THE IMPACT OF THE PROLIFERATION OF FRONTAGE SHOPS ON PROPERTY DEVELOPMENT IN TAMMAH NASARAWA

THE IMPACT OF THE PROLIFERATION OF FRONTAGE SHOPS ON PROPERTY DEVELOPMENT IN TAMMAH NASARAWA

CHAPTER ONE

INTRODUCTION

1.1       Background Of The Study

Properties either commercial or residential property in form of housing is an essential and fundamental component of the overall land use activities in both rural and urban areas. It has been universally acknowledged as one of the basic needs for man’s survival as it goes a long way to determine not only the social standard of a man but also that of a nation and a community (Ezirim, 2005).

Generally, the supply and the demand for properties take place in a housing market. According to Bourne (1981), the housing market is a set of institutions and procedures for bringing together housing supply and demand, that is, buyers and sellers, renters and landlords, builders and consumers, for the purpose of exchanging houses and housing services as resources. It examined in detail the present and future trends in the supply of and demand for housing within a given area. Basically, housing market analysis identifies supply and demand factors and needs and establishes procedures and processes for meeting the needs. Unlike other types of market, the housing market had a number of distinctive characteristics. It deals with the exchange of rights and property and is, for all intents and purposes, immobile. The housing market had no specific market place where exchanges between buyers and sellers were done.

The process of urbanization had taken a new turn over the last few decades and population explosion had placed urban areas in a situation where the available facilities including housing and commercial properties in form of shops were below margin in terms of meeting its equivalent demand. Considering the environmental nature of frontage shops which depicts deteriorating housing facilities, environmental degradation, poor sanitary environment, bad roads and access, overcrowding, high crime rate, delinquents, etc. had tremendous negative influence on the health, safety and economic and social welfare of residents of any urban centre or community.

In recent times studies have shown that inadequate commercial properties such as shops and offices in urban areas of developing countries have lead to the development of frontage shops (Rojas, 2000). Ooi and Phua (2007) have observed that most cities in developing world have been overwhelmed with the development of frontage and corner shops in an attempt to meet the gap for commercial properties development, thereby constituting hindrance to property development.

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).

Property or real estate development is the process of developing buildings or land into a higher use value. It is a multi-faceted business which encompasses any of the following; buying land and building property on it, renovating, extending or improving property and or converting property from one use type to another. The proliferation of frontage shops has significantly affected the quality of urban environment as it negates the effectiveness of property development and development control in Nigeria urban centers (    ). Property development control forms an integral part of the planning practice. It is the basic means by which the state intervenes to regulate the use and development of land in order to implement local and national planning policies. Most significantly, it is the part of the planning process in which members of the public come into contact with local planning authorities.

Originally, the rationale for the introduction of state control on private development was to achieve objectives of safety and better health in order to create an improved environment for the benefit of the community. However, as the role of the state expanded and the extent of its intervention increased the definition of the ‘environment’ subject to planning control has changed. From being wholly concerned with the physical form and content of development it now embraces the social and economic consequences of development. As a result, development control has been used to implement planning strategies for different purposes; for example to minimize the negative effect of urban growth, to check the menace of market forces and ensure social equity, as well as to control property development in the urban centers as to ensure compliance with development standard. (Litchfield & Darin Drabkin, 1980). It is against this background that this study seeks to examine the impact of the proliferation of frontage shops on property development in Tammah Nasarawa.

1.2       Statement of the Problem

Like every other developing country, the problems associated with frontage shops, corner shops and property development in general had been a predominant issue in urban centres. These problems were seen around both residential settlements and other uses. In Nasarawa town, Tammah in particularly, every most residential property or shops along major streets and roads are characterized with frontage shop which pose serious problems to the environment and property development in particular. These problems observed include obstruction to drainage system as most frontage shops are built across drainage systems, littering of wastes, distortion to the atheistic beauty of the town, overcrowding, conversion of residential building to commercial without due consideration to development standard among others. Frontage shops are mostly constructed without the approval of development control authority as owners of such properties did not have the right of either develop or occupying such properties. Frontage shops or structures were mostly erected arbitrary and construction is carried out with weak and short-lived materials which were vulnerable to potential environmental consequences. Buildings were not well planned or designed, no pre-concerned layouts and complete absence of development control. For this study, the problems mentioned above would be the focus of this study as it would examine the impact of the proliferation of frontage shops on property development in Tammah Nasarawa.

1.3       Aim and Objectives of the Study

The aim of this study is to examine the proliferation of frontage shops on property development in Tammah Nasarawa.

The specific objectives of the study include:

• Examine the types of frontage shops
• To examine the rules and regulation on development control in Nasarawa town
• To examine the development control authority
• To examine how the establishment or sitting of frontage shops abide to rules and regulations of development control
• To examine the challenges of the enforcement of development control in Nasarawa town.

1.4       Research Questions

• What are the types of frontage shops?
• What are the rules and regulation on development control in Nasarawa town?
• What the concept of development control authority
• Does the establishment or sitting of frontage shops abide by the rules and regulations of development control?
• What are the challenges of the enforcement of development control in Nasarawa town?

1.5       Significance of the study

The role of property development and development control in management of urban areas cannot be underestimated. The crucial relevance of property development makes studies about it important to national development. This study examined the impact of the proliferation of frontage shops on property development in Tammah Nasarawa.

The study is particularly important as contributes to existing works on
property development and the numerous factors that affects it, particularly the uncontrolled numbers of frontage or corner shops in Nigeria urban centers. This will contribute to knowledge by discovering new challenges stakeholders faces in controlling and housing development in urban centers in growing cities and also serves as a reference material for future research.

The findings of this study will help contribute to good management practice in the public
institutions charged with the responsibility of controlling property developments in the
country. This is because the study attempts to explore the problems associated with
proliferation of frontage shops and how it affects property development and recommends actions to be taken for its effectiveness.

Furthermore, the findings will create awareness of stakeholders on the current state of
proliferation of frontage shops and their effect on the urban environment and people. This will ensure adequate measures are put in place to prevent further developments of the
situations where buildings in urban areas uncontrolled. The implementation of findings of
this research will also lead to improvement in urban housing development and
management as well as related issues in Nigeria as a whole.

The study will extend literature and broaden the frontiers of knowledge in property development and development control and serve as input into related works in future. The findings could contribute to tackling issues for consideration in the study district as well as national policies on ensuring effective developments in the urban areas and beyond.

1.6       Scope and Limitations of the Study 

This project mainly concern on the examination of the impact of proliferation of frontage shops on property development in Tammah Nasarawa. The study will only be limited to properties with frontage shops which are not originally part of the building plan, which includes Kiosk, makeshift shops, etc.   

In the course of carrying out this study several problems were encountered among which are:

Financial constraint– Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint– The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

Uncooperative attitude of Respondents: Some respondents were very reluctant in responding to the research questions which tried to affect the research but the researcher make concerted effort to convinced them. 

1.8     DEFINITION & OPERATIONAL OF TERMS

• 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).
• Development:  used here means an event constituting a new stage in a changing situation i.e. process development or being developed.
• Control:  implies the power to influence or checking direct result of a survey or experiment of an intelligence of organization. 
• Impact: these means to have a strong effect on something either positive or negative.

THE IMPACT OF PRIVATE DEVELOPERS ON FINANCING RESIDENTIAL PROPERTY DEVELOPMENT

SOLD BY: Enems Project| ATTRIBUTES: Title, Abstract, Chapter 1-5 and Appendices|FORMAT: Microsoft Word| PRICE: N2000| BUY NOW |DELIVERY TIME: Within 24hrs

THE IMPACT OF PRIVATE DEVELOPERS ON FINANCING RESIDENTIAL PROPERTY DEVELOPMENT

CHAPTER ONE

1. INTRODUCTION

1.1       BACKGROUND OF THE STUDY

Private sector investment in residential real estate development in Nigeria has been one of the responses to the limited success of governments with provision of public housing as Nigeria government has consistently not been able to satisfy the demand for housing, as almost 90% of the nation’s housing stock is provided by the formal and informal private sector (FGN, 2002; UN-HABITAT, 2006; Olatubara, 2007).

The private developers play significant role in financing residential property development and housing delivering at large.  Housing finance by its very nature is a capital intensive venture which if it is to be financed through personal financial resources will require slow and tedious accumulation of savings. However, since housing provides benefits over many years, long-term credit financing is a more logical option as it will spread the repayment burden. But this requires the availability of long-term funding, and for which must be institutional capacity, structure and mechanism that will allow a convenient and effective linkage between the savers/investors and the consumers of such funds.

The sourcing of funds for investment in real estate development poses a great deal of problem for the developer. This is largely due to economic instability and stringent measures imposed by most financial institutions. This is compounded by the fact that the interest rate structure has had an unfavourable impact on funding the development of real estate especially residential property. Since the financing of real estate development is a long term project, it has necessitated the high interest rate that is being charged on the funds provided for such development purposes. Hines (1995) revealed that six major real estate financing methods are used across the world namely; Joint Venture, Equity and Debt Financing, Sale-lease Back Financing, Advance Payment of key money and Sale of Securities and private developers who source for fund from their personal savings and other possible means for financing residential property development..

In Nigeria, housing is typically financed through a number of institutional sources: Budgetary appropriations, Commercial/Merchant Banks, Insurance Companies, State Housing Corporations and the Federal Mortgage Bank of Nigeria (FMBN): and now the newly established Mortgage Institutions all these constitute the formal institutions. Informal institutions such as thrift and credit societies, and money lenders who have contributed and are still contributing substantially to the finance residential property development also persists.

Traditionally, real estate development was based on equity funds. Equity funds wholly generated and owned by one and to which there is no attachment. The chief source of equity funds is savings and these savings arise out of that part of income of individual or corporate organization. Equity funds sources could be private or public.

Private developer equity may be drawn from individuals or corporate savings, that is, retained earnings, assets stripping, for cash or revenue reserves of companies over a period of time and accumulated savings of individual from employment and/or profits from business enterprises. Other sources of private developers equity funds apart from savings include funds from family sources, friends, Isusu system and thrift system.

Availability of decent and affordable housing has been inadequate in virtually all places and almost throughout history. This is more pronounced in developing countries where rapid rate of population growth and urbanization is unmatched by corresponding and commensurate change in social, economic and technological development. (Mabogunje, 1978). Thus, this phenomenal rise in population, spontaneous increase in the number and size of most Nigerian cities have in the past few decades led to acute shortage of decent and affordable dwelling units. The outcomes of this developmental process are diverse urban problems ranging from overcrowding, deplorable environment, poor living conditions, inadequate and poor infrastructural services, homelessness and other related problems (Federal Government of Nigeria, 2004; Olotuah and Ajenifujah, 2009; Jiboye, 2009).

In many countries the private sector plays an important role in financing residential property development. It constructs housing either for sale or rent for different income groups. The private sector should participate in the construction of housing for all categories of the population either for sale or rent, manufacturing and supply of building materials in the housing construction sector, infrastructure development for human settlements and encourage members of communities to improve their living environment through community participation in projects.

In Nigeria a number of efforts have been mustered to solve the housing problem; from the most discernable and debut of the Lagos Executive Development Board (LEDB) in 1928 till now, a satisfactory level have not been achieved. The achievement from the changing finance mechanisms, material and construction technology development, delivery mechanism etc over the years is minimal and therefore calls for deeper and wider thought towards means that is all-embracing, meets other societal needs yet accelerating the enormous task of housing the nation’s teeming population (Bayode, 2008).

Residential property development is an issue that only touches on the life of an individual, but also has the potential to contribute to national development (Agbola, 1998). In Nigeria, housing is a space within which a generation of families expresses its existence and preserves the history and identities of lineage. Families discover themselves according to their lifestyle and dictates of the cultural values of the society to which they belong. The family residential housing therefore is a symbol of social identity and community recognition.

The successful completion of any kind of development largely depends on the availability and affordability of the essential factors requisite for such property development (land, labour, building materials and finance). Finance being the most significant determines the availability and quality of other factors, as it is required to acquire land, reward labour and buy building materials. Thus, this study seeks to examine the availability of finance for the purpose of residential property development in Nasarawa town, having due regards to its affordability. In view of the above therefore, efforts shall be made to assess the impact of impact of private developers on financing residential property development in Nigeria.

1.2       statement of the problem

Over the years, the government had been the major player in the area of housing delivery in Nigeria, by providing direct finance for previous housing schemes. This was embedded in the housing policy of past administrations but today, the dwindling nature of revenue accruing to the government, coupled with gross mismanagement and misappropriation of public funds and revenue has prohibited the ability of the government to continue to play her role as before (Nubi, 2000). The problem of financing residential property development has become an everyday discussion in all quarters of the public and private services of the developing countries of Africa. It has become increasingly glaring that most of the urban population live in dehumanizing housing environment while those that have access to average housing do so at abnormal cost. Furthermore, private developers as a compassionate housing providers performance need to be compare whether they are performing to the much expectation of residents in their need of housing supply. It is on this premise that the research seeks to evaluate the impact of private developers on financing residential property development.

1.3       Aim and Objectives of the Study

The aim of the study is to assess the impact of private developers on financing residential property development in Nigeria.

Objectives:

The objectives are:

1. To assess the various sources of finance available for residential property development.
2. To assess how private estate developers contribute to financing of residential property development
3. To examine the factors militating against the availability of funds for residential property development.
4. To seek ways of enhancing the present level of housing financing for residential property development

1.4       Research questions

1. What are the various sources of finance available for residential property development?
2. To what extent do private developers contribute to financing of residential property development?
3. Examine the factors militating against the availability of funds for residential property development?
4. What are the possible ways of enhancing the present level of housing financing for residential property development?

1.5       Significance of the Study

A study of this nature will be beneficial to a wide range of stakeholders in Nigeria. Recommendations made in this study will enable the government take a serious look at the current Housing policy in Nigerian, its effectiveness, alternative strategy and alternative sources and the need for re-engineering.

Also, corporate bodies and developers can use the information derived herein to further their work on source of finance for residential property development. Furthermore, this study is expected to give rise to further studies which will enhance knowledge in areas of the sources of finance for residential property development.

1.6       Scope and Limitation of the Study

In terms of scope, the study will evaluate the impact of private developers on financing residential property development with particular reference to CITEC Properties Limited Abuja. Due to limited time and resources the study not will cover the contribution of other private estate developers in the study area. The study will examine in details the dominant issues of private estate development as an option for providing finance for residential property development in Abuja.

Limitation

In the course of carrying out this research work, several challenges were encountered. Some of these challenges are:

1. Administering and gathering of questionnaires in real estate development firms was not an easy feat.
   1. The entire project was very capital intensive, gathering information on sources of project financing.
   1. Organizations are not ready and willing to review the source or sources of their project financing.

1.7       Operational Definition of Terms

Private Developers: Private developers are property developers within the private sector. They acquire buildings or land in order to construct or refurbish building projects on the site. Private developers aim to generate a profit, as opposed to the government which aims to provide buildings for social and welfare reason.

Finance: According toInvestopadia online dictionary Finance is the science that describes the management, creation and study of money, banking, credit, investments, assets and liabilities.

Estate: Udechukwu (2006) defined estate as “A legal entity denoting the character and quality of right that an individual or individuals possessed on a property.

Housing Estate: In the word of Essien G.A (2012) in his Lecture Note “An Approach to Property Development II (Vol. 3)”. “Is an area of land on which many houses are built either by private enterprise or by a public authority”.

Development: Is the process of generating latent values in land or creating benefits there from by incurring on it costs in the form of labour, capital or management skill (Umeh, 1983).

Residential Properties: Oxford advanced learners dictionary defined residential properties as properties suitable for living in, consisting of houses rather than factories, or offices.

1.8       Historical Background Of The Study Area

CITEC Property Limited Abuja Incorporated as a limited liability company in the year 2001, Citec Properties Limited Abuja began work at the Mbora district of Abuja in 2001 having secured the understanding and approval of the Federal Government to deliver houses for low income earners at its Mount Pleasant Estate on about 230 hectares of land provided by the Federal Government. Today, the estate boasts of the best infrastructure by any estate developer in the FCT.

The mission of CITEC Properties Limited is to provide top quality housing for Nigerians in life enhancing environments using experienced and qualified personnel working with the best technology available.

The core values of CITEC Properties Limited includes

• Professionalism
• Integrity
• Excellence
• Team Work
• Innovation

Mount Pleasant Estate where Citec targets about 3000 housing units features underground central sewage system, tarred internal roads with pedestrian walkways, recreation areas, school, shopping mall, worship centres and other modern facilities that make it unnecessary for residents to look outside the estate for further services.

With Mount Pleasant Estate, Citec has redefined standards and offered The Federal Capital Territory residents a wide range of top quality houses with exquisite finishing in a homely environment. Before embarking on the Mount Pleasant Estate project, Citec, in partnership with the Federal Housing Authority had built over 300 housing units of various types at its Citec Villas in Gwarimpa II Estate which has become the reference point in the Federal Capital.

CITEC Nigeria Limited has mandate under the Partnership with the Federal Housing Authority to complete 308 housing units of different house types. The partnership agreement was signed in the month of February, 2001 and mobilization to site began in the month of June 2001. Among the conditions agreed upon was a 12-month completion period. Field surveys show that only 65% of total housing units completed were within 2001 to 2004 — a period of four years. And the remaining, 35% completed between 2004 and 2006, another additional two (2) years.

The project was financed by commercial banks with very high interest rate of 32% between 2001 and 2004 which later rose to 36% in 2005. The 308 units were however completed in 2006, with project duration of six (6) years instead of 12 months as planned. However based on the detailed partnership agreement signed by the two partners on a 60:40 percent profit sharing between CITEC and FHA respectively, the expected operational profit per unit of total housing units are projected based on the assumptions that the housing units will be completed in good time and sold. There are four housing categories in Gwarimpa II partnership scheme. All the house types do not reflect the status of low and middle-income earners, but strictly for high income earners.

SOLD BY: Enems Project| ATTRIBUTES: Title, Abstract, Chapter 1-5 and Appendices|FORMAT: Microsoft Word| PRICE: N2000| BUY NOW |DELIVERY TIME: Within 24hrs

Real Estate Marketing

 Real Estate Marketing

The real estate brokerage business is a strong traditional service agency that conveys market information for facilitating trading of the product (namely, real estate developments) within a highly inefficient market and mechanism (Li and Wang, 2006). Various scholars have examined the subject of real estate marketing (agency) from different perspectives. Pheng and Hoe (1994) examined the important attributes for real estate marketing. The study which was questionnaire-based identified twenty two (22) attributes. It was found in the study that ability to provide good service, good track record, dedication and total commitment, ability to achieve defined results and professionalism in dealings are the top most driving attributes of the agency firms for real estate consultancy. Qualified and experience team, big client base, ability to achieve desired results, dedication and total commitment are rated high as the attributes that influence the developers’ choice of appointing an agent. The study further concluded that consistent with the marketing mix concept for the marketing of services, the developer rates ‘people factor’ as a very important attribute which real estate agency firms should possess. The “people factor” includes the marketing team’s dedication and total commitment, their ability to achieve desired results, their experience and qualifications as well as their professionalism in handling deals.

Jud and Roulac (2001) in their study revealed the features of unethical practices in agency in the forms of multiple listing, disrespect of agency regulation, rise of fee for service pricing. The study revealed that the elements of no-service quality may be because of little or no entry barrier. The proliferation of various marketing strategy can also be attributed to the advent of the internet as posited by Nissen (1995), and Li and Wang (2006), that the roles of a service agent on the internet is classified as that of a watcher agent, learning agent, shopping agent, information retrieval agent and helper agent. However, the aspect of online real estate marketing is a ripe area to explore in Nigeria to identity the challenges confronting the practicing ESVs. Xu et al (2010) put forward a novel approach to describe the changing situations of the Chinese real estate market by means of Chinese Real Estate Confidence Index called CRE index, which is synthetically calculated based on its three sub-indices to reflect the three different aspects. The study served as a generic indicator to reflect changes in the Chinese real estate market, the CRE index provides all stakeholders with a quantitative method to verify history and detect tendency with regard to the progressive development of the market which is influenced by dynamic social and national conditions.

Iroham et al (2011) posit that in real estate agency practice, where the market is fraught with dearth of information, the role of the estate agent cannot be overemphasized particularly in bringing together parties of divergent interest in attaining specific goals. The authors surveyed 159 estate surveying firms and 91 property development companies in the commercial nerve centre of Lagos and indicated that multiple agency is mostly adopted in Nigeria real estate practice. The study consequently advocated for the modification of agency practice to eradicate all inefficiencies by safeguarding the interest of all parties. Munneke and Yayas, (2001) confirmed that the differences among brokerage firms and/or their agents suggest the possibility that some homes sell at premium prices and over a shorter time horizon than is the case with other broker-assisted transactions handled by less skilled or motivated agents. In the research conducted by Ke et al (2008), the performance of an estate agent is attributed to market environment volatility such as market uncertainty, housing market liquidity and house price changes. The study hence concluded that the size of a firm does not determine business performance and that there is need for enhancing, through training, the skills of estate agents in Nigeria per effective service delivery.

Considering the strategies in real estate marketing, it is important to state that marketing is the skill of matching the needs of a buyer with the product of a seller, for a profit. It is true to say that development property used to be a soft-sell product. In the light of this, it is ethical in Nigeria to erect bill board and place an advertisement. Nowadays, however, those marketing property developments are faced increasingly with a highly competitive and discerning market and one that demands better information. The days of certain markets, easy lettings and malleable tenants have gone, and for the foreseeable future they unlikely to retain property as a product has become more difficult to sell and those responsible for selling it require bringing a higher degree of professionalism to the market. (Araloyin and Ojo, 2011). This implies that property service is tasking if an agent is to claim any achievement. In accordance with the codes of conduct of NIESV (2005), the following approaches are allowed in real estate marketing: site or bill boards, direct marketing, press marketing, brochure/bulletin and personal contact ethically.