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

Dabara, Daniel Ibrahim

doi:10.2139/ssrn.2784493

Cited by 8 publications

(19 citation statements)

References 6 publications

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“…This findings is not congruent with the relationship between direct real estate investments in the same study area. Studies such as Akpan and Ogunba (2015) and Dabara (2015) found that returns from direct investments in real estate in Nigeria increases as inflation increases.…”

Section: Resultsmentioning

confidence: 99%

“…Investments in indirect real estate on the other hand, denotes investing in a product whose performance is based on some measure of property performance; this includes buying shares or equities in a publicly quoted real estate company such as REITs or non REITs listed property companies (Kim, 2009, Li andChow, 2015). Dabara (2015) asserted that 'one of the reasons for investors' preference for real estate investment is its seeming ability to protect the purchasing power of the investor's investment funds'. This has made investments in specifically indirect real estate assets such as Real Estate Investment Trusts (REITs) and other real estate equities gain global attention in recent times.…”

Section: Introductionmentioning

confidence: 99%

“…In global markets, real estate investment asset classes are perceived to be good hedges against inflation (Dabara, 2014). This assertion was tested by studies conducted across the globe, these studies includes: Chu and Sing (2004); Liu and Zhou (2009);Leung (2010); Lee (2012) and Dabara (2015) among others. Findings from these studies were observed to be divergent and conflicting.…”

Section: Introductionmentioning

confidence: 99%

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Impact of Inflation on Indirect Real Estate Investments in Nigeria

Dabara¹,

Chiwuzie²,

Omotehinshe³

et al. 2019

26th Annual European Real Estate Society Conference

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The study aims at investigating the impact of inflation on securitized real estate investments in Nigeria with a view to providing information to aid real estate investors in making informed investment decisions. The timeframe for the study covers between 2007 and 2016. All the securitized real estate investments including both REITs and non REITs were captured in the study. The population for the study comprised of all securitized real estate companies in Nigeria namely: Skye Shelter Fund REITs, Union Home REITs, UPDC REITs and UACN properties. Data for the study were collected from the databases of the securitized real estate companies covering the study period. The data collected comprised of share prices and dividends of the respective companies as well as inflation rates obtained from the Nigerian National Bureau of Statistics (NBS). The data were analyzed by means of both descriptive statistical tools such as frequencies, mean scores and percentages; and inferential statistical tools such as regression models. Findings from the study revealed that the return profile of REITs and non REITs equities in Nigeria from 2007 to 2016 had experienced some level of volatility with the non REITs outperforming the REITs investment asset (the highest returns obtained from REITs investment was 5.43%, while the highest returns for the non REITs was 41.79%). Inflation was seen to be mostly in double digits and had kept increasing throughout the study period, ranging between 4.37 and 18.45. Analysis of the relationship between indirect real estate investment returns and inflation in the study area revealed negative Beta coefficients for both REITs and non REITs investments in the study area. This was indicated by a beta coefficient of -0.127 and -0.225 for REITs and non REITs asset classes respectively. This results suggested a perverse hedging characteristics for all the securitized real estate investments in the study area. This study have implications for individual and institutional real estate investors. The result of this study can be useful for investment forecast and investment decisions as regards to the type of asset to include in an investor's portfolio, taking to consideration the impact of inflation on such asset(s).

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Section: Resultsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Impact of Inflation on Indirect Real Estate Investments in Nigeria

Dabara¹,

Chiwuzie²,

Omotehinshe³

et al. 2019

26th Annual European Real Estate Society Conference

View full text Add to dashboard Cite

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“…It is obvious that most of the REITs industries in the African content were established in emerging property markets. This gives rise to certain peculiarities associated with emerging markets such as lack of data for assessment by prospective investors (Bekaert, Harvey & Lumsdaine, 2002;Dabara, 2015). Despite the huge investment potentials inherent in African property markets, lacks of relevant information about such markets have hindered both foreign and domestic investors from making investments in the markets.…”

Section: Introductionmentioning

confidence: 99%

Financial Structure of Reits in Emerging Property Markets: An Assessment of N-Reits

et al. 2018

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Purpose: The study assessed the financial structure of REITs in emerging markets, using the Nigerian Real Estate Investment Trusts (N-REITs) to provide relevant information to guide both foreign and domestic investors. Design/Methodology/Approach: Secondary data obtained from the financial statement and annual reports of all the REITs companies in Nigeria namely Skye Shelter Fund, Union Homes REITs and UPDC REITs were used for the study. The study period covered from 2007 to 2016. Descriptive statistical tools such as frequencies, mean weighted scores and percentages were used in analyzing the data obtained for the study. Findings: The study revealed that UPDC REITs had the highest capital injected into the industry; hence it has the highest market capitalization. However the entire industry has a market capitalization of ₦41, 183, 684, 050 ($134.5 million) and a unit holders' fund of ₦44,726,754,000 ($146.2 million) within the study period, this is considered quite small when put alongside REIT companies of other nations with substantial market capitalizations such as the US which had a market capitalization of about $977.9 billion and South Africa with market capitalization of about $21 billion. Similarly, the study revealed that the N-REITs has great potentials given that the direct property from which it derives its income is doing well in terms of return performance in the study area.Originality/Value: REITs in emerging property markets has not been sufficiently studied. This study provided empirical data from an emerging property market which can guide prospective investors from across the globe. 31 and growth over the years since its inception in 1960 in the US (Drew, 2016). Other nations, most especially developed nations, have long also adopted REITs regimes in their respective capital markets. Previous studies have shown that REITs are thriving well in the global property market space. This assertion is buttressed by the financial structure of global REITs as well as individual REITs industries across the globe. Li & Chow (2015) for instance, estimated the global REITs market capitalization in the year 2013 at about $1.1 trillion. In the year 2016, the global REITs market capitalization was estimated at over $2 trillion (NAREIT, 2016) and in 2017; it was estimated to be about $3 trillion (NAREIT, 2017). A very large portion of the estimated global REIT market capitalizations comes from REIT industries of developed economies which are mostly characterized by matured property markets (NAREIT, 2017). Very scanty studies have been conducted on the contributions of REITs industries from emerging markets. Hence, this study will add to the existing body of knowledge in this field from the perspective of REITs in emerging markets, using N-REITs as a case study. The paper is structured as follows: the next section reviews related literature; section three presented the methodology adopted for the study; section four presented the results/discussion of results while section five presented the conclusion of the st...

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“…Changes in real estate returns are an important factor for investors when making investment decisions. It is obvious that rational investors will only seek to invest on assets with strong historical positive returns which poses potentials for positive flow of future stream of returns (Kloosterman, 2009;Leung, 2010;Ankeli, Dabara, and Okunola, 2013;Dabara, 2015). Hence, the examination of the historical trends and predictive trends of such investment asset(s) is/are imperative before a prudent investor proceed to invest in such asset(s).…”

Section: Introductionmentioning

confidence: 99%

The Trends in Commercial Property Values in an Emerging Real Estate Market: The Case of Ibadan Metropolis, Nigeria

Dabara¹,

Oyewole²,

Taderera³

2015

Real Estate Markets Development: Meeting the Challenge, Making the Difference - The 15th African Real Estate Society Conference

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This study aims at examining the trends in commercial property's rental, capital and returns values from 2002 to 2014 in Ibadan metropolis, Nigeria with a view to providing information for investment decision making. DESIGN/METHODOLOGY/APPROACH:Questionnaire survey was conducted to collect data on rental and capital values from investments in commercial properties in Ibadan metropolis. The data were collected from partners/branch managers of Estate Surveying and Valuation Firms in the study area. There were 56 estate surveying and valuation firms in Ibadan with an average of 2,072 commercial properties in their management portfolios (an average of 37 properties in each management portfolio). A total enumeration of the 56 firms was conducted using structured questionnaire; however, only 31 questionnaires were completed and returned for analysis (representing 55% response rate). Descriptive statistics was used in analysis of the data obtained, hence the use of frequencies; percentages; income, capital and total returns formulae; weighted mean; growth rate formulae and trend analysis. FINDINGS: The study found that there was a steady and continuous increase in both the rental and capital values of the selected property types throughout the study period. This was depicted by the trendlines generated from data obtained from the field as well as the annual average growth rates calculated (8.35%, 8.1%, 10.3% and 6.3% for office rental values, shop rental values, office capital values and shop capital values respectively). The income, capital and total returns for investments in office property type were observed to have an average of 4.40%, 6.58% and 10.98% respectively. Similarly, the average income, capital and total returns on investments in shop property type were seen to be 4.62%, 5.19% and 9.82% respectively. The income, capital and total returns values indicated positive returns values for both office and shop properties throughout the study period. PRACTICAL IMPLICATIONS: Due to the dynamism and property market immaturity associated with emerging property markets of developing nations, investors may want to ascertain the trends of returns behavior of real estate investments so as to serve as a guide for their investment decision making, hence this study. ORIGINALITY/VALUE: This study is unique as it gathered historical data on commercial property investments behaviour and made future forecast or predictions of possible investment behaviour of returns values in an emerging property market which could serve as a guide to property investors in making investment decisions.

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

Cited by 8 publications

References 6 publications

Impact of Inflation on Indirect Real Estate Investments in Nigeria

Impact of Inflation on Indirect Real Estate Investments in Nigeria

Financial Structure of Reits in Emerging Property Markets: An Assessment of N-Reits

The Trends in Commercial Property Values in an Emerging Real Estate Market: The Case of Ibadan Metropolis, Nigeria

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