The Inflation-Hedging Performance and Risk-Return Characteristics of Residential Property Investments in Gombe, Nigeria

Dabara, Daniel Ibrahim

doi:10.9734/air/2015/12221

Cited by 8 publications

(6 citation statements)

References 11 publications

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“…In addition, the authors found that indirectly listed real estate has a weak link with inflation, which leads investors to discount its capacity to hedge against price increases; this is in contrast to residential real estate that is physically located [79]. Dabara et al [81] analyzed the possibilities for real estate investment to diversify and hedge against inflation from 2005 to 2014. The data were analyzed by employing descriptive and inferential statistics.…”

Section: Review Of Extant Literaturementioning

confidence: 99%

“…Thus, a good understanding of the inflation-hedging dynamics is important, which can be deduced from the inflation rates of the nation. The findings of Dabara [81] reflected that it is challenging for the Nigerian government to reduce the inflation rates and maintain them in the single-digit range. This is evident within the trendlines as Nigeria's inflation rates in some years during the 1980s and 1990s were higher than those of 2023.…”

Section: Effect Of Inflation On the Nigerian Economymentioning

confidence: 99%

“…The present study has observed that Nigeria has recorded the highest inflation rate in its financial history and it has not dropped at the time of this investigation in 2023. However, while Dabara [81] had a more conservative approach to discussing inflation in developing countries, Zhou and Clement (2010) also posited that real inflation rates in developed countries were mainly in the single digits. This finding is in line with Sing and Low's [64] findings that the expected inflation is consistent in its decrease.…”

Section: Effect Of Inflation On the Nigerian Economymentioning

confidence: 99%

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Dynamics of the Inflation-Hedging Capabilities of Real Estate Investment Portfolios in the Nigerian Property Market

Nwosu,

Bello,

Oyetunji

et al. 2023

Buildings

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There has been a wide belief that real estate is a source of good investment portfolios because it has a hedge against inflation. Considering this notion, the present research examined the dynamics of the inflation-hedging capabilities of real estate investment in Nigeria’s three foremost property markets, Abuja (Maitama and Central Business District), Lagos (Lekki and Victoria Island), and Port Harcourt (Rumu Ibekwe and Aba Road). To achieve this aim, this study was carried out by exploring the returns on different types of commercial properties in the chosen location and investigating the effect of inflation on such returns in order to come up with the hedging capabilities of the assets. Out of the four property prime locations in Nigeria’s market, these selected study sites were purposely selected for investigation because they comprise the most desirable and preferred properties regarding location, standards, aesthetics, and value. From the data collected, a mean return, coefficient of variation, and ordinary least square regression analysis were completed. In terms of the coefficient of variation (CV), the findings reveal that the duplex in Port Harcourt exhibits the most performed investment, with a value of 0.33, compared to other locations. However, in terms of the expected return (ER), the duplex outperformed other property types in the different locations, with a return of 39.56%. Results also show that inflation has an adverse effect on the returns of the office space for the three locations considered, with the expected returns below 1%. The block of flats in Abuja has a complete defence against the three components of inflation, with a coefficient beta of 0.5633, 0.6586, and 0.8440, respectively. Thus, investors should consider inflation and other investment attributes when making decisions among arrays of investments. This will help guard against the widespread perception that real estate has a hedge against inflation. This paper adds to the existing literature on inflation hedging by investigating the effect of inflation on the real estate investment returns of commercial properties.

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Section: Review Of Extant Literaturementioning

confidence: 99%

Section: Effect Of Inflation On the Nigerian Economymentioning

confidence: 99%

Section: Effect Of Inflation On the Nigerian Economymentioning

confidence: 99%

See 1 more Smart Citation

Dynamics of the Inflation-Hedging Capabilities of Real Estate Investment Portfolios in the Nigerian Property Market

Nwosu,

Bello,

Oyetunji

et al. 2023

Buildings

View full text Add to dashboard Cite

show abstract

“…The study of the impact of BBBEE on listed and non-listed property firms in South Africa revealed that BEE compliant firms have higher return than non-compliant firms . In Nigeria, empirical studies have shown that, the performance of real estate investment market is sensitive to economic outlook of any country (Ojetunde, 2013;Nzalu, 2013;Oyewole and Ajayi, 2014;Dabara, 2015). For instance, Oni, Emoh and Ijasan (2011) found that, inter-bank call rate (IBCR), monetary policy rate (MPR) and inflation (INF) were the major principal components influencing the real estate investment.…”

Section: _______________________________________________________ 312mentioning

confidence: 99%

“…Diala, Kalu and Igwe-Kalu (2016) discovered positive insignificant relationship between changes in exchange rate and returns on commercial property in Nigeria. Dabara (2015) revealed that, returns on residential property are sensitive to increasing different inflationary categories (actual, expected and unexpected) at varying degree. Oyewole and Ajayi (2013) study on the influence of macroeconomic factors on the performance of office property identified GDP, Interest rate, and employment rate as most significant but the study did not consider REITs market.…”

Section: _______________________________________________________ 312mentioning

confidence: 99%

Integrating the African Real Estate Market – An Agenda: the 18th AfRES Conference

Iwarere¹,

Williams²

2018

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Purpose -This paper examined stakeholders' perception on the competency attained by real estate graduates in Nigeria.Design/Method/Approach -The study adopted questionnaire survey conducted on 357 and 105 Estate Surveying and Valuation Firms in Lagos and Abuja respectively, representing an approximate 57 percent of the total number of practice firms in Nigeria. The questionnaire solicited information on practitioners' views on competencies, in terms of, knowledge, skills and attributes attained by real estate graduates in the industry. The respondents were asked to rank on a 7-point Likert scale, 24 knowledge areas, 10 skills and 10 attributes identified and conceptualized from literature. Their responses were analysed using frequency distribution and mean rating.Findings -The study revealed that practitioners were positive on their agreement to the graduates' attainment on only three (3) of the twenty four (24) identified knowledge areas, namely real estate agency, property management and property valuation. While ICT, communication, Personal/Professional development and Honesty were the skills and attributes attained respectively. This clearly suggests the need for stakeholders (academics, regulators and practitioners) to take urgent steps to bridge the obvious gap between the knowledge requirements of practitioners and the knowledge attained by graduates in the study area.Practical Implications -The findings of this paper can be used as framework for curriculum development and redesign as well as serve as a guide for real estate continuing professional development plan.Originality -This paper is one of the few that have identified stakeholders' perception on competencies attained by real estate graduates in Nigeria.

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A fresh look at the inflation-hedging attributes of residential property investments in emerging markets: evidence from Nigeria

Ekemode

2021

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PurposeThis study reinvestigates the short-run and long-run inflation-hedging attributes of residential property assets in the Nigerian property market, based on variations in property types and location.Design/methodology/approachData used for this study comprised the holding period returns of three residential property types, namely bungalow, block of flats and detached house during 1999–2018. These were obtained from property practitioners in Lagos, Abuja and Port Harcourt, respectively. The inflation values obtained from the National Bureau of Statistics were split into actual, expected and unexpected components. Fama and Schwert’s (1977) ordered least square (OLS) regression was used to assess the short-term inflation hedging efficacy. Afterwards, the long-run link between residential property and inflation was examined using the Johansen and Juselius cointegration test.FindingsThe results showed that despite the variations in hedging behaviour across property types in the three locations, residential property assets significantly provided protection over actual, expected and unexpected inflation in the short run based on the OLS regression analysis. The result of the Johansen and Juselius cointegration test also established a long-term link between the residential property assets and actual inflation. However, mixed results were found on the link between residential property and expected and unexpected inflation, as some of the assets did not effectively hedge these inflation components in the long run.Practical implicationsThe study implied that the differences in property types and geographic locations are crucial in establishing the short-run and long-run inflation-hedging attributes of residential property assets and should be factored into consideration.Originality/valueThe paper complements the existing body of knowledge on the inflation-hedging attributes of residential property in emerging markets by determining the effects of variation in house types and geographic differences on the analysis.

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The Inflation-Hedging Performance and Risk-Return Characteristics of Residential Property Investments in Gombe, Nigeria

Abstract: The study was designed, analyzed and discussed by the author. The author takes full responsibility for the whole study including data collation, manuscript drafting and editing.

Cited by 8 publications

References 11 publications

Dynamics of the Inflation-Hedging Capabilities of Real Estate Investment Portfolios in the Nigerian Property Market

Dynamics of the Inflation-Hedging Capabilities of Real Estate Investment Portfolios in the Nigerian Property Market

Integrating the African Real Estate Market – An Agenda: the 18th AfRES Conference

A fresh look at the inflation-hedging attributes of residential property investments in emerging markets: evidence from Nigeria

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