CHAPTER ONE

1.0 GENERAL INTRODUCTION

1.1 INTRODUCTION

Commercial properties are properties generally occupied for

the purpose of carrying on a trade or profession in the

expectation of realizing profit. They comprise mainly of shops,

offices, showroom among others and they command the

highest rent out of the other types of properties uses.

Rent provides the basis of value for landed property and the

trends in Land values are of significance in the prediction and

determination of income from real property.

Also, the income realisable from real estate is required in

evaluating the viability of projects. A number of factors

combine together in determining changes which property

values undergo which are of great concern to the Estate

surveyor and valuer. Amongst these factors are;

(1) Locational influence

(2) Land use pattern

(3) Income

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 (4) Physical characteristics

(5) Demand populace

(6) Supply of the property market e. t.c.

Lagos metropolis which comprises of areas such as Lagos

island, Lagos mainland, Ikeja, Ibeju- Lekki, Eti-Osa, Apapa,

Festac, Suruelre, Amuwo-Odofin, Ajeromi-Ifelodun, Kosofe,

Victoria Island, Oshodi-Isolo are within the central business

district of the Lagos Metropolis. It is mainly a commercial area

characterized by the presence of sky scrapers and expensive

office blocks.

Lagos metropolis, which typifies various areas with high

demand for commercial properties, is used as a case study to

analyse the trend in commercial property value from year 2000

to 2009.

1.2 STATEMENT OF PROBLEM

Commercial property represents the second largest landuse in

Lagos Metropolis after residential because it is an avenue for

profit maximization by both, the owner and occupier.

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This dissertation will look into the commercial property market

and analyse the factors affecting it and the trend of this type of

properties in Lagos Metropolis.

1.3 AIM AND OBJECTIVES

The aim of this study is to analyse the trend in commercial

property value in Lagos metropolis. In order to achieve this

aim, the following objectives are set forth;

(i) To classify commercial property types in lagos

metropolis.

(ii) To analyse commercial property values in relation to

the pattern of land use.

(iii) To determine the trend by value within the last ten

(10) years.

(iv) To make recommendation on the improvement of

commercial property market in Lagos metropolis.

1.4 SCOPE OF STUDY

The scope of this dissertation is confined to examining the

trend of commercial property value in Lagos metropolis.

Commercial properties are the main land use type in Lagos

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metropolis and is the nerve centre or hub of business activities

in the whole Lagos metropolis. The time-period covered by this

study is 2000-2009.

Due to the fact that Lagos can not be covered at the stretch,

Ikeja and Lagos Island have been selected to represent Lagos

Metropolis.

1.5 METHODOLOGY OF STUDY

The information required for this dissertation will be gathered

through two (2) sources of data namely, primary and

secondary sources of data.

Primary data includes conduction of oral interview with estate

surveyors and valuer, companies and field surveys by

practicing firms. Meanwhile secondary data includes

information from relevant journals, books and other

unpublished materials.

1.6 SIGNIFICANCE OF THE STUDY

A lot has been written on management of commercial

properties without a need for how these types of properties are

fair in the market over a period of time.

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Commercial properties especially in Lagos metropolis have

been characterized with high-class design prestige.

This dissertation will proffer factors affecting commercial

properties values and trend of these values in the past and

recent time.

1.7 DEFINITION OF TERMS

In order to erase my element of ambiguity relating to the topic

of this study, it is ideal to throw some light on some basics

term used in the wording of this study. This is necessary for the

sake of clarity.

1. TREND:

These are series of related change brought about by a chain of

causes and effects. Trends are forecast through economic base

analysis, statistical analysis, market analysis and analysis of

economic indicator and surveys . (The dictionary of Real Estate

Appraisal, 4th edition).

A trend can be upward or downward, lateral or horizontal and

in cross series of related changes, which may be identified and

projected into a probable future.

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2. PROPERTY

According to this study, it is the exclusive right to posses,

enjoy and dispose off land or building. It is the exclusive right

to control economic good.

3. REAL PROPERTY

Michael Thorncroft defined real property as land, buildings, and

other improvement on land, together with, the legal right

relating to these assets. Real property can be classified into

residential, commercial, industrial, agricultural and special

purpose property.

(4) COMMERCIAL PROPERTY

The types of property dealt with in this category can be

grouped as follows;

(i) Shops

(ii) Office space

(iii) Stalls

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One features common to all the aforementioned classes of

property is that, generally speaking they are occupied for the

purpose of carrying on a trade or profession in the expectation

of profit making. It is the profit, which can reasonably be

expected to be made in the premises or occupied space,

which, in the long run will determined the rent a tenant can

afford to pay to them (owner/Landlord).

(5) VALUES

Values literally means the worth of something in terms of

money or other goods for which it can be exchanged. There are

various concepts of values such as rental value, capital value,

rateable, value et.c. Whenever a valuer used the word

“value”, which is defined by the Royal institute of chartered

surveyors as “ best price or best rent which might reasonable

be expected to be obtained for the interest in the property at

the date of valuation assuming;

a. A willing seller or lessor;

b. A reasonable period in which to negotiate the sale or

letting, taking into account the nature of the property

and the stage of the market;

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 c. That values will remain static during such period;

d. That the property will be freely exposed to the open

market, and

e. That no account will be taken of any higher price or

rent that might be paid by a purchaser or lessee with a

specific interest.

6. RENT

This is the periodic payment for the use of land or buildings. It

is an amount expressed in monetary terms at which a property

might be reasonably expected to let out usually from year to

year.

7. PROPERTY MARKET

This is a type of an investment in which capital sum is given up

in expectation of a return to be received over a period of time

which could be periodic in form, or it could be allowed to

accumulate and taken as a capital sum.

1.8 LIMITATION

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In the course of this research work, various limitations were

encountered posing threat to the completion of this research

they include:

- Shortage of time

- Inadequate finance

- Paucity of relevant materials

- In availability of necessary data

- Weather constraint

CHAPTER TWO

2.0 LITERATURE REVIEW

2.1 INTRODUCTION

It is a known fact that no project is written in isolation, it is

important to refer to works or researches carried out by re-

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know authors in this area of study in this chapter. Furthermore,

attempts will be made to explain conceptual terms such as

property and its various types, factors influencing the value of

properties, However emphasis will be laid on the categories of

commercial properties ad their characteristics and factors

affecting their values.

2.2 VALUE AND VALUATION

Although the aim of valuer is to provide an estimate of market

value, it should not be assumed that the valuer’s estimate of

value and the market price or market value will always be the

same. Different valuers could well place different values on a

particular interest at a particular time because they are making

estimates and there is normally room, within certain limits for

difference of opinion.

In the majority of cases this is the most serious difference

which should arise between competent valuers in times of

stable market conditions because prices result from estimates

of value made by vendors and purchasers on the basis of

prices previously paid for other similar interest, but in times

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when condition are not stable more serious difference may

arise. In such instable times the valuer’s estimate of value will

be based on prices previously paid but he must adjust this

basis to allow for the changes since the previous transaction

took place. The accuracy of his estimate will, therefore, depend

on his knowledge of the change and skill in quantifying their

effect.

Unstable times bring into focus the fact that in any market at

any time there are many buyers and sellers, each of whom will

have his own personal views, desires and judgement on what

the commodity in question is worth. This a market constitutes

an amalgam of difference individuals who will strike individual

bargains, so that a “market price” can only represent an

average view of all these factors. Where the commodities are

all different, as in the case of property, the problems of arriving

at this average are multiplied (William, et al 1980).

2.3 CONCEPTS OF VALUES

Value is a word with many meanings, [Turner 1977) says, “The

concept of value is normally referred to as value to the owner”.

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Value implies capacity to satisfy wants thus, there exists as

many values as there are wants. We have social values, sales

value, economic value and so on, depending on the benefits

enjoyed from the ownership of a property. But the quantifiable

of value the economic or financial value.

Value is not intrinsic but result from estimates made

objectively by able and willing purchasers of the benefits or

satisfaction they derive from the ownership of an interest in

properly”. Value measures not only the relationship between

the supply and demand of a commodity but also its usefulness

and scarcity relative to other commodities. There are two

broad ways of look at value.

Value could be subjective or objective. Subjective value is the

estimate by a property owners of the amount of satisfaction or

utility he gets from the property. Subjective value will include

the social and aesthetic concept of value. Objective value is

the value of a property which when exposed could be said to

be universal, that is, the value of a property so recognized by

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all prospective purchaser. Objective value is the same as the

economic concept of value.

The relevant concept of value in this dissertation is the

dissertation is the economic concept of value. “for property to

have economic value, it must have utility or usefulness to its

owner” it must have utility or usefulness to its owner” it must

be something that is capable of being possessed, and must be

transferable from one owner to another.

2.4 TYPES OF VALUE

Value can be defined as the sum of the present value of a

stream of income or the present worth of future benefits. It can

be considered from these other points of view.

2.4.1 MARKET VALUE (VALUE IN EXCHANGE)

Market value is the highest value estimated in terms of money

which a property will bring. If exposed for sale in the open

market, allowing a reasonable time to find a purchaser who

buys with knowledge of all uses to which the property is

adopted and for which, it is capable of being used. In other

words, it is the price at which at a willing purchaser would buy

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the property, both of them adequately informed about the

prevailing market conditions of the property.

Thus, the value of property is identified with its current

exchange value or market price. Market value is dictated by eh

economic forces of demand and supply. An increase in the

demand of properties, not matched by an equal increase in

supply, raises the market value of land and property likewise,

when supply of properties is fixed or increasing and demand

for them is declining, the market value of properties will fall.

The most often used method of determining the market value

of a property is by making reference to recent sales of similar

properties in the same neighbourhood, or in similar

neighbourhoods. But sometimes, the difficultly of find

comparable properties renders this method efficient. And in

some cases where comparable properties exist, there might

not be record of recent transaction in these properties. In

such case, property value is determined by direct comparison

valuation carried out by Estate Surveyors and valuer, who have

expert knowledge on prevailing market forces, legal aspects,

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building qualities, and some other factor which are necessary

before values are placed on properties.

Different methods of valuation are employed depending on

property type and on the client’s values are given to shifts

from time to time depending on the effect of market forces.

Hence, when we talk of the market value of a property, we are

referring to its open market value at a specified period. This

value might increase or decrease with the passing of time.

The concept of open market admits that the market price

many or may not be rationally established, that is, it is only a

reflection of the market and does not include valuers own

judgement. It also admits that, ‘value’ is used in a restrictive

sense excluding any idea of justness about the level of prices.

These leads to the thesis that, prices are the best indicators of

value.

2.4.2 CAPITAL VALUE

Capital value is the aggregate sum which the property is

expected to fetch if exposed in the market for sale. This means

that the capital value of a property should be equal to the

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present worth of all future income to be earned by the

property.

Determination of capital valves of properties involves the

estimates of future flows of annual rental values and the

calculation of those rental returns, which will not be realized

until, specified times in the future. Calculation of the present

worth of future annual income involves the discounting of

future values to determine their present worth.

The determination of capital values of property poses a lots of

problems. Estate surveyors and valuers tackle these problems

with their expert knowledge of the factors that might cause

fluctuation in future, annual incomes and with experience

acquired from dealing with landed properties. Thus, the value

attached to a property will depend upon the judgement or

discretion of the valuer who values such property for

investment valuation purpose, a capitalization formular is

commonly used to indicate the discounting of expected future

annual income before the capital value is arrived at. The

capitalization formular is expressed as CV= I x yP

Where;

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CV= capital value of property

I= Expected annual future income or rent

YP= Rate of return on the investment (Nigel 1984).

The expected annual future rent and rate of return to the

investment are known values used in calculating the unknown

value of property. The above formular applies in cases where

the duration of the incomes being capitalized, is of a

perceptual nature.

Where the duration of the income is for a relative period then,

in addition to the capitalized value of the annual income, we

will have to add the present value to receive a certain income

(on reversion) deferred for the duration of the present income.

Varied circumstances may warrant the employment of another

method of arriving at a capital value. Contractors and residual

method are all different methods of arriving at the capital

value of a property. The method chosen is a particular

situation depends on its particular circumstance. The choice of

capitalism rates of return to an investment is left to the

discretion and judgement of Estate valuer. Several methods of

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arriving at an appropriate capitalization rate exists but the

most commonly used method is based on the percentage

relationship which exists between the annual income and the

current value of comparable properties. Consideration is also

given to the income quality of the property’s value, the burden

of management, and some other factors which the valuer

might think appropriate to take into consideration.

This the capitalization rate illustrates the relative

attractiveness of an investment. The higher the rate, the more

risky and unattractive the investment is, and the lower the

rate, the less risky and more attractive the investment is. Since

capitalization rate has a direct influence on the value of

property. Proper care should be taken in making the choice.

Wide difference may exists between the people and their

estimate of present and future property values, for example a

property might have a different value from its replica became

of difference in choice of capitalization rate used by the two

different valuers valuing the two different properties.

2.4.3 THE UTILITY THEORY OF VALUE

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The utility theory of value states that, “Value of any

commodity depends on the utility or usefulness derived from

it.” This theory is fundamentally realistic and useful, but its

usefulness is greatly standardized.

The amount of utility a property owner will obtain from his

property depends greatly on his motives are the most common

motives for property ownership, and where this is the case,

utility can then be measured by reference to the financial

returns from the property. The owner may however have some

other motives his/her motives may be political, social, cultural,

status oriented, pride with which he might hold a property in a

particular area, or a hast of other possible motives.

Thus the utility scale varies with individuals and utility cannot

be standardized for all hence, estimates to owner depending

on motive for ownership of property and how well these

motives are satisfied. It is thus evidence that, practically

speaking, this theory is not very useful in attaching values to

landed property hence, in this study, the values referred to,

are standardize value or open market values.

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However, the utility theory of value is not an entirely useless or

obscure theory of value to the actual owner but which have no

market and thus no comparable.

2.4.4. CURRENT USE VALUE

This is a concept of value which is used to portray the

relationship between land values and changes in land use. The

current use value of a pieces of land or property is the amount

of income which the property is fetching being put to its

present use. This current use value may change over time

subject to changes in land use and or subsequent development

property. In the case of a subsequent development property,

the current use value is expected to increase due to the

additional works and improvements carried out on the

property.

2.4.5 POTENTIAL USE VALUE

This concept of value is also used to portray the relationship

between land values and changes in land use. “Potential use

value is an estimated value of property subject to projections

of development or redevelopment prospects, and the ultimate

changes in the current use of the property.

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When establishing the potential use value of a property,

estimates are made as to when the development will take

place, what kind of development it will be, what costs and yield

will be during and after development, and them the discounted

value for the potential use. These are mere estimates because

nobody is certain about any of these factors. When the

projected development finally gets completed and the new

structures are in new use, new current values are established.

These new values reflect the new use of the landed property.

The newly established values might be less or more than the

projected or potential use value attached to the property

before development.

The concept of use value and potential sue values are of great

important to developers of landed property. Therefore, a

developer can be attracted to purchase property, which he

hopes to redevelop in the future subject for the future need or

demand for such development or redevelopment. The potential

use value of the property sufficiently above its current use

value.

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2.4.6 RATEABLE VALUE

Property rates are taxes levied on occupiers of property in

respect to the annual returns they get from their properties.

The property owners pay these rates to local government

authority in charge of the area. Rateable value is the annual

net value of property, a percentage of which is to be paid as

property rate by occupier of that particular property.

Reteable value is the rent at which a property is reasonably

expected to let in the open market. Assuming that the tenant

pays all the usual rate and taxes, and the landlord takes cares

of repairs, insurance, and other maintenance expense less all

usual tenants rates and taxes, and minus the average annual

cost of increase and other maintenance expenses.

A rate mirage (specified by the rating legislations) is then

applied on the rateable value of a property to arrive at the

amount of property rate an owner should pay. This rate

nairage is sometimes applied (as percentages) on the capital

value of certain types of properties to arrive at the amount of

property rates. Rate review and changes in use of property

could lower or increase value from year to year. Some

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properties are exempted from property rate and some property

owners are granted reliefs from the payment of property rates.

2.4.7 INSURANCE VALUE

Property owners normally inure their properties to protect their

investment from foreseeable hazardous occurrence. Under an

insurance arrangement with an insurance company, the

insurance company will pay the property owner the equivalent

cost of reinstating the damaged part of his property in the

event of occur the disaster covered by the policy for landed

property is the fire insurance policy. The property owner

having insured his property makes annual payments of a

specified sum to the insurance company (premium).

The basis of a fire insurance valuation is to establish the cost of

re-instating the asset destroyed or damaged by fire, to its

dormer condition. Valuation is carried out before the execution

of the policy to determine or estimate the loss, which may be

suffered in the even of a destruct of the building.

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The builder or quantity surveyors will carryout estimation of

building cost, and value is normally restricted to historic or

actual cost approximation based on comparable cost of similar

accommodation. The value arrived at, using actual or historic

cost is usually adjusted for inflation.

2.4.8 MORTGAGE VALUE

The mortgage is probably the most important source of credit

for property transaction whereby, the borrower or mortgage or

grants an interest in his property to the lender or mortgage

loan are contained in the mortgage deed.

The borrower retains the right to recover his interest in the

property from the lender on full repayment of the loan and

interests. The lender also his some remedies to protect his

investment in case of default in interest payment by the

mortgage or failure of the mortgage or to repay the loan at the

stipulated time.

The value of the interest, which the mortgage or is offering as

security for obtaining the loan, is importance and has to be

24
appreciate for obtaining such a loan. A valuation is carried out

to establish the value of the security. The value arrived at,

though based on the market value may different from the

market value. This is because additional factors are consider in

making this valuation, viz, the mortgage’s position in relation

to the property and remedies available to him in the event of

default by mortgages, whether the present market value is

likely to be maintained in the future and probable action by

local planning authority which may unfavourably affect the

value of the property in the future.

2.4.9 RENTAL VALUE

Rental value is defined as the rent at which a property would

let at a point in time, it were offered in the open market,

assuming the property being offered is properly advertised.

Rent is the periodic payment made by the occupier of a

property to the owner for the use of land or of his land and

building.

(Richmond, 1985). In practice however, some properties are let

at less than their rental valuer. Some are let at more than their

rental values while, owner-occupied houses are not let at all.

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The difference between actual rent passing in a property and

that property’s rental value be as a result of one or more of a

number of reasons, such as where a special relationship exist

between the owner of the property and the occupier, as to

premiums, capital expenditure, repairs, insurance and

management, whether there exists a sale and lease back

arrangement, whether the property is let on a long or short

lease and a host of other possible reasons.

2.5 FACTORS INFLUENCING RENTAL VALUE

There are certain factors influencing rental value of

commercial properties. Notably, the factors influencing rental

value as considered by Richmond, 1985 are as follows;

i. Deterioration of the structure.

ii. Effect of adjacent activities

iii. Government and supply

iv. Demand and supply

v. Cost of building materials

Other factors are;

i. Location of the property

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 ii. Property accessibility (Thorncroft, 1965) and

iii. Catchment area

DETERIORATION OF THE BUILDING OR PHYSICAL

CHARACTERISTIC

A property may be physical obsolete which is the wear and

tear of fabrics of the building. The obsolescence may affect

some parts of the building which are difficult to estimate.

Building techniques and materials are constantly changing,

and it is likely that building in the future will not be planned to

last as long as they have in the past, due to the sub-standard

building materials that is being used.

However, in order to ensure a reasonable rental value, it will be

necessary for some money to be expend pairs and decoration

throughout the life span of the building.

EFFECT OF ADJACENT ACTIVITIES

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This can be referred to as the character of a particular locality.

The rental value of a property may be affected by both existing

and proposed developments within the area. A prospective

investor should inspect the development plan operatives in his

area and consult with the local planning authority so as to be

aware of any development that may affect the value of the

proposed property.

GOVERNMENT POLICIES

Government policies as regard capital, land and handed

property could also influence the rental value of properties.

This could be inform of building codes, rent control, taxes,

national defence measure and policy and other monetary

policies which are created by political forces and which have

on the free use of real estate and prices placed on properties in

the property market. These governmental rules and

regulations tend to force rental values to be above or below

the open market values. For examples, government through its

various policies can increase the rental value of properties by

imposing estate duties, tenement rates and other forms of

taxes.

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DEMAND AND SUPPLY

Demand factors: It is obvious that the factor of the greatest

importance in fixing rent is demand, the demand for any

particular property will be influenced by a number of factors,

which will be convenient to consider under appropriate

heading;

(i) GENERAL LEVEL OF PROSPERITY

This is perhaps the most important of the factors governing

demand. When times are good and business is thriving, values

will tend to increased. There will be a demand for additional

accommodation for new and expanding enterprises. There will

be a corresponding increase in the money available for new

and improved accommodation and for additional amenities in

connection therewith.

(II) POPULATION CHANGES

The supply of land being limited, it is obvious that an increase

in demand due to increase of population will tend to increase

values on the other hand, when population size diminish in

29
intensity, values will tend to fall. Increase in population within a

locality may occur in various ways. The birth rate may exceed

the number of deaths rate so that there is a natural increase in

the size of the existing population . Alternatively population

may rise locally due to migration of people from other areas to

the locality.

[III] CHANGES IN CHARACTER OF DEMAND

Demand, in addition to being variable in quantity may vary in

quality. Associated with an increase in the standard of living,

there is a change in the character of demand of many property

types. For examples, in houses, many amenities regarded

today as basic requirement would have regarded today as

basic requirement would have regarded as refinement only to

be expected in the highest class of properties two decided ago.

Similar factors operate in commercial properties, the increased

standard of commercial building in the layout, design and

equipment of the building tend to cause many buildings to be

come obsolete and so diminish their rental value.

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(IV) RENT AS A PROPORTION OF INCOME

In relation to properties, the rent paid may be expressed as a

proportion of the income of the person or organization

occupying the property. It is obvious that, in a free market, the

general level of rent for a particular type of property

accommodation will be related to the general level of income

of the person occupying that accommodation.

(V) RENT AS A PROPORTION OF THE PROFIT MARGIN

In relation to commercial properties and as a rule by tenants,

who expect to make a profit out of their occupation, that

expectation of profit will determine the rent that such a tenant

is prepared to pay. Out of his gross earning, he has first to

meet his expenses, from the gross he has left, he will require

remuneration for his own labour, and interest on capital that he

has to provide, the balance that is left is the margin that the

tenant is prepared to pay in rent and rates. Obviously no hard

and fast rule can be laid down as to the proportion which the

rent will form of profit, but the expectation of profit is the

primary course of the tenant’s demand and the total amount of

rent and rates he will be prepared to pay will be influenced by

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this estimation of the future trend of receipts and expenses

and the profit he requires for himself.

(VI) COMPETITIVE DEMAND

Certain types of premises may be adapted for use by more

than one trade or for more than one purpose, and there will be

a potential demand from a larger number of possible tenants.

For instance, a block of flats in a convenient position in a large

town may be suitable either as offices or shopping centre

purpose. In a particular locality the demand for office

accommodation and rent that can consequently be expected to

be paid for that purpose may be more or less than the

demand, and the consequently rent that can be expected, for

shopping complex purposes.

In a free market it would be expected that the enterprise

yielding the largest margin out of profit for premises for where

there are competing demand for various purpose, properties

will tend to put to of this rule may be affected by the fact that

town planning legislation will probably restrict the use to which

th property may be put.

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Supply factors: It ahs already been stated that land differs

from other commodities in being to a large extent fixed in

amount. This limit on the amount of land available is the most

important of those factors which govern supply.

(i) LIMITATION OF SUPPLY

An every country, there are certain quantity of land suitable for

all land use purpose. If these quantitative were entirely static,

the rent would be affected only by changes in demand. In fact,

they are not static, but respond, although slowly, to changes in

demand. There is ultimately, only a certain quantity of land

available for all purposes but increases in demand will cause

changes in the use to which land is put.

(ii) RELATION OF COST TO SUPPLY

It at any time, values as determined by market conditions are

less than cost, the provision of new building will be checked or

may even cease, and build will not recommence until the

disparity is removed. The disparity which exist at any time

between cost and value may be subsequently remove either

by a reduction in cost or by an increase in demand. Over a long

33
period it might be modified by the non-replacement of obsolete

buildings, which might in time bring an excess of demand over

supply and consequent increase in value.

COST OF BUILDING MATERIALS

The increasing cost of land development and construction in

the present day in Nigeria is contributing to the soaring of rent

payment. The increase in cost of building material due to

inflationary trend has an effect on rental value. An investor will

obviously expect a fair return upon his capital cost in form of

“rent” and if rent does not step up with building costs, then the

rate of construction of investment property is likely to slow

down.

LOCATION

The general situation of a property in relation to the case of

access to other land uses namely place of worship, recreational

schools, place of workshops and market and other amenities

increase the rental value. However, not all properties depend

on access to each of these aforementioned factors. To some

extent, in a commercial town, place of work will be a more

34
important feature of location than in a seaside resort where

access to the sea may count for more. The location of property

in the heart of a very viable centre could motivate the

property owner to increase their rental value. In the technical

analysis of location, there are some peculiar site, that has a

special feature that affects property valuers. They are as

follows;

i. The physical and social attractiveness.

ii. Adequacy of civil, social and commercial centres.

iii. Adequacy of transportation.

iv. Sufficiency of utility and service.

v. Level of taxes and special assessment

vi. If the area is subjected to protection against in

harmonious land uses

ACCESSIBILITY

This is achieved either by proximity of location or by good

means of communication. As a means of communication, it

may be upset by external circumstances like growing traffic

congestion, the suspension of transport services of the

diversion of traffic by public authorities.

35
In finding the rental value of a lndeed property, the value is

largely influenced by accessibility factor. Once a property is

not centrally located, it will command less value than the same

property that is centrally located. This accessibility factors

evaluated the net economic cost of moving persons and goods

between two place . it does not only affect the real cost

incurred in the movement but also the real benefit derived.

CATCHMENTS AREA (AREA OF SERVICE)

The area of influence on a particular land use, attracting the

highest level of patronage. In particular, it is often necessary to

delineate, as precisely as possible, the region in which a

particular land use exercise a pull; usually two or three spheres

of influences can be identified the nearer ones with a more

powerful catchments than those further away.

The task of estimating the boundaries of influence is difficult,

because of the presence of other physical competing centres

of attraction. Many of the boundaries however, are definable a

major road, a bridge, a seaport or airway, a hill or other

physical or artificial barriers. Where these indicate the line of

36
demarcation, any trend or development that is likely to break

through time, or which in any way, might upset the established

pattern requires special study. A new road or bridge can bring

enormous changes in the general setting of particular land use,

either by extending or diminishing its catchments area. It is

often possible to exercise judgement in identifying that area

where the property is likely to command a pulling power of

close on hundred percent of available and perhaps one of more

area may be an estimated percentage of the total. One way in

which be done is to compare the pattern of sales of

“convenience goods” and “comparison goods”. Shoppers are

likely to obtain their everyday necessities near at hand but will

travel further to centres that offer a choice for household

goods, other consumer durable and luxuries.

2.6 TYPES OF RENTS

1. GROUND RENT

37
It can be referred to as payment made by a lessee to a lessor

for the use of bare land usually for a long period of time. Here

the lessee erects building on the land hence the ground rent is

said to be secured since the rent passing on the building will

far exceed the ground rent.

2. CONTRACT RENT

It is the actual payment which the owner receive from their

tenants or the occupation or use of their properties. It is solely

determined by contractual arrangements made between the

two parties that is landlord and tenant. Generally, contract rent

includes element of interest of return on capital and value is

economically concerned with this.

3. ECONOMIC RENT

Richardo defines it as the surplus income earned by a factor of

production over the minimum necessary to bring to it into

production. Generally, the term is applicable to land, so

economic rent also refers to any excess of earning over

transfer earnings. It is otherwise called scarcity rent.

38
4. RACK RENT

This is the current open market letting value of the amount for

which premises is let in the open market at a time under

consideration. Therefore, it refers to the greatest amount that

a premises commands in the open market.

5. VIRTUAL RENT/SITTING RENT

A term which is used to describe the true annual cost of land or

building to a lease. It is thus the rent reserved in the lesse and

also. The annual equivalent (AG) of any capital sums that the

lessee pays as premium or has expended on the premises

from time to time.

When a person expands capital on property in which he has

only a terminate interest, it must be remembered that not

only might this capital invested elsewhere have borne interest

at fair rate percent, but also that an annual sinking find ought

to be provided to replace this capital by the time the party’s

interests in the property expires.

39
6. PROFIT RENT

This describes the differences between the rack rent or full

rental value and the head or rent reserved under a lease of the

premises. This is the gain that accrues to the tenant.

7. QUASI RENT

If a factor of production, e.g. labours earned more than normal

rewards, then it is termed as quasi rent. This is because the

free-flow of factors around the market is interrupted by some

sort of economic friction.

8. EXCLUSIVE RENT

If a factor of production, e.g. labours earned more than normal

rewards, then it is termed as quasi rent. This is because the

free-flow of factors around the market is interrupted by some

sort by economic friction.

9. EXCLUSIVE RENT

It refers to a rent which makes the tenant responsible for

outgoing. It is also called not rent.

40
10. INCLUSIVE RENT

This refers to a rent payable or paid by the lessee which takes

care or include outgoings like repairs management fees and

insurance premiums. The amount so paid makes the landlord

to carryout or foot the bill of outgoings. It is also called gross

rent.

11. PERPERCORN RENT

It is a taken rent payable as consideration to a landlord, being

either of a nominal amount of money or more imaginatively a

peppercorn. In modern times, this usually occurs where the

tenant has paid a premium to the landlord.

2.7 MEANING AND TYPES OF PROPERTY

Property from an estate management point of view is the

right and interest exercised over a pieces or parcel of

land and all that is attached to the land, natural and

manmade structures that are above, on or under the said

land.

41
RESIDENTIAL PROPERTIES

These are buildings, which provide living accommodation

to its dwellers. It protects them from adverse whether

conditions and trespassers. Examples of such properties

are tenement buildings, block of flats, terraced houses,

semi detached house, detached houses, bungalows and

marionettes Houses.

COMMERCIAL PROPERTIES

These comprises mainly of shops, offices and show rooms

are usually of profit oriented purposes. The principal

factors affecting their value can be classified broadly into

the quality and quantity of broadly into the quality and

quantity of accommodation and situation of the premises.

Commercial properties incorporate those that render

retail and wholesale service, provide executive office

space or handle other similar functions. They can be

found in the following structural forms e.g. converted

dwelling houses, mixed development, purpose built office

accommodation which should have accessibility to the

common and medical clinics.

42
Commercial properties have to be situated is a central

business district so as to enjoy complementary

advantages and this depends on the purpose for which

they are required, as to look for a good location, for

example, insurance firms, merchant banks, micro-finance

banks and both other commercial enterprises are

concentrated in a particular locality such as Lagos

metropolis.

Office spaces comprise of suites, while floor or flat let,

can be used for transacting business. It also varies from

one room unit or suite of room to suit of large purpose

built office block. Some are on the ground floor of

buildings haring direct access to the street for example

banking hall. Some offices may also have double

frontage. There is usually evidence of rent as offices are

generally let out a rate or amount per square metre of

internal lettable space.

INDUSTRIAL PROPERTIES

43
These are properties that are acquired for special

manufacturing or processing purposes. The main factors

in sitting of an industrial premises are its nearness to raw

materials, labour and market. Example of such properties

include factories and warehouses.

AGRICULTURAL PROPERTIES

Properties engaged in the production of food and

livestock. They include farms, fishery, cattle rearing,

poultry, piggery amongst others.

SPECIAL PURPOSE PROPERTIES

These include properties not mentioned above but are

used by person in one form or other, such as, schools,

hospitals, recreational properties, cementry properties,

transportation lands, institutional properties,

transportation lands, institutional properties, services

areas amongst others.

2.8 THE PROPERTY MARKET AND USE

CLASSIFICATION

44
 The term “property market” does not connote a physical

located market where buying and selling of products take

place. The proper market consists of products take place.

The proper market consists of the sum total of the

transactions of buying, selling and letting of real property.

The term can also be used to refer to the free interplay of

the forces of demand and supply on real property. The

property market deals in right and interests in land and

buildings.

Therefore, the property market should not be viewed as a

particular place though, we recognize the local nature of

real estate markets and refer to them by name of the

locality in which the property is found plays an important

role in the life of real estate investors, valuers, estate

agents, economists and other allied professionals existing

spaces, adjusts the supply of land and the demand for

space in quantity and quality. It also determines land use.

2.8.1 VALUE AND ITS DETERMINATION IN THE

PROPERTY MARKET

45
 Value evolves from and changes with the degree of utility

and scarcity of an object in relation to man’s desire for

use and possession. Real property value arises from the

power of real property to satisfy man’s needs and desire

as an indispensable accomplishments to human life and

activity and obeys the same economics law as other

goods and services whose value are determined by the

interaction of forces of demand and supply.

The creation, modification, maintenance and destruction

of property value is subject to the interplay of social

ideals and standards, economics adjustments and

changes, political regulations, physical or natural forces

and other forces which motivate the activities of human

life. This study is concerned with the trends of value of

real property transformed into monetary term which

occupiers of commercial properties.

2.8.2 CHARACTERISTICS OF REAL PROPERTY

MARKET

(i). Heterogeneity

46
 Every property occupies a unique location, and there are

many other instance of possible difference in design,

condition, size, aspect and so on it is true that some

properties and close substitutes for one another, but on

the other hand, it is true that certain types of property

may present very rare opportunities for acquisitor and

therefore be virtually unique as an investment

opportunity.

(II). INVISIBILITY

Another feature of property which distinguishers it from other

investments is its frequent indivisibility and the relative high

cost of each indivisible unit. This often result in property being

unattainable as an investment medium for the small investor,

except for his own occupation through acquiring shares in

property companies through property binds or indirect means.

(III) INELASTICITY OF SUPPLY

A fundamental economic features of property is the difficulty of

varying its supply. The physical overall supply of land is

47
virtually fixed and the mix of various land uses is difficult to

alter, because of planning controls.

Due to the time taken to obtain planning permission, arrange

finance, construct buildings and arrange disposals, the

development in demand. It is not always viable or practicable

to demolish or change buildings to meet such a reduction. This

lack of responsiveness (or inelasticity of supply) in the industry

leaves it abnormally vulnerable to economic booms and

slumps.

(IV). HIGH COSTS OF TRANSFER

The incidental cost of dealing in property and high

relative to those of other investments. Investigations of

title, the need for a formal contract, and the frequent and

to create a mortgage are reason for employing a solicitor

while, the desirability of a professional opinion of value of

a report upon physical condition or to appoint an agent to

handle advertising and negotiations, all add to the cost of

transfer.

(V). SPECIAL RISKS

48
These includes:

(a) Physical risks such as fire, earthquake, flooding

wear and tear and user damage.

(b) The risk of liability of third parties due to

defective premises.

(c) The financial risk of granting lease for specified

periods of time with or without rent reviews.

(d) The economic risk that a property will become

obsolete in terms of design or purposes.

(VI). DECENTRALIZED MARKET

Unlike the stock exchange, the property market is not a

central market property is normally bought and sold

through agent acting in, and familiar with a particular

locality. The exception to this is with regard to the major

firms, who operate nationally and even international in

purchase, sale and letting of investment for major clients.

(VII). IMPERFECT MARKET KNOWLEDGE

Transaction involving certain types of property are

frequent, and the details concerning them are kept

49
 secret. This leads to lack of information about transaction

in certain sectors of the market.

(VIII). GOVERNMENT INTERVENTION

In view of the political significances of property,

government intervention is life. The following list gives an

indication of some of the main forms that this takes.

(a) Rent control and security tenure

(b) Discriminating taxation and relief from taxation.

(c) Control of credit.

(d) Control of land use and control of the construction,

maintenance and use of buildings,

(e) Compulsory purchase and public developments.

(IX) PERPETUITY

Land is durable and it is the habit of man and so he who owns

part of it has an investment is something which always has

been and (hopefully) always will b e absolutely to the needs of

man.

(X) THE ABILITY TO CREATE INTEREST IN PROPERTY

50
An interest in property may be defined as a “bundle of rights”

over that property, and it is these interest in property which

are bought and sold rather than the actual properties

themselves. These are from interest, leasehold interest to

mention a few .

(XI) LOCAL IN CHARACTER

fixity of location cause the market for real estate to be local in

character. As a commodity real estate cannot be moved from

place to place. Demand must come to the parcel or property.

An over supply of land and land improvements in a mid-

western state is of no avail to fill a market demand for like land

and improvements in another region or metropolitan centre-

real estate must be employed where it is, and because its

fixity, its geographical locality, it is extremely vulnerable to

shifts in local demand.

(XII) USE OF SPECIALISTS

Fixity in location again do creates the need for real estate

specialties who is familiar with local and environmental market

51
condition and with the applicable physical economic, and legal

characteristics of real estate as a commodity. Examples

include estate agents, estate valuers, brokers, lawyers,

engineers and a host of others.

(XIII). PAUCITY OF MARKET PARTICIPANTS

The number of participation in the market is limited by finance.

Not all who would love to purchase land and rich enough to

buy a plot.

2.10 CATEGORIES OF COMMERCIAL PROPERTIES

commercial premises as earlier mentioned include shops,

stalls, showrooms and offices. In the case of shops, the chief

consideration affecting rent is likely to be the number of

persons passing the premises in the course of the year and

the type of goods they are likely to be able to afford to buy. In

the case of offices, the prestige, which fashion may give to a

52
particular district and convenience of situation and access for

business purposes generally, will largely determine, rent.

SHOPS

Shops are usually very sound investment. They vary

substantially in size and type, from small shops in secondary

position to town centre shops on a number of levels and

corner pieces.

As already indicated the chief factor affecting values is that of

position and its effect on trade. The prospective tenant or

purchaser is likely, in nearly every case, to attempt some

estimate of the trade in those premises in that position.

The degree of accuracy that he will attempt to achieve will

depend largely on circumstances. It is well know that many of

the bigger concerns, with a large number of branches, have

arrived from experience at certain methods of assessing with a

fair degree of accuracy, the turnover they are likely to be able

to achieve in a given shopping position. From such an

estimated turnover it is necessary to deduct the cost of the

53
goods to be sold, from the gross profit remaining will fall to be

deducted wages, overhead charges and a margin for profit and

interest on capital. There remain a balance or residue, which

the tenant can afford to pay in rent, rates and repairs.

The use of in rent, premises for a particular retail trade can,

with some expectation, be changed to its use for another retail

trade without the necessity for obtaining town planning

permission. If therefore premises are capable of occupation for

a number of different purposes, and are likely to appeal to a

member of different tenants, there will be competition between

the latter, and the prospective occupier whose estimate of the

margin available for rent, etc is largest, is likely to secure the

premises by tenancy or purchase. Factors that affects the

investment potentials of shops, are;

i. Position- Shops in good position always let readily at

reasonable rents.

ii. Types of premises and their suitability for the display

and sale of goods.

iii. Types of tenant- It ahs an important bearing on the

security of income.

54
 iv. Terms of lease- the shop property may be let on

various terms, on one hand, the tenant may be

responsible3 for repairs and at the other extreme, the

landlord may be responsible. In between these

extremes a variety of different responsibilities is found.

Other factors influencing values and uses are (Ifediora

1993)

i. Proximity to customers

ii. Traffic street

iii. Good paving sidewalks and clean streets

iv. Ease of access

v. Adequate parking pace

vi. Adequate location amidst similar utilities and

vii. Good and level street for housing

OFFICES

The term above refers to premises, which are used for

professional or trade purpose or where clerical work is done,

but excludes premises which are sued for the display or sale of

55
goods. There are purpose bulk offices and converted dwelling

houses, purpose built offices which are modern buildings

constructed specifically for offices, containing, security

personnel, generating sets amongst others.

As regards letting, it is generally better to let a block as a

whole than if it is let in suites as it creates management

problems for the landlord and the provision of services in some

form or another is generally necessary. If the Landlrod is

prepared for such problems of management, the service

charge method should be sought.

The factor affecting the values of this property are;

(i) Location factors- the positioning of office

properties is less crucial than that of shapes

offices should be located in an area served by

good transport and other facilities, but the precise

position within that general location is generally

of less importance.

(ii) The income- The annual value is usually

considered in relation to area, and in

56
 advertisement of floor space to let in office

building. The rent is often quoted at a much per

unit of floor area.

(iii) Terms of Tenancy. Lettings of today almost

always are exclusive of rates. The cost of external

repairs, maintenance of stairs case, lifts and

other parts in common use, in the case of building

let in suites will be covered by a separate service

charge. The tenants may be liable for all repairs

to the interior of the offices. Where the whole

building are let to a single tenant, the lease is

normally a full repairing and insuring one. Other

factors include,

i. Similar surroundings.
ii. Ease of access from other parts of town

iii. Accessibility to principal financial institutions, banks,

exchanges, clearing houses.
iv. Ease of intercommunications
v. Parking spaces and facilities.

57
2.10.1 INFRASTRUCTURAL FACILITIES REQUIREMENT BY

COMMERICAL PROPERTIES

These are social amenities provide by the government,

commercial property owner and/or occupiers and the

general public to improve operation within these properties

and their values. They come in the following forms:

(i) Provision of goods roads.

(ii) Provision of electricity

(iii) Provision of generating sets (where applicable)

(iv) Provision of market centre

(v) Provision of market services

(vi) Provision of telephone services

(vii) Provision of lifts (where applicable)

(viii) Provision of fire alarm services

(ix) Provision of post offices

(x) Provision of hospitals and

(xi) Provision of pipe born water.

58
 CHAPTER THREE

3.0 RESEARCH METHODOLOGY AND STUDY AREA

3.1 INTRODUCTION

It is the objective of this research to make an analysis of trends

in commercial property rental value in Lagos metropolis from

2000-2009.

There has been noticeable increase in property value in Lagos

metropolis within this period. This observation could be

59
considered to be a mere assertion and that this research study

is to investigate. I this research, theoretical evidence, facts and

figures will be used to prove that the stated hypothesis. The

success, reliability an validity of a research is very much

determined by the collection, collation, interpretation and

analysis of data. There are many method of collection of data,

However the method to be used depends on the nature of the

study.

3.2 QUESTIONNAIRE ADMINSTRATION

3.2.1 QUESTIONNAIRE DESIGN

In the preparation of the questionnaire, There are the

fixed response type, the open and type and rating scale

question.

1. Fixed Response Type: The fixed response

questionnaire is design in such a way that

a number of alternative answers are

provide for a question. The respondent is

required to choose from the best answer

that will be conform to own line of thought.

2. Open- End type: The open and type

response questionnaire is the type that

60
 allows every respondent to provide

answers in his own option. He is not

restricted to any response options.

3. Rating scale Question: In this type of

questionnaire the questions are

constructed in such a way that the

respondents will have enough alternative

from which he/she can make a choice of

adequate, not adequate or no idea.

3.2.2 QUESTIONNAIRE DISTRIBUTION AND

COLLECTION

The questionnaire were administer by hand to the

respondent. This is because it has been observed that the

longer it remain with the respondent, the more time he

spend to provide answer to the questions which also

serve the time of both parties i.e. the researcher and the

respondent but most especially the respondent where he

is a and the respondent but most the respondent but

61
 most especially the respondent, where he is a very busy

person.

3.3 SOURCES OF DATA

The data used in this dissertation were obtained from

primary and secondary sources.

3.3.1PRIMARY DATA

The primary data used in this research are the

information gather and obtained through direct interview,

personal observation and filling of tables.

DIRECT INTERVIEW

Personal interviews were made with some occupiers of

commercial properties within Lagos metropolis as well as

Estate Surveyors and valuer to get information on rent paid

over years.

PERSONAL OBSERVATION

62
Personal observation were also made on some street within the

selected area in Lagos metropolis in order to ascertain the

general aesthetics of the area and the commercial property

types were also identified.

TABLES

A tables was designed and distributed to firms of Estate

surveyors and valuers and some individuals (consisting of

Landlords and occupier) in Lagos metropolis for the purpose of

obtaining rentals values on commercial properties from 2000-

2009 respectively.

3.3.2 SECONDARY DATA

This consist of assembled information relating to the topic of

the dissertation. This work information obtained from relevant

textbooks, past project, magazine and unpublished papers.

3.4 PROCEDURES FOR DATA ANALYSIS

After collecting the data, the researcher will find the

similarities or otherwise in the responses to the table. The data

63
presentation and analysis is in tabular form expressed in

ranges.

3.5 SAMPLE TECHNIQUES AND SAMPLE SIZE

A sample is precisely a part of the population. This sample

includes any commercial property as well as Estate firms in

Lagos metropolis for the purpose of this research, the simple

random sampling method was adopted through the use of

table of random number.

3.6 CHARACTERISTICS OF THE POPULATION OF STUDY

The researcher is interested in studying the nature of a

phenomenon as exhibited in commercial property types within

Lagos metropolis. A small size population sample of estate

firms and individuals within Lagos metropolis was employed for

the purpose of this research.

A population is made up of all conceivable elements subjects

or observation relating to particular phenomena (property

rental values) of interests to the researcher. All conceivable

elements and subjects in this research is therefore commercial

64
property type in Lagos metropolis as well as chosen firms of

estate surveyors and valuers. All this set of people will be

administered questionnaire in order to acquire the needed

information.

3.7 STUDY AREA (SAMPLE FRAME)

For the purpose of this project, the selected study area which

will represent Lagos metropolis was grouped into the following

major areas namely.

A. IKEJA AREA, DIVIDED INTO

i. Awolowo Way,

ii. Oba Akran,

iii. Toyin Street and

iv. Allen Avenue

B. LAGOS ISLAND, GROUPED INTO

i. Broad Street

ii. Idumota Area

iii. Moloney and

iv. Bamgbose

HISTORICAL BACKGROUND OF LAGOS METROPOLIS

65
Modern day Lagos is now a state situated in south-western

Nigeria. It is bounded in the west of the republic of Benin to the

north and east by Ogun State with the Atlantic ocean providing

a costline on the south and Lagoon has many Obas’s.

It has a total of 3,577 square kilometer. 787 square kilometer

is made of Lagoon and creeks including Lagos Lagoon, Lagos

harbour, five carries creek, Ebute-mtta creeks, Port-Novo

creek, new canal Badagry creek. An area of 455km2 of this is

water, wet and land and main grove swamps.

Modern days Lagos was founded by the Bini in the sixteenth

century. It was later called Eko. The Portuguese explorer Ruy

de sequerra who visisted the area in 1472, named the area

around the city Lagos de Curamo”, indeed the repesent name

is Portuguese for “Lake” . An alternate explanation is that

Lagos was named for Lagos, Portugal. A maritime town which

at the time was the main centre of the Portuguese expectation

down the African coast and whose own name is derived from

the celtic word Lacobriga.

It was a major centre of the slave trade until 1851, when the

untied kingdom, which had abolished slavery in 1807, captured

the city. It was formally annexed as a British colony in 1861.

66
The reminder of modern-day Nigeria was seized in 1886.

when the colony and protectorate of Nigeria was established in

1914 Lagos was declared its capital. Lagos experienced rapid

growth the throughout the 1960 and 1970s as a result of

Nigeria’s economic boom prior to the Biafran War. This

continued through the 1980s, 1990s, up till the present date.

It is significantly to note that Lagos grew at a rate of 3.3% per

annum between 1901 and 1950 but its growth rate per annum

between 1950 and 1963 had risen to 18.6%. By the 1963

census, a population of 1, 122, 7333 was recorded for

metropolitan Lagos, which at that time did not include Ikorodu.

While by 1971, some Nigerian urban centres were growing at

an annual rate of 2.3%, Lagos metropolis was experiencing a

growth of 14% (Lagos Executive Department Board 1971). By

1978, the population of metropolitan Lagos had risen to 3.8

million and by 1979 it was 4.13 million. The various economic

activities encouraged population growth. This phenomenal

population growth was not due to natural increase alone but

also to rural-urban migration and foreign immigration. The

immigrants are mainly in their reproductive years and are in

search of better opportunities. Lagos remained the nation

67
administrative capital till December 1991, when the seat of the

federal government moved to Abuja. However, up till now is

still the nations nerve centre from economic activities. Lagos

continue to grow and by 1997 the metropolis had a population

of 11.85 million, by the year 2001, it was estimated to haven a

population of 13 million. By the year 2015, the population of

Lagos Metropolis is projected to 24.4 million, and becoming the

third largest city in the world.

The rapid population growth in Lagos metropolis poses a

number of problem in the urban area, which include pressure

on the hand, shortage of housing, slum, urban congestion and

failure of the urban community as a whole to adapt to

changing conditions occasioned by the influx of migrant to its

institutional and social services. Population increases has a

direct impact on land use. It results in the demand for more

land for industrial, commercial, recreational, residential and

institutional purposes, as well as for other community facilities.

As Lagos grows, it has become a centre of gravity for all

professionals, semi-professionals, school skilled and unskilled

labour throughout its catchments area. The rate of statal,

rural-urban, and intra-continental migration of job seeker into

68
metropolitan Lagos has overburdened its housing facilities,

transport, system, telecommunication network, road articles,

electricity and water supply and shopping facilities.

CHAPTER FOUR

4.0 DATA PRESENTATION AND ANALYSIS

4.1 INTRODUCTION

Data presentation and analysis is embarked upon with a

view to describing, classify and finding out the existing

relationship between the variables of study in order to

draw a logical conclusion.

In this chapter, attention is paid to the orderly

presentation and analysis of data through the various

ways in which data was collected via the administrative of

questionnaire.

69
4.2 DISTRIBUTION OF QUESTIONNAIRE

A total of one hundred (100) copies of questionnaire were

distributed. Seventy (70) copies to the occupier/owners

while thirty (30) copies were administered on the Estate

Surveyors and valuers.

The record of respondents is as shown in table 4.1 below.

Table 4.1 Administration of Questionnaire

Respondent No of No of No of %
s questionnaire questionnair
administrativ e retrieved questionnair responden
e
e retrieved t
Occupier on 35 30 5 35%

Land Island
Occupier on 35 28 7 33%

Ikeja
Estate firm 30 20 10 24%
Total 100 78
Source: Field survey 2010

A total of seventy-eight (78) response were retrieved

from respondent on administering a total of 100

70
 questionnaire which represent 92% which appears

suitable for analysis.

4.3 PRESENTATION AND ANALYSIS

The table below shows the trends in rental values of

commercial properties (offices) in Lagos Island between

2000-2009 and it is measured per/m2.

71
TABLE 4.2

Trend in rental value of commercial property (office) in Lagos metropolis

=N=(per/m2)

Areas 2000 2001 2002 2003 2004 2005 2006 2007 2008
Broad 5500- 5500- 5500- 7000- 7000- 10,000 10,000 20,000 20,000 20,000

7000 7000 7000 15000 15000 18,000 18,000 25,000 25,000 25,000
Marina 5500- 5500- 6,500 8,500 8,500 12,000 12,000 18,000 18,000 18,000

7000 7000 9,000 10,000 10,000 15,000 15,000 20,000 20,000 20,000
Ofin 2500 3,500 3,500 5000 6,000 9000 10,000 15,000 15,000 15,000

4,000 5000 5,000 7,000 7,500 12,000 15,000 18,000 18,000 18,000
Nnamd 2,500 4,500 4,500 7,000 7,000 10,000 10,000 15,000 16,000 16,000

i 4,500 6,000 6,000 10,000 10,000 12,000 12,000 18,000 18,500 18,500

Azikwe
Source: Field Survey 2010

72
The trend of commercial (office) property value in Lagos

Island increases in a peculiar manner which is greatly

influenced by the economic situation of the country. The

increase is not constant throughout the period under

survey rather the values were increasing at the beginning

of the decade and later reached their peak. The peak

rental figures attaches to ground floor spaces of banking

Hall and shops etc, least rental figure attaches to the

upper floor of properties with poor services facilities as

well as those inadequate function at maintenance.

The rental of office on Broad Street rose in 2003 and

remains so in 2004 but reached its peak in 2007. The

trend was the same with marina, the rental rose in 2003

and also reached its peak in 2007and his been the same

since then. Ofin has a different trend with less price but

start rising in 2005 and reach it peak in 2007 and

remained the same. Likewise Nnamdi Azikwe, its value

increased in 2003 and later reached its peak in 2007.

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 Table 4.3
The trend In rental value of commercial properties (Shop) in Lagos Island between 2000-2009
and its is measured by annum.
Trend in commercial property (shop) rental value Lagos metropolis

Areas 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Idumota 120,000 120,000 140,000 140,000 140,000 150,000 150,000 180,000 250,000 250,000

- - - - - 180,000 180,000 - - 500,000

150,000 150,000 160,000 160,000 160,000 250,000 500,000

Nnamdi 70,000- 70,000- 80,000- 80,000- 130,000 140,000 140,000 180,000 250,000 250,000

Azikwe 90,000 90,000 120,000 120,000 160,000 170,000 170,000 250,000 450,000 450,000

Moloney 30,000 30,000 50,000 50,000 60,000 60,000 75,000 75,000 100,000 100,000

50,000 50,000 70,000 70,000 80,000 80,000 110,000 110,000 150,000 150,000

Lewis 35,000 35,000 50,000 50,000 55,000 55,000 80,000 80,000 95,000 95,000

55,000 55,000 70,000 70,000 80,000 80,000 100,000 100,000 150,000 150,000

Source: Field Survey 2010

74
This category of commercial property is not common on

marina and broad street as they are dominated by purpose

built high rise office structures but presently the few available

shops are let between N250,000-N500,000 per annum. The

trend of shop value within Lagos Island has been on the

increased since the beginning of the decade. Although the rate

of increase is not constant and there are some instance of

price stability.

(IKEJA)

Table 4.4 shows the increase in rental values of commercial

properties (offices) in Ikeja between the year 2000- 2009 and it

is measure or rated by per m2 trend in rental value of (office)

in per.

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 (Table 4.4)
Trend in rental values of commercial properties (Office) in Lagos metropolis in Ikeja
=N= (per/m2)
Areas 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Awolowo way 1400 1400 1800 1800 1800 2600 3300 3300 3500 5000

1600 1600 2000 2200 2200 3000 3500 3500 4500 6000
Allen Avenue 6500 6500 8500 85,000 85,000 9500 9500 13000 13,500 14,00

7500 7500 10,000 10,000 10,000 11,500 11,500 15000 15,000 16,000
Toyin Street 4,50 4500 5500 55000 6000 6000 7500 7500 10,000 10,000

0 5500 6500 65000 8000 8000 9000 9000 12,000 12,000

5500
Oba Akran 4000 4000 65000 6500 7000 7000 7500 7500 10,080 10,000

6000 6000 7500 7500 8000 8000 9500 9500 13,000 13,000
Source: Field Survey 2010

76
From the above table Awolowo way record an increase in 2003

and it was steady also in 2004 but later witness increased in

value in 2007 while the increase later reached it peak in 2009.

Allen Avenue has a different trend, it value increased over the

years since the beginning of the decade and also gotten to its

peak in 2009.

Toyin Street started increasing in 2004 and was stable in 2005

but later increased in 2006 till it get to its peak in 2008. Oba

Akran also has the same trend along with Toyin Street with

little or no difference.

Table 4.5 show the trend in rental values of shops in Ikeja and it

is measured or rated per annum

77
 Table 4.5

Trend in a rental value of commercial properties (shops) in ikeja =N= per annum

Areas 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Awolow 45,000 45,000 50,000 50,000 65,000 65,000 75,000 75,000 110,00 110,00

o way 55000 55000 60,000 60,000 90000 90,000 100,00 100,00 0 0

0 0 150,00 150,00

0 0
Allen 140,00 140,00 150,00 150,00 220,00 220,00 250,00 250,00 350,00 350,00

Avenue 0 0 0 0 0 0 0 0 0 0

160,00 160,00 200,00 200,00 280,00 280,00 350,00 350,00 500,00 500,00

0 0 0 0 0 0 0 0 0 0
Toyin 45,000 55,000 70,000 90,000 100,00 100,00 140,00 140,00 220,00 220,00

Street 55,000 80,000 100,00 100,00 0 0 0 0 0 0

0 0 150,00 150,00 200,00 200,00 300,00 300,00

0 0 0 0 0 0
Oba 75,000 75,000 75,000 95,000 95,000 100,00 100,00 120,00 140,00 140,00

Akran 90,000 90,000 90,000 110,00 110,00 0 0 0 0 0

78
 0 0 130,00 130,00 160,00 200,00 200,00

0 0 0 0 0
Source: Field Survey 2010

79
Trend in Awolowo way record an increased in 2004 and it was

stable in 2005 but later reached its peak in 2008 moreover, value

is much higher at the other side of Awolowo way which is the

Central Business District (CBD).

Allen Avenue has been on the increase since the beginning of the

decade, the rate of increase is constant in 2004 and 2005 but

later rise in 2008.

Toyin street has a similar trend with Awolowo way only at the

beginning of the decade but the rate change in 2002 till it gets to

its peak in 2008.

Oba Akran has a different trend, its value was constant in 2000,

2001 and 2002 but later rise in 2003 and the increased did not

stop until it get to its highest in 2008.

80
4.4 ANALYSIS OF THE INFLATION RATE TO RENTAL

VALUES OF COMMERCIAL PROPERTIES IN LAGOS

METROPOLIS

The real estate sector as a whole, is prone to adverse

effect of economic conditions prevailing during a

depression. The most obvious features of economic dis-

equilibrium on real estate sector are, rent default,

stagnant rent, slow growth rate of rent, closure or

reduction in capacity of business strength and poor

maintenance of properties due to increasing maintenance

cost.

The fall in the real income of the citizenry coupled with

increasing cost of living invariably, makes demand for real

estate to be determined by affordability and frequent

sustainability rather than necessity. Occupiers who cannot

pay higher rent due to increase pressure on the disposable

income will inevitably settle for lower type of

accommodation. A good example is happening in Lagos

Island where there is a high rate of voids as occupiers are

81
moving out of the high valued accommodation to lower

valued ones. As occupants move out of accommodation

stated earlier, the demand for them will reduce and at the

same time their prices will reduce. The reduction of them

remains until demand exceeds supply. The prices increase

and they become no longer affordable.

GENERAL OBSERVATION

DEVELOPMENT

Lagos metropolis is the centre of economics and

commercial activities in Nigeria as a whole. It is associated

with high-technologically-developed buildings and high

rise structures.

PLANNING

Planning standards are conformed to during and after

development because apart from the town planning and

building regulations, it also cretates an avenue for revenue

for local and state governments in terms of acceptance

and defaults.

CONCENTRATIONS

82
The researchers observed that high valued commercial

properties are concentrated in Lagos Metropolis.

CHAPTER FIVE

5.0 SUMMARY OF FINDINGS, RECOMMEDATIONS AND

CONCLUSION

5.1 INTRODUCTION

The analysis in the following chapter has fulfilled the purpose

of this research work. This chapter will include the summary,

conclusion and recommendation of the analysis based on the

research objective.

5.2 SUMMARY OF FINDINGS

Under this study, the following situation are found to have

caused and resulted to the trend in commercial property value

in lagos metropolis from 2000-2009

- There has been a significant increase in commercial

property development .This is usually in the form of

office building, banks ,shops, and supermarket etc which

has cropped up in almost every part of the study area

83
 .Most of the development are in the nature of

conversion ,renovation and re-building.

- Financial institution have not been willing to give out loan

for development, this is mostly due to the high rate of

default on the part of developer or investors in redeeming

loans. Where loans are given, the interest is usually very

high.

- The problems of finance ,land acquisition and high cost

of construction are attribute to the increase in the trend

of commercial property in Lagos metropolis.

- The study also showed that the trend are directed

upward, some value tend to be stabilize, some fall and

rise again

5.3 RECOMMENDATIONS

1. Government should endeavour to envisage full impact of

their economic, fiscal and monetary policies on the

various sectors of the economy before embarking on such

policies. The general impact of the policies should be

evaluated comprehensively.

84
2. Office space, which is above 1000 m2, should be designed

with level of flexibility during construction stage to be

able to accommodate two or more tenants conveniently

should there be difficult in getting a single tenant. The

later, which is becoming more and more difficult to

achieve in today’s market.

3. Office centres should be incorporated in development

plan for regional economics development.

4. Rent control should be designed in such a way that it will

favour both owners and occupiers, that is supply and

demand will be at equilibrium.

5. Obsolescence should be avoided through repairs,

maintenance and flexibility of designs.

6. The government should find out ways by which the

masses could easily get building materials in the locality

and encourage their use. Local building materials are

better substitutes or their modern counterparts. They are

durable and cheap.

85
5.4 CONCLUSION

Conclusively, rental trends have effects on commercial

property market, when rent are low, more people can afford to

rent accommodation but when rents are high, and people find

alternatives which have low rent.

86
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