Commercial Real Estate Return Distributions: Empirical Evidence from Ibadan, Nigeria
The study aims at examining commercial real estate return distributions in Ibadan Nigeria with a view to providing information for informed investment decisions in emerging real estate markets. The timeframe for the study covers between 2009 and 2018. Population for the study comprised all office and shop properties in the management portfolios of all the 56 registered estate surveying and valuation firms in Ibadan, Nigeria. A total enumeration survey of all the firms was carried out. Data for the study were collected from the records of the aforementioned firms. The data comprised rental income and capital values of office and shop properties over the study period. The data were analyzed by means of descriptive statistical tools, the income, capital and holding period formulae as well as trend analysis. Findings from the study revealed that the return profile of commercial properties in the study area have experienced some level of volatility, with the shop property type outperforming the office property type. Both property types provided positive income, capital and holding period returns with mean values of 3.96%, 5.16% and 9.1% respectively for office properties and 10.68%, 7.59% and 18.27% respectively for shop property type, indicating that the shop property type outperformed the former within the study period. The study have implication for both institutional and individual investors as a guide for investment forecast and investment decisions as regards the type of asset to include in an investor’s portfolio, taking to consideration the return performance of such asset(s).
Keywords - Commercial Property, Investor, Portfolio, Rent, Return.