ASSESSING THE TREND IN RENTAL VALUES OF COMMERCIAL PROPERTIES ALONG OYEMEKUN ROAD, AKURE, NIGERIA

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ASSESSING THE TREND IN RENTAL VALUES OF COMMERCIAL PROPERTIES ALONG OYEMEKUN ROAD, AKURE, NIGERIA
Covenant Journal of Research in the Built Environment (CJRBE) Vol. 1, No. 1 (Maiden Edition), June, 2014.

    ASSESSING THE TREND IN RENTAL VALUES OF
   COMMERCIAL PROPERTIES ALONG OYEMEKUN
              ROAD, AKURE, NIGERIA
                                                    By
                                               Iroham, C. O1,
                                            Oluwunmi, A. O.1,
                                              Simon, R. F1,
                                                  &
                                             Akerele, B. A1.
                               1
                            Department of Estate Management,
                        Covenant University, Ota Ogun State Nigeria.

                         osmond.iroham@covenantuniversity.edu.ng
                        funike.oluwunmi@covenantuniversity.edu.ng
                                  funshosimon@yahoo.com
                                 akerelebeatrice@yahoo.com
Abstract: Commercial property investment which is now very evident along Oyemekun
Road, Akure, Nigeria, a place characterized hither to by residential development, leaves
investors at dark with the choice of commercial property investment. Commercial
properties evident in the study area are purpose-built office space, converted office space
and shopping complex. In a bid to lead investors aright on the best decision of the type of
property to invest their hard earned income in, a study was conducted to assess the trends
in rental values of the properties between 2006 and 2011 in order to discover the property
with the highest trend. This study which is a cross-sectional research that entailed the
survey of the entire 22 Estate Surveying Firms in the study area made use of
questionnaires as the primary source of data. The use of both descriptive and inferential
statistical techniques such as the frequency distribution table and the simple linear
regression, and Analysis of Variance (ANOVA) were adopted in analysing data. From the
study it was discovered that the converted office space is mostly predominant (53%) while
the shopping complex is the most professionally managed property (46%) respectively.
However, the purpose built office space with the highest R2 of 0.9 and having the highest
trend in rental values will result to the fastest recoup of investment. The use of (ANOVA)
coupled with Tukey post-hoc test reveal that the rental values of three properties at the
95% confidence level are significantly different (p=0.000). Based on the study findings, it
is recommended that the purpose built office space with the highest rent and trend should
be the focus of both investors and professional managing agents in order to maximize
returns.
Keywords: Rental values, Rental Trends, Commercial Properties, Nigeria.

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ASSESSING THE TREND IN RENTAL VALUES OF COMMERCIAL PROPERTIES ALONG OYEMEKUN ROAD, AKURE, NIGERIA
Covenant Journal of Research in the Built Environment (CJRBE) Vol. 1, No. 1 (Maiden Edition), June, 2014.

1. Introduction                                              Meyer,. 2006); the situation of a
Real estate trend is a generic term                          new sport venue (Dehring,
used to describe any consistent                              Depken, and Ward. 2007);
pattern or change in the general                             distance      from        foreclosed
direction of the real estate                                 properties (Lee, 2008); local
industry, which must be based on                             historic designation (Ijla, 2008);
fact and, over the course of time,                           the impact of inflation and real
causing a statistically noticeable                           construction cost in the long-run
pattern of change (Mueller, 1999).                           while in the short-run increase in
This phenomenon can be a result                              wealth rising from equity price
of the economy, a change in                                  (Leung, Chow and Han, 2008);
mortgage       rates,     consumer                           provision of wall-fence round the
speculations or other fundamental                            building and the installation of
and non-fundamental reasons. A                               burglary proof in all the windows
trend can be downward or upward,                             (Olujimi and Bello, 2009);
horizontal or vertical depending                             nearness to worship centres‟
on the series of related changes                             (Iroham, Oloyede and Oluwunmi,
that are identified and projected                            2011) amongst others. Specifically
into a plausible future. When such                           for commercial properties certain
trends are based on rental values                            factors do abound as revealed in
then the observation will be                                 previous studies. Such factors
confined to any evident changes in                           include average floor area and
rent patterns. Rents passing on                              number of rooms (Slade, 2000);
properties are bound to be                                   changes in floor space and prime
influenced variedly due to the                               lending rates (Chin, 2003); size of
heterogeneity of real estate. These                          sales facility (Kivilahti and
factors range from intrinsic to                              Viitanen, 2006); neighborhood
extrinsic characteristics. They                              and      physical     characteristics
include closeness to high-rise                               (Marco, 2007). From these
office    buildings     (Thibodeau,                          backdrops these requisite factors
1990); accessibility (Ball, Lizieri                          have to be continually evident for
and MacGregor, 1998); location,                              properties to keep commanding
size, structural characteristics                             attractive rents that will generate
(Tay, Lau and Leung, 1999;                                   an impressive trend/pattern from
McCluskey, Deddis, Lamont, &                                 the stance of investors over a
Borst, 2000); proximity to rail and                          given period of time. Rising rents
park (Jensen and Durham, 2003);                              have been described as an
provision of balconies (Chau,                                attraction for rental real estate
Wong, , and Yiu, 2004); proximity                            development as prospect of rental
to open space (Anderson and                                  growth is also an important
West, 2005); location of dams                                viability consideration. In addition
(Provencher,      Sarakinos,    and                          rental growth rates combined with

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ASSESSING THE TREND IN RENTAL VALUES OF COMMERCIAL PROPERTIES ALONG OYEMEKUN ROAD, AKURE, NIGERIA
Covenant Journal of Research in the Built Environment (CJRBE) Vol. 1, No. 1 (Maiden Edition), June, 2014.

occupancy levels are being                                   Akure which was hither to sprawl
regarded as major long run                                   with residential structures. Three
determinants of property income                              types of commercial properties
(Mueller, 1999).                                             including purpose-built office
                                                             space, converted office space and
Changes in rent invariably affect
                                                             shopping complex are evident in
every type of real estate although
                                                             the study area. As a fast growing
in varying degrees. It appears that
                                                             arena for commercial activities
these changes are more evident in
                                                             investors could be faced with the
commercial      properties.    This
                                                             decision on which of the type of
perhaps is due to the fact that
                                                             property to invest their hard
these properties are majorly built
                                                             earned income. This study is
for business transactions and as
                                                             thereby geared towards leading
the name implies could easily be
                                                             investors aright on the best
prone to varying economic warp.
                                                             decision of investment to make
Commercial property which could
                                                             amongst the three property types
come in form of office space,
                                                             for earliest recoupment of
malls, retail stores, shopping
                                                             investment.
centers, banks amongst others has
an important role in real estate                             Hence the basic research questions
markets. Its importance can be                               designed are to seek the opinion of
related to three different factors:                          respondents      through     direct
First, as a factor of production,                            statements contained in the
commercial property provides the                             questionnaire on certain aspects of
space to house the activities of                             the study:
business and industry. Second, as                                 What are the rental values
a financial asset, commercial                                        of the various types of
property constitutes a significant                                   commercial       properties
part within asset markets. Third,                                    along Oyemekun Road,
as an investment medium, it                                          Akure between the years
provides revenues to its holders                                     2006 and 2011?
based on value (Ustaoğlu, 2003).                                  What are the trends in the
These      characteristics    make                                   rental values of these
commercial property attractive for                                   properties?
investors. Hence, any painstaking                                 Which of these properties
process in monitoring rental                                         has the highest trend in
movements over the years is worth                                    rental values over the
the while.                                                           years?
Perhaps these grandiose attributes                                Is there any significant
commercial properties offer have                                     difference in the rental
resulted to a plethora of such                                       values passing on these
investment in Oyemekun Road,                                         properties?
                              15

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ASSESSING THE TREND IN RENTAL VALUES OF COMMERCIAL PROPERTIES ALONG OYEMEKUN ROAD, AKURE, NIGERIA
Covenant Journal of Research in the Built Environment (CJRBE) Vol. 1, No. 1 (Maiden Edition), June, 2014.

                                                             rent increases (indicating rent
2. Earlier Works on Trends in                                drift) could be found. Evidence
Property Values                                              was found to support the existence
According to Nwuba (2008), the                               of such rent drift. This rent drift
need to analyse the movement of                              has also been discovered in
rents is premised on the fact that it                        commercial real estate rents in
would aid entrepreneurs in their                             similar research conducted in
planning and cash flow projections;                          Hong Kong (Brown and Chau,
assist developers in investment decision                     1997) and Australia (Beer, 1999).
making; useful to real estate                                However, a later research in Hong
professionals in appraisals and                              Kong, Dahoa (2003), discovered
evaluation of proposed development                           that after a peak reached in 1997
projects; as well as provide information                     there was a drop of 66.9% and
for researchers. A number of studies                         48.7% respectively in House Price
have been carried out on rental                              Index      and    Rental     Index
movements. In the United States,                             respectively. The situation in
Mueller (1999) using asking rents                            Scotland is quite different as no
and average rental growth rate,                              regular trend in office rents was
evaluated rental growth rates in                             observed. However, there were
the physical real estate cycle and                           fluctuations particularly between
found that national average                                  1987 and 2002 (Langdon and
growth rates at each point in the                            Everest, 2003).
cycle were statistically different.                          Scott and Judge (2000) examined
Bjorklund       (1999)        studied                        the     cyclical   behaviour      in
residential rent between 1990 and                            commercial property values in the
1997 in Stockholm from an                                    UK between 1956 and 1996 using
investor‟s point of view. With the                           a     structural    times     series
use of rent equations, estimations                           (unobserved            components)
were conducted to analyse                                    approach. The study incorporated
whether or not rent levels varied                            influence of the transition to short
between locations holding other                              rent reviews during the late 1960s
rent-affecting variables (age and                            and the short and long-term
improvement) constant. It was                                impacts of the 1974 and 1990
discovered it varies. The study                              property crashes in the analysis,
also entailed a comparison                                   via dummy variables. It was found
between annual increases in the                              that once these variables were
effective rent charged for privately                         taken into account a fairly regular
owned residential properties and                             cyclical pattern can be discerned
the official increases set via                               within a period of about 7 to 8
official       negotiation        for                        years. Furthermore, the 1974 and
municipality owned residential                               1990 property crashes were shown
housing to see whether excessive                             to have had a major long-term

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Covenant Journal of Research in the Built Environment (CJRBE) Vol. 1, No. 1 (Maiden Edition), June, 2014.

impact on property value growth                              recent     financial    crises    in
(presumably via their influence on                           developed economies, the results
investors‟ expectations).                                    of stress-testing exercises and the
Shipley (2000) embarked on a                                 current historically high share of
research that was designed to                                commercial          property-related
examine the assertion that historic                          lending to private non-financial
designation of properties, under                             corporates. Observation made
the    heritage    legislation    in                         reveals that over the period 2003
Canada‟s largest province, has a                             to 2006, there was a large increase
negative impact on the values of                             in capital values in the Irish
those properties. The actual selling                         commercial       property    market
price of subject properties was                              without a correspondingly large
used to establish their value                                increase in rents. Consequently,
history trends, which were then                              income yields on all types of
compared to ambient market                                   commercial property reached very
trends     within      the     same                          low levels in 2006. Of additional
communities.      Almost       3,000                         concern, from a financial stability
properties in 24 communities were                            perspective have been the rapid
investigated, in what is believed to                         rates of increase in lending for
be the largest study of its kind                             commercial          property-related
ever undertaken in North America.                            purposes during the same period.
It was found that heritage                                   The paper investigated whether
designation could not be shown to                            these trends were unique to
have a negative impact. In fact                              Ireland, and considered the extent
there appeared to be a distinct and                          to which the growth in
generally robust market in                                   commercial property values can
designated heritage properties                               be explained by fundamental
with over 74% of such properties                             factors. It addressed these issues
performing well. These heritage                              by examining recent trends in
properties tend to be resistant to                           capital values and income yields
down-turns in the general market                             on Irish commercial property on a
as ample numbers of willing                                  historical and international basis
buyers were prepared to pay                                  and found that nominal income
premium for this type of property.                           yields have followed a general
Woods (2007) argued that                                     downward trend since the mid-
developments in the commercial                               1990s.
property market have greater                                 Hui et al (2008) carried out a
consequences for the stability of                            research on building and real
the Irish financial system. This as                          estate index for the Hong Kong
highlighted by Woods op. cit. may                            residential property market. The
be especially true in the light of                           aim of the study was to explore
international experience regarding                           changes in price expectations and

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Covenant Journal of Research in the Built Environment (CJRBE) Vol. 1, No. 1 (Maiden Edition), June, 2014.

confidence of housing consumers                              source of data collection was
over a period of time, with the                              secondary through newspapers,
primary objective of developing                              magazines         and       internet,
an independent confidence index                              supplemented by primary data
for residential properties in Hong                           collection via interviews and
Kong. The building and real estate                           making personal visits to the
index provided an objective                                  various real estate companies. The
resource to forecast market                                  study revealed issues concerned
performance. It also provided an                             with real estate investment in the
objective tool, and a statistical                            country considering the past and
pointer that forecasts future                                present trends of rental values.
housing price trends.                                        Cities like Delhi, Mumbai and
Jeong and Kim (2009) used a time                             Gurgaon experienced a 20-25%
series analysis and a shock-                                 jump in their rental values because
response analysis of the vector                              of the demand for independent
auto regression (VAR) model to                               houses by majorly corporate
find the trends in retail rents in                           sectors who rent such houses for
South Korea. The data of retail                              their senior executives. Even
rent series were compiled by three                           though       commercial         lease
institutions (the Bank of Korea -                            agreements specify a 15%
BOK, the Kookmin Bank, and the                               escalation in the real estate rental
Korea Statistic Office) from                                 in every three years, the present
January 1995 to February 2008.                               cause of real estate boom in India
                                                             was injection of foreign funds by
The long-term trends in retail rents                         the         government           into
showed that they continued to rise                           infrastructures     like      hotels,
in general but there was a short                             shopping      malls,     large-scale
sluggish period. The researcher                              residential complexes in new
discovered that retail rents had a                           townships, InfoTech parks and
positive relationship with office                            special economic zones in order to
rents,    property     management                            attract higher investments. The
expenses, consumer price index,                              growth in the real estate sector
and housing deposit-basis lease                              was discovered to be between 25-
value (chonsei), but negative                                30% for residential, 10-15% for
relationship with interest rate.                             commercial       and     agriculture
Singh and Komal (2009) in their                              sectors.
study of the prospects and                                   Briggs and Ng (2009) in their
problems of real estate in India;                            study of trends and cycles in New
surveyed 50 major players in the                             Zealand house prices sought to
real estate field. The study focused                         find the trend level of house prices
on commercial real             estate                        and identifying the anchor or
investment in India. The principal                           attractor for house prices, and look

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Covenant Journal of Research in the Built Environment (CJRBE) Vol. 1, No. 1 (Maiden Edition), June, 2014.

at whether it was possible to                                respectively.    Each      interview
identify a long run equation that                            which lasted a minimum of 30
describes the trend in house                                 minutes was based on the
prices. The study linked house                               following research question: to
prices to household income                                   what extent has structural change,
suggesting that other factors                                caused by the state-led economic
besides interest rates such as tax                           transition,       affected        the
treatment of rental properties and                           performance and the stability of
an increase in the proportion of                             the emerging office market as
rental properties are also behind                            reflected by market-led cyclical
the rise in the trend in house                               fluctuations?     The      interview
prices. Certain factors including                            process undertaken between 2004
increases in section prices and the                          and 2007 was centered on five
cost of construction would have an                           themes developed based on the
impact on the cost of existing                               research question: Markets and
houses as well as new houses.                                cycles since the 1990s; what
Other factors include increased                              changes        have        occurred?
access     to    credit   following                          Information (data) availability and
financial deregulation, and a                                quality; how this was structured?
higher propensity on the part of                             Factors affecting commercial
households to borrow.                                        property markets; Government
Wu et al. (2009) used interview                              policy and office markets - the
data to explore and examine                                  analysis: e.g. Market vs. State
property markets in three Chinese                            policy, which one is the main
cities with the focus placed on the                          driver? Also there was a search for
emergence of the commercial                                  the future prospect and market
property      markets    and      the                        maturity. The work identified
government-market          interplay,                        varying opinions and perceptions
noting the market formation                                  among key stake-holders about
process and cycles that are                                  cycles in China‟s emerging
„unexpected‟ in a transitional                               commercial property markets.
economy.       Interviewees     were                         Interviews in the three cities
selected with the intention to                               suggested a spectrum of factors
cover the core elements of the                               that may substantially affect the
property submarket. The sampling                             stability of China‟s office markets.
was not random because the                                   A cross-sectional comparison of
information sought-after was not                             the three cities did reveal a similar
evenly distributed in the society.                           pattern of cyclical behaviour
A total of 27, 19 and 26 semi-                               highlighting structural change and
structured      interviews      were                         state intervention with leads-and-
conducted        in     Guangzhou,                           lags, in spite of the dispersion in
Chongqing           and      Beijing                         geography, culture and market

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Covenant Journal of Research in the Built Environment (CJRBE) Vol. 1, No. 1 (Maiden Edition), June, 2014.

maturity. The various views                                  between the rental growth rates
offered about market mechanism                               and CPI inflation rates. The results
and cyclical behaviour represented                           showed       that    office     rents
varying levels of market maturity.                           maintained upward trend during
These brief insights offer an                                the study period but the growth
opportunity to develop an                                    rates were lower than general
alternative approach to measure                              inflation rates. Rental growth rates
property market conditions in                                were statistically significant, but
emerging or immature markets                                 no significant difference existed
such as China by looking at                                  between the growth rates and
market stakeholder perception                                inflation rates. There was a strong
based on the notion that market                              positive      linear     relationship
can be partially driven based on                             between time and office rents
perception i.e. market are not                               movement, which could be an
100% efficient.                                              indication that office rents grow
                                                             significantly over time. Also,
The Nigerian Experience
Although studies on rental trends                            Idudu (1989) and Omuojune
in Nigeria are relatively sparse,                            (1994) in related studies on trends
certain contributions need to be                             in rental values observed that
acknowledged. Nwuba (2004) in a                              urban rents in Nigeria have
study involving differences in                               maintained upward movements in
house rent in various locations in                           the previous two decades.
Kaduna between 1986 and 2004                                 In Ikeja, Lagos State, due to the
shows the existence of house rent                            rate of increase in rental values of
inflation    rates     which    was                          commercial properties along each
discovered to be statistically                               arterial road which has become
significant amongst these areas.                             unpredictable leading to inability
Nwuba and Adeagbo (2007) as a                                of Estate Surveyors and Valuers to
follow-up on this research found a                           accurately predict its trend, Oni
steady rise in house rents index in                          (2009) focused on determining
Kaduna during the same period. In                            spatial distribution and deriving
the succeeding year, Nwuba                                   models for predicting the trend of
(2008) evaluated office rental                               the values. In doing so, data
movements in the Central Area of                             (rental values over a period of 5
Abuja, Nigeria, between year                                 years, 2003-2007) were collected
2000 and year 2007, with a view                              by interviewing Estate Surveyors
to measuring the rental growth                               and Valuers and occupiers of
rates. The basic questions                                   commercial properties in the study
determined were whether the                                  area, analyzed using polynomial
rental    growth       rates   were                          regression models and spatial
significant,       and       whether                         distribution     of     commercial
significant     difference    exists                         property values along the arterial

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Covenant Journal of Research in the Built Environment (CJRBE) Vol. 1, No. 1 (Maiden Edition), June, 2014.

roads were depicted on a Value                               the researchers also embarked on
Map. Models were also derived to                             participants‟ observation of the
assist Estate Surveyors and                                  properties in the area to know the
Valuers, real estate developers and                          number of commercial properties
financiers in predicting accurately                          in the area. The method used in
future values of commercial                                  analyzing the data includes
properties along the arterial roads                          frequency distribution as well as
in the study area.                                           other techniques. The collected
The studies so far have been in-                             data was arranged, tabulated and
depth however there was no                                   presented to allow for meaningful
nudging for investors in making                              analysis and interpretation. The
decision      amongst       given                            data of the frequency table was
alternatives particularly amongst                            presented using diagrams, charts
the Nigerian researchers. This                               and graphs, in addition to the
present study takes a leap in this                           simple linear regression models of
direction.                                                   Microsoft Excel. Data was
                                                             processed by coding using the
Methodology                                                  Statistical Package for Social
The methods are principles                                   Sciences (SPSS) software in
underlying any given research                                determining      any      statistical
which logically involves obtaining                           significance amongst the three sets
information via peculiar field                               of rental values by the use of the
work, data collection, sample size                           Analysis of Variance (ANOVA)
and frame, sampling procedure,                               coupled with the Tukey post-hoc
data requirements through primary                            test at the 95% confidence level.
sources and secondary sources and
method of data analysis. The                                 3. Findings and Discussions
methodological framework used to                             The        administration       of
attain the stated aim and                                    questionnaire to Estate Surveyors
objectives of the study are                                  and Valuers was carried out
examined, also the type and                                  personally, and the various
sources of data examined are                                 responses were subsequently
usually along the procedure                                  analyzed using the Statistical
employed.                                                    package for social science (SPSS)
                                                             software. Twenty-two (22) copies
This is a cross-sectional research                           of questionnaire were distributed
that entailed the survey of the                              to the firms of practicing estate
entire 22 Estate Surveying Firms                             surveyors and valuers in Akure.
in the study area. The major                                 Nineteen                 completed
instrument for data collection of                            questionnaires were returned
this study is questionnaire for                              resulting to a response rate of
Estate Surveyors and Valuers                                 86%. This was found substantial
involved in the study. However,                              for convincing analysis.

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Covenant Journal of Research in the Built Environment (CJRBE) Vol. 1, No. 1 (Maiden Edition), June, 2014.

In achieving the objective of this                            grouped into Purpose-built office
study, the researchers embarked                               space, Converted office space and
on a participant observation of all                           Shopping     Complex.          The
commercial properties in the area.                            frequency distribution of the three
It was observed that the                                      types of commercial properties are
commercial      properties   were                             given       in       Table       1.

Table 1: Frequency Distribution of Commercial Property along
Oyemekun Road
S/N     Type of Office                                              Percentage
1       Purpose-built                        40
                                             Frequency              31.0
2       Converted                            70                     53.0
3       Shopping Complex                     21                     16.0
         Total                               131                    100
Source: Authors’ Field Survey, 2012

From Table 1, it can be seen that                             study area, Oyemekun was mainly
converted office space ranked the                             of     residential   use   before
highest type of commercial                                    commercial activities evolved and
property found in the area,                                   demand       for   office  spaces
constituting about 53% of the total                           encouraged owners to convert to
number of properties along                                    offices. However, the respondents
Oyemekun Road. This indicates                                 asserted that they have more of
that the type of office spaces                                shopping complexes under their
mostly common in the study area                               management portfolios as shown
is the converted office space. The                            in Fig. 1

      Fig. 1: Pie Chart Showing Percentages of Commercial Properties
              managed along Oyemekun Road.

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Covenant Journal of Research in the Built Environment (CJRBE) Vol. 1, No. 1 (Maiden Edition), June, 2014.

Figure 1 shows the percentage of                             managed. However, the shopping
commercial properties available in                           complex which is the least in
the respondents‟ management                                  number happens to be the most
portfolio. During the course of the                          managed.
field survey the researchers                                 Rental values of the various
discovered that most of the                                  types of commercial properties
converted office spaces were not                             along Oyemekun Road, Akure
being managed. As a result, most                             between the years 2006 and 2011
estate firms do not have converted                           The study period of between year
office spaces in their management                            2006 and year 2011 reveals that
portfolio. Hence, of the 70                                  the average rental values per
converted office      spaces in the                          annum of these commercial
study area only 13 are being                                 property types are as shown in
                                                             Table 2.

Table 2: Average Rental Values of Commercial Properties
S/N Office Space 2007         2008     2009      2010                                                   2011
1     Purpose-built              195,000           240,000          240,000           300,000           300,000

2     Converted                  100,000           100,000          130,000           150,000           150,000
      Office
3     Shopping                   35,000            35,000           50,000            50,000            60,000
      Complex
Source: Authors’ Field Survey, 2012

Trends in the rental values of the commercial properties along
Oyemekun Road, Akure
From the average rental values of the different commercial properties
within the area obtained, the trend in the commercial property values were
obtained and shown in Figure 2

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     350000
     300000
     250000
     200000                                                                                    Purpose-built
     150000                                                                                    Converted
     100000                                                                                    Shopping Complex
      50000
            0
                     2007           2008           2009           2010           2011

       source: Authors field survey 2012
     Figure 2: Trends in Rental Values of Commercial Properties
The future trend was considered using linear regression analysis for each of
the properties in the study area with time as the independent variable to
explain how the rental values of these properties vary with time. The
graphic details below elucidate better:

Table 3: Rent paid for Purpose-built Office from 2006-2011
 S/N Office Space                  2007              2008              2009              2010              2011

 1       Purpose-built             195,000           240,000           240,000           300,000           300000

Fig 3: Trend in Purpose-built Properties

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Covenant Journal of Research in the Built Environment (CJRBE) Vol. 1, No. 1 (Maiden Edition), June, 2014.

Table 4: Rent paid for Converted Office Space from 2006-2011
    S/N Office Space                   2007              2008             2009              2010              2011

    1       Converted                  100,000           100,000          130,000           150,000           150,000

Fig 4: Trend in Converted Office Space

Table 5: Rent paid for Shopping Complex from 2006-2011

S/N Office Space                    2007             2008              2009              2010              2011

1        Shopping                   35,000           35,000            50,000            50,000            60,000
         Complex

Fig 5: Trend in Shopping Complex
Source: Authors’ Field Survey 2012

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Covenant Journal of Research in the Built Environment (CJRBE) Vol. 1, No. 1 (Maiden Edition), June, 2014.

Commercial properties with the                               by which the variation in outcome
highest trend in rental values                               of the dependent variable can be
over the years in the study area                             accounted for by the independent
From the projections seen in the                             variable. The R2 of the three
following linear equation as                                 commercial properties as shown in
follows                                                      the graph above are as follows:
Y= A + Bx                                                    Purpose-built office space = 0.9;
This can aid in projecting future                            Shopping Complex = 0.8989;
rental income                                                Converted Office Space = 0.8929.
Where:                                                       Although the high R2 value of the
Y= the calculated or estimated                               three commercial property types
value for the dependent variable                             indicate a very strong positive
(projected rent)                                             relationship between time and
                                                             rents, from above it can be seen
A= the Y intercept, the theoretical
                                                             that the R2 of the purpose–built
value of Y when X=0
                                                             office space is the highest among
B= the slope of the line, the
                                                             the three commercial properties.
change in Y is divided by the
                                                             Therefore, it is the property whose
change in X, the value by which Y
                                                             rental values can be most
changes when X changes by 1.
                                                             ascertained with each successive
X= the number of years projected
                                                             year under study. Hence, it implies
for.
                                                             that about 90% of the variation in
Therefore, from the graph above,
                                                             rent of purpose-built office space
it is evident that the following R2
                                                             is explained by variation in time in
applies to the linear equation for
                                                             the model, making it the property
the various commercial properties.
                                                             with the highest trend over the
R2     in    regression     analysis
                                                             years as revealed in Fig 6
represents the level of relationship

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Covenant Journal of Research in the Built Environment (CJRBE) Vol. 1, No. 1 (Maiden Edition), June, 2014.

Fig 6: Projected Rent of the Commercial Properties
Significant difference in the rental values passing on the properties in
the study area
An Analysis of Variance (ANOVA) was conducted to discover if this
difference in rental values is quite significant. Results from the SPSS
analysis produced the following relevant Tables (6-8).

                                                           Table 6: Descriptive
  Rent
                                                                 95% Confidence Interval for
                                                                 Mean
         N     Mean      Std. Deviation  Std. Error             Lower Bound Upper Bound           Minimum          Maximum
 pur     5                45000.00000 20124.61180
             255000.0000                                        20124.61180 310874.8799 310874.8799 310874.8799
 con     5                25099.80080
             126000.0000                11224.97216             11224.97216 157165.5190 157165.5190 157165.5190
 sho     5    46000.0000 10839.74169
                                         4847.67986               4847.67986      59459.3170 59459.3170 59459.3170
Total 15                  93462.49566 24131.91261               24131.91261 194091.1383           35000.00         300000.00
             142333.3333

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Covenant Journal of Research in the Built Environment (CJRBE) Vol. 1, No. 1 (Maiden Edition), June, 2014.

     Table 7: ANOVA
     Rent
                              Sum              of
                              Squares               df        Mean Square            F            Sig.
   Between Groups             1.112E11              2         5.560E10               60.164       .000
   Within Groups              1.109E10              12        9.242E8
   Total                      1.223E11              14

   Table 8: Multiple Comparisons
   Dependent Variable:Rent
              (I)                                                               95% Confidence Interval
              propert (J)      Mean Difference
              y       property (I-J)           Std. Error              Sig.     Lower Bound        Upper Bound
   Tukey      pur       con       1.29000E5              19226.71752 .000       77705.7390         180294.2610
   HSD                  sho       2.09000E5              19226.71752 .000       157705.7390        260294.2610
              con       pur       -1.29000E5             19226.71752 .000       -180294.2610       -77705.7390
                        sho       80000.00000*           19226.71752 .003       28705.7390         131294.2610
              sho       pur       -2.09000E5             19226.71752 .000       -260294.2610       -157705.7390
                        con       -8.00000E4             19226.71752 .003       -131294.2610       -28705.7390
   Games-     pur       con       1.29000E5              23043.43724 .003       59168.2601         198831.7399
   Howell               sho       2.09000E5              20700.24154   .001     138654.7866        279345.2134
              con       pur       -1.29000E5             23043.43724   .003     -198831.7399       -59168.2601
                        sho       80000.00000*           12227.01926   .002     41344.5229         118655.4771
              sho       pur       -2.09000E5             20700.24154   .001     -279345.2134       -138654.7866
                        con       -8.00000E4             12227.01926 .002       -118655.4771       -41344.5229

   *. The mean difference is significant at the 0.05 level.

We can see from the output of the                             contains the results of Tukey post-
ANOVA analysis that there is a                                hoc tests is referred.
statistically significant difference                          We can see from the table below
amongst the means of the various                              that there is a significant
types of commercial property in                               difference in rental values
the study area. We can see that the                           amongst the various types of
significance level is 0.000 (p =                              properties. For instance, the rental
.000), which is below 0.05.                                   values between the purpose built
Therefore, there is a statistically                           commercial        properties    and
significant difference in the mean                            converted shops is significantly
rent collected on these properties.                           different (p=0.000); likewise the
However, in order to know if the                              rental values between purpose
difference cuts across the three                              built properties and shopping
property types, the “Multiple                                 complex (p=0.000). The rental
Comparisons        Table”     which                           difference is also evident between

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Covenant Journal of Research in the Built Environment (CJRBE) Vol. 1, No. 1 (Maiden Edition), June, 2014.

the converted shops and shopping                             Conclusion
complex (p=0.003).                                           The converted office space which
In a nutshell, it is revealed that                           happens to be the most evident
there is a statistically significant                         amongst        the      commercial
difference in the rental values                              properties already reveals the
amongst the         three types of                           status of the study area as
commercial properties in the study                           residential base in time past. The
area as determined by one-way                                shopping complex on the other
ANOVA (F(2,12) = 60.164, p =                                 hand       being      the     most
.000). A Tukey post-hoc test                                 professionally managed reveals
revealed that the rental values are                          the status of this type of
statistically significantly different                        commercial investment when
as     follows:     purpose     built                        compared to others. Although the
commercial property (N255, 000                               three sets of properties have quite
±N45, 000, p = .003); Converted                              high R2 values, that of purpose
Shops (N126, 000 ± N25, 099.80,                              built office space recorded the
p = .000) and Shopping Complex                               highest and also in rental values.
(N46, 000 ± N10, 839.74, p                                   There is therefore the need for
=.000). Hence, the difference in                             investors      and     professional
rental values is quite glaring with                          managing agents to devote much
purpose built shops showing the                              effort to the investment in
most prospects in rental values.                             purpose-built office space, in the
                                                             area    of     development      and
                                                             management respectively, so as to
                                                             maximize returns on investment.

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