).
1.8 Historical Background of the Study Area
Enugu state is noted for her cultural diversity, beautiful sceneries and undulating plateau. In Enugu state, Tourism is Coal, our investment and our charm from the unique forest dynasty of Ngwo Pine forest, Eziagu tourism complex, Iva valley coal mine, Awhum waterfall, Opi Lake Complex, Milken hill, Ani Ozalla Lake, silicon hill and other attractions need to be patronized. The State was created in 1991from the Old Anambra state. The name Enugu means (On top of the hill) it is known as the oldest urban area in Igbo land, with about 7,161 km2 (2,765 sq m) and is the 29th largest state in the country, it shares borders with Abia state and Imo state in the south, Ebonyi state to the East, Benue state to the Northeast, Kogi state to the Northwest and Anambra state to the West. The vegetation is predominantly of guinea savannah type. Rainfall average from 700mm south-west at the extreme northern part of the state to 1000mm towards the south and south-west.
Indeed Enugu state provides visitors from all the four corners of the globe a fascinating heaven for leisure and business activities. Visit Enugu state and be touched by one or more of these fascinating features of our tourist spots, art and craft, ancient historical relics and above all hospitality to tourists and love for peace.
As a tourist destination, the state is unique in that its tourist attractions are quite distinctive from tourist attractions found in other states of the federation.
Enugu was found in 1909, when Mr. Kikson, a British Mining Engineer, stumbled on a large coal reserves in the Udi ridge while looking for sliver. Lord Lugard, the then colonial Governor, took keen interest in the unexpected discovery and by 1914 the first shipment of coal was made to Port Harcourt. Attracted by the increasing mining activities, Iva valley, coal camp and Asata were established by foreign entrepreneurs and the indigenous laborers. Enugu acquired township status in 1917 and was called Enugwu-Ngwo, but because of the rapid expansion towards areas owned by other indigenous communities, the city was renamed in 1928 to Enugu. The name Enugu began around Nike village called Ogui. The name Nike in Igbo land means “with strength or power.’ During the transatlantic slave trade Nike people gain most of their lands and they used slaves for defense by placing slave camps at the edge of their territories so that it will be harder for the enemies to invade them. In 1690-1901 they formed an alliance which is known as Aro confederacy which was known as Igbo organization that controlled slave trading in the southern Area of Nigeria. The alliance was formed between Aro people of Abia state and Nike people of Enugu state.
In 1939 Enugu became the capital of the Eastern Provinces of Nigeria, during that time most of the colonial style buildings were constructed. The colonial charm is still witnessed in the old government buildings and mansions in the Government Reserved Area (G.R.A), a civil servants hosing district exclusively reserved for administrative staff. It became the administrative city of the eastern region when the country was divided in three areas in 1951. Enugu became for diversified in the 1960’s with the creation of the industrial estate of Emene located near the airport, steel pipes, asbestos, cement products, and oxygen and acetylene gases were manufactured. In 1963, with the creation of 12 states in Nigeria, it became the capital of the East central state, and the city had grow from the original population of 100 to 138,000 inhabitants. In 1967 the state served briefly as the provisional capital of the secessionist Republic of Biafra and later became the capital of Anambra state in 1967. Currently the city has 465,000 inhabitants and its city premises are spread over an area of 73km2
Geographically Enugu shares borders with Abia state and Imo state in the south, Ebonyi state to the East, Benue state to the Northeast, Kogi state to the Northwest and Anambra state to the West. The capital city is Three hours drive away from Port-Harcourt, River state where coal shipments exited in Nigeria. Coal city state is also located about Two hours drive from Onitsha one of the biggest commercial nave center in west Africa and two hours’ drive from Aba another big commercial city in Nigeria. The State Government and the Local Government are the two levels of government in Enugu State and in all other states of Nigeria. Sullivan Chime elected in 2007 handed over to his successor, Rt. Hon. Lawrence Ifeanyi Ugwuanyi on Friday, 29th May 2015.
There are 17 Local Government Areas in the State headed by Local Government Chairmen, Councilors also exist for wards and there are still Monarchs in each community but their power is based on influence and tradition. The Local government areas are Aninri, Awgu, Enugu East, Enugu North, Enugu South, Ezeagu, Igbo Etiti, Igbo Eze North, Igbo Eze South, Isi Uzo, Nkanu East, Nkanu West, Nsukka, Oji River, Udenu, Udi, Uzo Uwani.
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