THE EFFECT OF ONLINE MARKETING ON REAL ESTATE BUSINESS IN ABUJA MUNICIPAL AREAL COUNCIL

THE EFFECT OF ONLINE MARKETING ON REAL ESTATE BUSINESS IN ABUJA MUNICIPAL AREAL COUNCIL

ABSTRACT

This study examines the effect of online marketing on real estate business in Abuja municipal areal council. The following specific objectives are pursued to achieve the aim of this study; to examine the effect of online marketing on real estate in Abuja, to determine the effectiveness of online marketing in real estate sector in the study area and to identify the problems associated with online marketing in real estate sector. The researcher adopt the use of questionnaire, observation and personal interview to gathered relevant data from the respondents while tables, simple percentage and descriptive statistics were used for data presentation and analysis. The research reveals that online marketing business have a significant effects on real estate market in Abuja and therefore it should be encourage to cover all areas of real estate market such as estate agency, development, sales, and management of real estate property.

CHAPTER ONE

1.0       INTRODUCTION

1.1       BACKGROUND OF THE STUDY

Prior to the age of the Internet, people selected their rental homes through realtors, newspaper advertisements, by word of mouth, and by touring neighborhoods (Bensinger, 2007). Since the inception of the Internet and social media marketing, however, the real estate sector workforce has another viable tool to advertise their properties (Wagner, 2008). Identifying consumers’ preferred rental amenities and methods of selecting rental properties should enhance the success of any property management company.

The growth of the use of the Internet, and in particular the World Wide Web, over the last 10 years has been phenomenal and impacted on nearly every area of life in developed societies. One of the most important aspects of peoples’ lives is their physical living conditions and in Nigeria just like in many other countries. Traditionally Nigeria has adopted new technology rapidly, with the relatively large population of over 170 million and the high demand for housing. The use of Internet or online marketing business has followed this pattern with World Wide Web access now available to the vast majority of Nigerian homes.

The online marketing or internet is still seen as a fairly new tool by many people. With respect to the current graphic-intensive state of the media (multi-media presentations) and encrypted e-commerce (secure on-line purchasing) used on the internet, this technology is very new (Birvin, 1999). However, the backbone of the Internet has roots going all the way back to the Soviet Union’s launching of Sputnik in 1957. In response (to Sputnik), US forms the Advanced Research Projects Agency (ARPA), the following year, within the Department of Defense (DOD) to establish America’s lead in science and technology applicable to the military. Real estate listings were part of the fabric of the Internet. Originally, entire Usenet message boards were reserved for listing homes, with eager homeowners looking to cut out the real estate commission which has been in operation in advanced countries (Rosen, 1996). When the Internet started to boom, real estate practitioners got in on the game as well, adding their listings on their own sites. Real estate services also started developing Internet platforms. In 1996, LendingTree.com introduced their marketplace concept. This was the first service offered for real estate that existed only in cyberspace. Many other banks offering on-line loans already existed, but this showed the unique power of the Internet. Today, sites offer a myriad of real estate services in an online environment all over the world. While some of them have traditional brick and mortar operations, many of these new companies exist only over TCPIP (Transmission Control Protocol over Internet Protocol) (Rosen, 1996).

The role of online marketing business in real estate has grown profoundly over the past few years. In an industry that once used print media as its primary form of delivering the marketing message, there is now an urgent need to have transitioned to the internet in order to reach today’s homebuyer. An online presence is a vital component of a real estate professional’s marketing strategy. Because today’s consumers want accurate information quickly and conveniently, real estate professionals must harness the features and capabilities of online marketing to meet these ever-increasing needs. In this study, the researcher examine the effect of online marketing business on real estate in Nigeria and Abuja in particular.

1.2       STATEMENT OF THE PROBLEM

Individuals currently seeking a new apartment home to rent or purchase are faced with many challenges in the process of searching, contacting the real owner or property managers, most of the times fall victims of scrupulous individuals posing as real estate agents in Abuja and its environs. To interested individuals in real estate sectors uses realtors, newspaper advertisements, word of mouth, and touring neighborhoods to scout for properties of their interest, this traditional process comes with a lot of challenges. However, It has been estimated that 80% of homebuyers in the developed countries begin their housing search online (Bensinger, 2007). However, not all property managers or property management companies use the Internet or social media websites to market their properties. Property managers and leasing professionals need to determine if the marketing techniques they use meet the needs of the renters they hope to acquire. Therefore, in an attempt to increase productivity and profitability, brokerage firms are using the internet to deliver market information to consumers about the real estate market. This study examines the effect of online marketing business on real estate in Abuja and Nigerian cities at large.

1.3       AIM AND OBJECTIVES OF THE STUDY

The aim of this study is examine the effect of online marketing business on real estate in Abuja.

The following objectives are pursued to achieve the aim of this study:

1. To examine the effect of online marketing on real estate in Abuja.
2. To determine the effectiveness of online marketing in real estate sector in the study area.
3. To identify the problems associated with online marketing in real estate sector.

1.4       RESEARCH QUESTIONS

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

1. What is the effect of online marketing business on real estate in Abuja?
2. What is the effectiveness of online marketing business in real estate sector?
3. What are the problems associated with online marketing in real estate sector?

1.5       SIGNIFICANCE OF THE STUDY

This study evaluates the effect of online marketing business on real estate in Abuja, it will enlightens the general stakeholders in real estate sector on the effects of online marketing on the real estate market. The following are the significance of this study:

1. The result from this study will educate the general public on the rudiments of online marketing and especially how it can influence the real estate business.
2. This research will also serve as a resource base to other scholars and researchers interested in carrying out further research in this field subsequently, if applied will go to an extent to provide new explanation to the topic.

1.6       SCOPE AND LIMITATIONS OF THE STUDY

This study on the effect of online marketing business on real estate in Abuja will cover the level of online marketing in Nigeria especially in the real estate development sector. It will also cover the online business activities of real estate agents in Nigeria with particular interest in Abuja, the Federal Capital Territory.

LIMITATION OF STUDY

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.

1.7       DEFINITION OF TERMS

For the purpose of this creative project, the following definitions will be used:

E-Commerce: The Use Of Computers To Carry Out Transactions Such As Buying And Selling On Internet.

Emerging Market: An Emerging Market Economy Is A Nation’s Economy That Is Progressing Toward Becoming Advanced, As Shown By Some Liquidity In Local Debt And Equity Markets And The Existence Of Some Form Of Market Exchange And Regulatory Body.

Information Technology (IT): This Represents Set Of Tools, Processes, And Methodologies And Associated Equipment Employed To Collect, Process, And Present Information.

Service Delivery: This Is The Act Of Providing The Needs Of Customers Or Clients.

Spamming: This Is The Use Of Electronic Messaging Systems (Including Most Broadcast Media, Digital Delivery Systems) To Send Unsolicited Bulk Messages Indiscriminately.

Social media – uses Internet-based technologies that facilitate the creation and exchange of user-generated content. Social media refers to websites that permit people to interact with the site and with each other using simple interfaces.

Facebook: Facebook is more than just a website; it is a network unprecedented and unlike any other website in existence (McElvain & Smyth, 2006). Facebook is an online directory that connects people though social networks.

Twitter – is a social media website like Facebook, but Twitter is a much more active form of social communication in which the way the user communicates with people on the social network emerges as much more conversational. The main difference between Facebook and Twitter is Facebook limits the users’ status updates to more than 63,000 characters but Twitter limits the users characters to a mere 140 (Tagtmeier, 2010).

Property Management Company – is responsible for running day to day operations for a rental property including maintenance, rent collection, move ins, move outs, lease renewals and evictions and marketing. (Paris, 2006).

LinkedIn – is a social networking site that allows the user to learn about another contact’s interests, making it a great resource to help the user build a strong relationship (Comer, 2011).

1.8       BACKGROUND OF THE STUDY AREA

Abuja was formally a town under traditional emirate of Suleja in Niger state, north central of Nigeria. The town is situated along the river Iku, a minor tributary of the river Niger at the foot of the Abuchi hills and lies at the intersection of several roads. The emirate’s savannas areas of approximately 2,980sqkm originally included four secondary Koro Cheifdoms that paid tribute to the Hausa kingdom of Zazzau. In the period 1804, Zaria, the capital of Zazzua (220km North-Northeast) was captured by warriors of the Fulani jihad (holy war). Muhamman Makau, the king of Zazzua (Sarkin Zazzua) guided a large section of the Hausa nobility to the Koro town of Zuba (10km southwards)

Abu Ja (Jatau) the brother of the king and later his successor, founded the town of Abuja in 1828 and a year later started the construction of the town wall. Abu Ja then proclaimed himself the emir of Abuja and withstood Zaria’s attacks, allowing Abuja emirate to remain an independent Hausa refuge. During the reign of Emir Abu Kwaka (1851-77), trade with the Fulani emirate of Bida (Westwards) and Zaria began. But the trade route between Lokoja (160km South-Southwest) and Zaria was disrupted by Abuja’s leaders, resulting in the British occupation of the town. During the reign of Emir Musa Angulu (1917-44) alluvial tin mining began.

A Hausa emir who retains advisory role oversees the traditional emirate, with its predominate Gbari (Gwari) and Koro population. During the administrative reorganization in 1976, Abuja town became the headquarters of a local government council. The town was renamed Suleja in the late 1970’s after development began on the urban area of federal capital territory of Nigeria (FCT). The new Federal capital adopted the name Abuja.

ECONOMY AND POPULATION OF ABUJA

Abuja although is said to be bless with natural endowment such as; its rolling hills, isolated highlands and other endearing features which makes it a delight. The savannah grassland of the north and the middle belt, the riches of the tropical rain forest of the south and equable climate all combined make the city a soil rich agricultural and tourist heaven.   But despite all this, the city is not economically buoyant due to absent of industrial activities.

Projection called for a population of more than one million early in the 21^st century, the population estimate as at 2006 stand for a four million with annual growth rate of 2.8

PHYSICAL DEVELOPMENT OF ABUJA

Abuja created in 1976 by the federal military government of the late general Muritala Mohammed via decree No. 6 of the same year; it officially replaced Lagos in December 1991after fifteen years of planning and construction. The city was divided into two zones; central zones contains the national assembly, the city hall, national cultural institution, government related offices that include the administrative headquarters of all federal government ministries and parastatals, also major private sector organizations and foreign missions. The second zone provides housing, shopping facilities and other urban amenities.  

GEOGRAPHICAL LOCATION

The federal capital is located in the geographical center of Nigeria. It has a land area of 8,000square kilometers. It is bounded on the north by Kaduna state, the West by Niger state, the East and Southeast by Nasarawa state and Southwest by Kogi state. It falls within latitude 70^o20”north of the equator and longitude 60^o45”and 70^o39’.

THE EFFECT OF ONLINE MARKETING ON REAL ESTATE BUSINESS IN ABUJA MUNICIPAL AREAL COUNCIL

THE EFFECT OF ONLINE MARKETING ON REAL ESTATE BUSINESS IN ABUJA MUNICIPAL AREAL COUNCIL

ABSTRACT

This study examines the effect of online marketing on real estate business in abuja municipal areal council. The following specific objectives are pursued to achieve the aim of this study; to examine the effect of online marketing on real estate in Abuja, to determine the effectiveness of online marketing in real estate sector in the study area and to identify the problems associated with online marketing in real estate sector. The researcher adopt the use of questionnaire, observation and personal interview to gathered relevant data from the respondents while tables, simple percentage and descriptive statistics were used for data presentation and analysis. The research reveals that online marketing business have a significant effects on real estate market in Abuja and therefore it should be encourage to cover all areas of real estate market such as estate agency, development, sales, and management of real estate property.

CHAPTER ONE

1.0       INTRODUCTION

1.1       BACKGROUND OF THE STUDY

Prior to the age of the Internet, people selected their rental homes through realtors, newspaper advertisements, by word of mouth, and by touring neighborhoods (Bensinger, 2007). Since the inception of the Internet and social media marketing, however, the real estate sector workforce has another viable tool to advertise their properties (Wagner, 2008). Identifying consumers’ preferred rental amenities and methods of selecting rental properties should enhance the success of any property management company.

The growth of the use of the Internet, and in particular the World Wide Web, over the last 10 years has been phenomenal and impacted on nearly every area of life in developed societies. One of the most important aspects of peoples’ lives is their physical living conditions and in Nigeria just like in many other countries. Traditionally Nigeria has adopted new technology rapidly, with the relatively large population of over 170 million and the high demand for housing. The use of Internet or online marketing business has followed this pattern with World Wide Web access now available to the vast majority of Nigerian homes.

The online marketing or internet is still seen as a fairly new tool by many people. With respect to the current graphic-intensive state of the media (multi-media presentations) and encrypted e-commerce (secure on-line purchasing) used on the internet, this technology is very new (Birvin, 1999). However, the backbone of the Internet has roots going all the way back to the Soviet Union’s launching of Sputnik in 1957. In response (to Sputnik), US forms the Advanced Research Projects Agency (ARPA), the following year, within the Department of Defense (DOD) to establish America’s lead in science and technology applicable to the military. Real estate listings were part of the fabric of the Internet. Originally, entire Usenet message boards were reserved for listing homes, with eager homeowners looking to cut out the real estate commission which has been in operation in advanced countries (Rosen, 1996). When the Internet started to boom, real estate practitioners got in on the game as well, adding their listings on their own sites. Real estate services also started developing Internet platforms. In 1996, LendingTree.com introduced their marketplace concept. This was the first service offered for real estate that existed only in cyberspace. Many other banks offering on-line loans already existed, but this showed the unique power of the Internet. Today, sites offer a myriad of real estate services in an online environment all over the world. While some of them have traditional brick and mortar operations, many of these new companies exist only over TCPIP (Transmission Control Protocol over Internet Protocol) (Rosen, 1996).

The role of online marketing business in real estate has grown profoundly over the past few years. In an industry that once used print media as its primary form of delivering the marketing message, there is now an urgent need to have transitioned to the internet in order to reach today’s homebuyer. An online presence is a vital component of a real estate professional’s marketing strategy. Because today’s consumers want accurate information quickly and conveniently, real estate professionals must harness the features and capabilities of online marketing to meet these ever-increasing needs. In this study, the researcher examine the effect of online marketing business on real estate in Nigeria and Abuja in particular.

1.2       STATEMENT OF THE PROBLEM

Individuals currently seeking a new apartment home to rent or purchase are faced with many challenges in the process of searching, contacting the real owner or property managers, most of the times fall victims of scrupulous individuals posing as real estate agents in Abuja and its environs. To interested individuals in real estate sectors uses realtors, newspaper advertisements, word of mouth, and touring neighborhoods to scout for properties of their interest, this traditional process comes with a lot of challenges. However, It has been estimated that 80% of homebuyers in the developed countries begin their housing search online (Bensinger, 2007). However, not all property managers or property management companies use the Internet or social media websites to market their properties. Property managers and leasing professionals need to determine if the marketing techniques they use meet the needs of the renters they hope to acquire. Therefore, in an attempt to increase productivity and profitability, brokerage firms are using the internet to deliver market information to consumers about the real estate market. This study examines the effect of online marketing business on real estate in Abuja and Nigerian cities at large.

1.3       AIM AND OBJECTIVES OF THE STUDY

The aim of this study is examine the effect of online marketing business on real estate in Abuja.

The following objectives are pursued to achieve the aim of this study:

1. To examine the effect of online marketing on real estate in Abuja.
2. To determine the effectiveness of online marketing in real estate sector in the study area.
3. To identify the problems associated with online marketing in real estate sector.

1.4       RESEARCH QUESTIONS

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

1. What is the effect of online marketing business on real estate in Abuja?
2. What is the effectiveness of online marketing business in real estate sector?
3. What are the problems associated with online marketing in real estate sector?

1.5       SIGNIFICANCE OF THE STUDY

This study evaluates the effect of online marketing business on real estate in Abuja, it will enlightens the general stakeholders in real estate sector on the effects of online marketing on the real estate market. The following are the significance of this study:

1. The result from this study will educate the general public on the rudiments of online marketing and especially how it can influence the real estate business.
2. This research will also serve as a resource base to other scholars and researchers interested in carrying out further research in this field subsequently, if applied will go to an extent to provide new explanation to the topic.

1.6       SCOPE AND LIMITATIONS OF THE STUDY

This study on the effect of online marketing business on real estate in Abuja will cover the level of online marketing in Nigeria especially in the real estate development sector. It will also cover the online business activities of real estate agents in Nigeria with particular interest in Abuja, the Federal Capital Territory.

LIMITATION OF STUDY

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.

1.7       DEFINITION OF TERMS

For the purpose of this creative project, the following definitions will be used:

E-Commerce: The Use Of Computers To Carry Out Transactions Such As Buying And Selling On Internet.

Emerging Market: An Emerging Market Economy Is A Nation’s Economy That Is Progressing Toward Becoming Advanced, As Shown By Some Liquidity In Local Debt And Equity Markets And The Existence Of Some Form Of Market Exchange And Regulatory Body.

Information Technology (IT): This Represents Set Of Tools, Processes, And Methodologies And Associated Equipment Employed To Collect, Process, And Present Information.

Service Delivery: This Is The Act Of Providing The Needs Of Customers Or Clients.

Spamming: This Is The Use Of Electronic Messaging Systems (Including Most Broadcast Media, Digital Delivery Systems) To Send Unsolicited Bulk Messages Indiscriminately.

Social media – uses Internet-based technologies that facilitate the creation and exchange of user-generated content. Social media refers to websites that permit people to interact with the site and with each other using simple interfaces.

Facebook: Facebook is more than just a website; it is a network unprecedented and unlike any other website in existence (McElvain & Smyth, 2006). Facebook is an online directory that connects people though social networks.

Twitter – is a social media website like Facebook, but Twitter is a much more active form of social communication in which the way the user communicates with people on the social network emerges as much more conversational. The main difference between Facebook and Twitter is Facebook limits the users’ status updates to more than 63,000 characters but Twitter limits the users characters to a mere 140 (Tagtmeier, 2010).

Property Management Company – is responsible for running day to day operations for a rental property including maintenance, rent collection, move ins, move outs, lease renewals and evictions and marketing. (Paris, 2006).

LinkedIn – is a social networking site that allows the user to learn about another contact’s interests, making it a great resource to help the user build a strong relationship (Comer, 2011).

1.8       BACKGROUND OF THE STUDY AREA

Abuja was formally a town under traditional emirate of Suleja in Niger state, north central of Nigeria. The town is situated along the river Iku, a minor tributary of the river Niger at the foot of the Abuchi hills and lies at the intersection of several roads. The emirate’s savannas areas of approximately 2,980sqkm originally included four secondary Koro Cheifdoms that paid tribute to the Hausa kingdom of Zazzau. In the period 1804, Zaria, the capital of Zazzua (220km North-Northeast) was captured by warriors of the Fulani jihad (holy war). Muhamman Makau, the king of Zazzua (Sarkin Zazzua) guided a large section of the Hausa nobility to the Koro town of Zuba (10km southwards)

Abu Ja (Jatau) the brother of the king and later his successor, founded the town of Abuja in 1828 and a year later started the construction of the town wall. Abu Ja then proclaimed himself the emir of Abuja and withstood Zaria’s attacks, allowing Abuja emirate to remain an independent Hausa refuge. During the reign of Emir Abu Kwaka (1851-77), trade with the Fulani emirate of Bida (Westwards) and Zaria began. But the trade route between Lokoja (160km South-Southwest) and Zaria was disrupted by Abuja’s leaders, resulting in the British occupation of the town. During the reign of Emir Musa Angulu (1917-44) alluvial tin mining began.

A Hausa emir who retains advisory role oversees the traditional emirate, with its predominate Gbari (Gwari) and Koro population. During the administrative reorganization in 1976, Abuja town became the headquarters of a local government council. The town was renamed Suleja in the late 1970’s after development began on the urban area of federal capital territory of Nigeria (FCT). The new Federal capital adopted the name Abuja.

ECONOMY AND POPULATION OF ABUJA

Abuja although is said to be bless with natural endowment such as; its rolling hills, isolated highlands and other endearing features which makes it a delight. The savannah grassland of the north and the middle belt, the riches of the tropical rain forest of the south and equable climate all combined make the city a soil rich agricultural and tourist heaven.   But despite all this, the city is not economically buoyant due to absent of industrial activities.

Projection called for a population of more than one million early in the 21^st century, the population estimate as at 2006 stand for a four million with annual growth rate of 2.8

PHYSICAL DEVELOPMENT OF ABUJA

Abuja created in 1976 by the federal military government of the late general Muritala Mohammed via decree No. 6 of the same year; it officially replaced Lagos in December 1991after fifteen years of planning and construction. The city was divided into two zones; central zones contains the national assembly, the city hall, national cultural institution, government related offices that include the administrative headquarters of all federal government ministries and parastatals, also major private sector organizations and foreign missions. The second zone provides housing, shopping facilities and other urban amenities.  

GEOGRAPHICAL LOCATION

The federal capital is located in the geographical center of Nigeria. It has a land area of 8,000square kilometers. It is bounded on the north by Kaduna state, the West by Niger state, the East and Southeast by Nasarawa state and Southwest by Kogi state. It falls within latitude 70^o20”north of the equator and longitude 60^o45”and 70^o39’.

EVALUATION OF RISK ELEMENT IN REAL ESTATE INVESTMENT IN NEW NYANYA

EVALUATION OF RISK ELEMENT IN REAL ESTATE INVESTMENT IN NEW NYANYA

CHAPTER ONE

INTRODUCTION

1.1       Background of the Study

The growing expectation of any investor is to achieve maximum satisfaction in his investment. To attain the investment objective of maximizing wealth, maximizing returns and minimizing risks as a prudent investor will be paramount; therefore, investors choose between ranks of alternative investments.  The term risk is seen as the probability of loss of income, assets or condition of mishap, unfortunate situation or circumstances that result in the decline of revenue or loss of income, property, wealth and other items having economic and financial values. In statistics, risk relates to a situation where a probability or weight can be assigned to a possible outcome arising from a policy decision (Enever and Isaac,1997).

In the financial sense, risk is somewhat more intricate than the calculation of historical or expected returns. It is the possibility that an investor will lose some or all of the initial investment. Such conditions are the outcomes of a fall in product demand, high competitive pressure, unfavourable government policies, poor economic conditions, community uprising, industrial disharmony and management inefficiencies. Environmental factors such as changing weather conditions and environmental degradation are also noted to have adverse effect on investment. The international component of risk is relatively more complex, which arises from divergent economic policies, political and cultural ideologies thus making management of risk across national boundaries a difficult task. From the real estate investment perspective, risk is seen as the level of probability that a required return will be achieved when measured in terms of capital value and income.

As an investment, some properties have a high-risk profile while others have low-risk profile. This depends on the type, nature, location and possibly, the lease term of the property. Over time, the variance of actual return from expected return can be measured and used to help determine probability level. Risk is a deviation from the expected return and not just the chance that the return on an investment will be below expectations (Geddes, 2002). Thus, risk is about the interaction of future returns, which can have a number of possible results, and the chances that any particular outcome will occur. It is all about variances and probabilities. The degree to which actual performance may exceed the expected performance is called the upside potential while the amount by which it falls below expectation is known as the downside risk. Investors are concerned with the upward potentials, particularly when the investment is funded by borrowed capital. Upward potential is the actual bonus over and above the targeted return (Dubben and Sayce, 1991).

Another possible real estate risk investors may face as a real estate investor in Nigeria is government or political risk. Because of the wide ranging power of the executive arm of government and fluidity of functions, the government could acquire private land but the land so acquired must be for public purposes. Unfortunately, there are several instances where government had acquired private land for “public purposes” and “development control” only to turn around and allocate to other individuals to use for their own private projects. Some have experienced their Certificate of Occupancy revoked by a new government due to the fact that the owner does not belong to the same political party. This kind of policy inconsistency is a major discouragement to investors. They should be that as it may, whenever investors are planning to purchase a land in an area, engage professionals (e.g. Estate Surveyors and valuers) to confirm whether or not the land is under acquisition by government or could not be sold (Black, 1986).

There are also financial risks involved in real estate investment. If an investor decides to use a bank loan to buy a property, there is need for the awareness that what we call mortgages in Nigeria, is technically a residential loan. Ideally, a real estate/home loan should be a single-digit interest loan, but what Nigeria currently have are double – digit residential loans. Although, the government established a National Housing Fund (NHF) single-digit-interest loan that could advance a contributor up to N25m, many have not been able to access the loan due to bureaucratic bottlenecks and red tape. Some who have accessed the loan have had to apply for a bridging loan at residential double-digit interest rates in order not to miss their desirable property.

Risk is a common feature of all forms of investment including real estate and fundamental to investment choice. Therefore, any investor who embarks on a project development or acquires a property expects some benefits as future returns. Like any other form of investment, real estate has two principal components: expected return and risk. In an ideal situation, an investor is expected to maximize returns while minimizing risk. Therefore, the investor assumes risk with the hope of making profit or other forms of return. Risk assumption depends on past investment operation, future projection, trend in the economy, government intervention programmes and the expected returns from the investment. Often, the actual returns from the investment may vary from the projected returns. In some cases, the invested capital is lost. According to Ubom (2010), the degree of variability of the actual return from the estimated return of the investment as well as the probability of the loss of capital reflects the risk elements of investment. The higher the degree of such variability, the higher the risk involved and vice versa; and the greater the risk involved in a project, the greater the expected rate of return or cost of capital. The problems associated with investment risk cannot be totally eliminated even in an ideal economic situation. Real estate investors come across various types of risk in the course of embarking on projects and in the life of the projects.

Investment risk may be examined on the basis of the fundamental components or sources of risk and making predictions on how future returns will be affected by each fundamental risk. Risks have been variously classified into business, financial, interest rate, market and business power risks. Other forms of risk are political risk, tenant risk, sector risk, structural risk, taxation risk, planning risk, legal risk, comparative risk, timing risk and holding period risk, risk of unplanned obsolescence as well as management or union risk (Bowlinet al., 1980; Okafor, 1983; Messner, 1984; Dubben and Sayce, 1991;Ajayi, 1998; Geddes, 2002; Chandra, 2010; and Udoudoh, 2016). These risks are collectively described as investment risk. The goal of an ideal investor is to embark on any project or scheme that involves minimum risk with an expectation of maximum profit.

 In New Nyanya where this study is based, there has been phenomenal growth in real estate investment due to the influx of people and investors from other parts of the country as well as the ongoing renaissance in infrastructural development. There is therefore the need to empirically evaluate the risk element in real estate investment in New Nyanya in order to generate a roadmap that would guide prospective investors in the real sector.

1.2       Statement of Problem

It is very important for investors in residential real estate to first ascertain the risk factors of an investment asset before committing investment funds to such investment. Investors’ informed decisions with respect to the risk and develop strategies of real estate investments in order to ensure profitability. Residential real estate investment is usually rental properties intended to generate a return from rental income or capital appreciation. Investments in these real estate assets are associated with multiple risk complexities which includes: investment illiquidity, asset value volatility, asset valuation inaccuracies, leverage-amplifying negative performance during falling markets, limited/ imperfect benchmarks to gauge closed-end fund performance, combination of a large lot size (capital intensive investments) and high transaction costs. However, the researcher will provide an overview of real estate investment risks in New Nyanya and Nigeria at large.

1.3       Aim And Objectives Of Study

The primary aim of this study is to evaluate risk element in real estate investment in New Nyanya. The objectives of the study included:

1. To examine the various forms of investment available to the real estate investor in New Nyanya
2. To identify the qualities expected from an investment that is attractive to the investor.
3. To highlight the various stages of real estate development.
4. To examine the different elements of risk in relation to the various stages of real estate development.

1.3       Research questions

1. What are the various forms of investment available to the real estate investor in New Nyanya?
2. What are the qualities expected from an investment that is attractive to the investor?
3. What are the various stages of real estate development?
4. What are the different elements of risk in relation to the various stages of real estate development?

1.5       Significance Of The Study

The finding of this study will be of benefit to the following groups; firstly, investors who bear the cost of property development, secondly, the tenants and thirdly, real estate firms who are involved in the management of properties. This will again enable the investors to understand the trends of property investment as it relates to its cost in the face of risk. The research will also be of great importance to students and researchers who are interested in studying the real estate investment risk on residential properties.

The government and the financial sectors regulators (CBN) will find this research useful as it highlights the risk of residential real estate investment /development and provision of sustainable housing for her teaming citizens.

1.6       Scope and Limitations of the Study

The study helps to evaluate risk element in real estate investment in New Nyanya. Some factors militated against the success of this work, though the researcher endeavoured to accommodate them. Thus, some of the constraints inherent in the course of carrying out the research include, among others, the peculiar nature of real property market. It is not like commercial markets where one can easily come face to face with both the buyers and sellers to get information he wants. In real property market, information is not easily circulated among Estate Surveyors. Vital information required by the researcher from some respondent Estate Surveyors were not collected due to pressure of work and other commitments facing them during the time the researcher required those information.

1.7       Definition Of Operational Terms

Market analysis: The market analysis is activity of gathering information about conditions that affect a market. A market analysis studies the attractiveness and the dynamics of a specific market within a special industry.

Development risk: Development risk is defined as the risk that the leasing or sale of the project will generate insufficient returns to cover cost and create the desired return due to a lack of sales or inadequately meeting the needs of the market in terms of type and location. The more unusual a particular type of project is for the developer, the higher the chance that the developer will misread the market and the higher the development risk. (DICKINSON, 2001)

Building site risk: This is the risk that the selected site is unsuitable, or needs to be modified at cost to become suitable, for the intended use due to environmental issues (such as contamination) or its natural characteristics (stability, water levels, subsidence etc.) (DICKINSON, 2001)

Risk Management: Risk management as a systematic and integrated approach to the management of the total risk that a company faces. Risk management is the process of identifying, assessing and controlling threats to an organisation’s risk. (DICKINSON, 2001)

Market Value: This is the worth of an interest in property in which measurable buyers and sellers would agree to, when referred to market with existence of condition for comparative market application. Market value can also be defined as the higher price in terms of money which a property should bring in comparative or open market under all condition requisite to a fair sale, the buyer and seller each acting prudently, knowledge and assuming the price is not affected by undue stimulus. (Wendth and Paul, 1979)

Value: This is the monetary worth of a thing that is expressed as the value of the goods or services measured by the amount of other goods and services for which it will be exchange. (Wendth and Paul, 1979)

Residential Properties: Residential properties are those properties that are occupied for the purposee of providing shelter to the occupants and serves as a habitation for them. Residential properties are properties providing housing accommodation, (Leramo,1992)  Residential properties are generally constructed to mean property primarily acquired for residence and its attributed to giving shelter, security, comfort, privacy, investment, and personal identify, (Malady and O’ Donneland, 1994).

Property: Legally there are two types of property. They are real property which is land and buildings and personal property that is all kinds of personal possession. In economic the term property means anything that yield interest or income to the owner, The terms property  is defined as the bundle of right invested in a persons or a co operate bodies over a specific parcel of land, buildings object, e.t.c in the relation to other persons which gives right  to use and enjoy and control on  the land.

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.