The Relationship Between Infrastructure And Property Value

Project and Seminar Material for Estate Management

The Relationship Between Infrastructure And Property Value


Property is a bundle of rights whose value is determined by the interplay of various factors classified into accessibility, environment, Neighbourhood and property characteristics. This study access the relationship between infrastructure and property value in Agege area of Lagos metropolis. In other to achieve the research objectives, questionnaires were administered to two sets of respondents: Estate firms and Residents in Agege Local government area of Lagos.

The first part represent the demographic details of the respondent. The sample were drawn from the residents in Agege and Estate firms around the Area including Ikeja and its Environs. The data collected were analysed using some standard statistical method like tables and charts and findings were interpreted accordingly with the use of percentage. For the purpose of this research, 120 copies of research questionnaire were administered, 90 copies were given to residents and 30 copies to estate firms out of which 93 copies were retrieved and analysed, 70 copies were retrieved from residents and 23 copies from Estate firms in selected areas.

Chapter One

1.0 Introduction

1.1 Background To Research Study

Infrastructure plays a key role in the well being of developed and developing nations and its importance to economic growth and development cannot be underestimated or overlooked. It is one of the basic facilities and systems serving a country, city, or area, including the services and facilities necessary for its economy to function. It typically characterizes technical structures such as roads, bridges, tunnels, water supply, sewers, electrical grids, telecommunications, and so forth, and can be defined as “the physical components of interrelated systems providing commodities and services essential to enable, sustain, or enhance societal living conditions.

Infrastructural development influences the housing sector and it is one of the determinants of the value of property in the housing subsector. Housing represents one of the most basic needs of man and it has a profound impact on health, welfare and productivity of individuals. For housing to produce these impacts, it must be adequately provided with functional infrastructures. One of the veritable parameters and assessment indicator of status of any spatial, especially urban system is the state of infrastructure. The efficiency of any form of human activity system including an urban area largely depends on provision of efficient infrastructural facilities and services (Babarinde 1998). The significance as well as the quality and coverage of infrastructural facilities have a major impact on the standard of living, property value and economic growth. Its role in the proper functioning of an urban area cannot be over emphasized.

According to Fox (1994), infrastructures are those services derived from a set of public work traditionally provided by public sector to enhance the private sector production and allow for household consumption. Nubi (2002) describes infrastructure as the aggregate of all facilities that allow a city to function effectively.

Janet Rivers and Michael Heaney have connected infrastructure investment to all facets of economic development. This almost always includes an increase in property values, which is not a problem since the increase is always offset by increasing opportunities and incomes in the general vicinity. The closer a residential area is to new infrastructural projects, the higher the increase in its value. In addition, Rivers and Heaney also found that the reverse relationship is true: Failing infrastructural investment is closely related to falling property values. They go so far as to hold that decaying or neglected infrastructure is a major determinant of economic decay and recession.

In developed countries of the world where infrastructures are well developed and given top priority, Infrastructure has played a key role in promoting and sustaining rapid growth in all sectors of their economy including the housing-property subsector of these countries. Properly designed infrastructure can also make growth more inclusive by sharing its benefits with poorer groups and communities, especially by connecting remote areas and small and landlocked countries to major business centers.

The relationship between infrastructural development and property value also exists in the developing world. In Nigeria for instance where the federal government over the past few years have embarked on massive infrastructural development in all regions of the country after years of neglect, every sector of the economy including the housing sector which has experienced an unprecedented boom in patronage as well as increase in value of properties in areas that have high infrastructural development. Professor M.A. Adebayo of the University of Lagos, found strong relationships between property values, economic development and infrastructural development. Lagos which the commercial capital and ranked the highest in terms of infrastructural development has a result of the commendable efforts made by the slate government, properties in the state command the highest value in the country. Not only is there a connection between public investment and the financial values of local housing, but people arc clearly willing to pay more for a house or business if they know there is, or was, substantial public investment in the area.

1.2 Statement Of The Problem

This project examines the relationship between infrastructures (roads, electricity, water, drainage facilities & waste disposal system), effects of these infrastructures on property value and cost and how the key players like estate firms and residents of Agege area are at the receiving end of the effects. The level of neglect of infrastructural development over the years as well as the deficient and deteriorating state of the few available ones is becoming more alarming and worrisome due to the inability of the public sector to meet up with its social responsibilities to the people. The availability and inability of infrastructural amenities may influence proper value and cost positively or negatively.

1.3 Research Question

  1. What are the existing infrastructure in study area?
  2. What is the demand level for infrastructure in the study area?
  3. What is the willingness to pay for specific infrastructure in the study area?
  4. What is the extent to which these infrastructure affect the value of residential property in the study area?

1.4 Aim And Objectives

This research is aimed at assessing how much value is added to residential property for specific infrastructure project in the study area.

The objectives however include:

  1. To examine the existing infrastructure in the study area
  2. To ascertain the demand level for infrastructure in the study area
  3. To identify the willingness to pay for specific infrastructure in the study area
  4. To ascertain the extent to which these infrastructure affects the value of residential property in the study area.

1.5 Significance Of Study

Property Market is very dynamic and complex sector which transverse a vast array of components, institutions, socio-economic and historic dimensions. This research examined the influence of infrastructural amenities on property as well as look at the challenges faced in infrastructural development in Agege area of Lagos. In addition to the above, the study will be a reference material for students, scholars and other researchers.

In addition, this study will create awareness to individuals, professionals, investors, communities and the society at large on how selected infrastructure determines residential property values. Aside the contributions made to knowledge, the research would go a long way in making possible mass evaluation of properties, help guide property investors on areas of potential returns on investments. The research would also be significant to government on the type of infrastructures to be provided in certain areas.

The study will guide investors on where to invest taking into consideration unavailable infrastructural facilities. For this reason, it will be significant to the following group.

  1. This research will be beneficial to the property owners and residents in the study area by providing adequate information on availability and state of infrastructure.
  2. This study will be useful in providing regulatory guideline for infrastructure] reform
  3. It will assist providers of infrastructures in planning and budgeting resources and allocations to areas where it is most needed.

1.6 Scope Of Study

This project will evaluate the relationship between infrastructure and property value in Agege area of metropolitan Lagos. Various infrastructure includes but not exhaustive; Telecommunication infrastructure, Drainages/sewage infrastructure, Portable water supply, Electricity, Health facilities, Educational infrastructure, Sanitation and solid waste disposal system. This study therefore attempts to examine the extent to which this infrastructure contributes to residential property value in the study area. It would also look at the challenges faced in infrastructural development in an attempt to improve the value of properties in Agege area of metropolitan Lagos.

1.7 Definition Of Terms


This refers to the fundamental facilities and systems serving a country, city, or area, including the services and facilities necessary for its economy to function.


This is s a building that functions as a home for humans or other creatures, ranging from simple dwellings such as rudimentary huts of nomadic tribes to complex structures composed of many systems.


This is the shell or structure of dwellings. It is generally referred to the social problem of ensuring that members of society have a home in which to live, whether this is ahouse, or some other kind of dwelling, lodging, or shelter.


This is a population shift from rural to urban areas.

Real Property:

This is any subset land that has been legally defined and improved thorough direct or indirect human efforts, it includes: buildings, wells, dams etc.

Chapter Five

Conclusions and Recommendation

5.1 Conclusion

From the findings, there is variation in availability/functionality of facilities in different areas and in rental value, though, that of rental value is not statistically significant. This means that the rental values of shops and offices in different areas of Onitsha do not depends on infrastructural facilities or simply say that the infrastructural facilities in Onitsha, do not affect the rental values of shops and offices in different areas or locations in Onitsha. The statistical test conducted corroborated that there is weak positive statistically significant effect of facilities on commercial property value. Therefore, facilities are necessary but do not play a significant role in determining values of commercial properties in Onitsha. The results of the study have provided some insight in the impact of infrastructure, especially the weak positive side, as the aim of infrastructural facilities is to boast economic growth, adequate consideration should be made by the state government on how to provide all the necessary facilities needed in the state.

5.2 Recommendation

Provision of infrastructural facilities is a primary function of all governments throughout the universe. Where urban infrastructure is adequately provided and efficiently managed, productive and profitable land uses are usually attracted towards such area. Therefore, both the state and the local government authorities have a major role to play, since the cost of providing it is beyond individual. Provision of these infrastructural facilities where they are lacking will bring evenly distributed development and commercial activities, and attracts more investors to the city.

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