IMPACT OF FACILITIES ON RENTAL VALUE OF RESIDENTIAL PROPERTIES IN OSOGBO OSUN STATE

IMPACT OF FACILITIES ON RENTAL VALUE OF RESIDENTIAL PROPERTIES IN OSOGBO OSUN STATE

ABSTRACT

Facilities are generally believed to enhance the rental values of residential properties. This study aims at examining impact of facilities on rental value of residential properties in Osogbo Osun state. Specifically the study seek to identify the types of residential properties in Osogbo; to identify the types and conditions of infrastructural facilities provided in the residential properties; assess the impact of facilities on the rental values on the residential properties; and analyze the relationship between infrastructural facilities and the value of residential properties.  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 Osogbo. 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, 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 (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 centers 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 has undesirable effect of residential property rental value. Therefore, it is the focus of this study to examine the impact of facilities on rental value of residential properties in Osogbo.

1.3       Aim and Objectives

The aim of this study is to examine the impact of facilities on rental value of residential properties in Osogbo.

The following specific objectives are pursued:

1. To Identify the types of residential properties in Osogbo Osun State;
2. To identify the types and conditions of infrastructural facilities provided in the residential properties;
3. To assess the role of infrastructural facilities on the rental values on the residential properties; and
4. Analyze the relationship between infrastructural facilities and the value of residential properties.

1.4       Research Question

The following research questions shall guide the researcher towards achieving the set aim and objectives:

1. What are the types of residential properties in the study area?
2. What is the type and condition of infrastructural facilities provided in the residential properties in Osogbo?
3. What are the impacts of infrastructural facilities on the residential property values?
4. What is the relationship between infrastructural facilities and residential property values?

1.5       Significance of the Study

This project is an attempt to examine the impact of facilities on rental value of residential properties in Osogbo, 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 Limitations of the Study

The research work is confined to the study of the assessment of the impact of facilities on rental value of residential properties in Osogbo. 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 Definitions 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.

Facilities: 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 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.