Residential Property Investment And Its Associated Problems (A Case Study Of Amorites Estate, Osogbo)
This study was carried out to examine residential property investment and its associated problems using Amorite Estate Osogbo, Osun stateas a case study. The study was set to find out the challenges of housing investment in Osogbo, find out the factors affecting the development of residential property investment in Osogbo and ascertain the role of the Government in managing the challenges encountered in residential property investment in Osogbo.The survey design was adopted and the simple random sampling techniques were employed in this study. The population size comprise of staff of Amorite Estate. In determining the sample size, the researcher conveniently selected 65 respondents and only 50 were validated. Self-constructed and validated questionnaire was used for data collection. The collected and validated questionnaires were analyzed using mean scores.while the hypotheses was tested using Chi-square statistical tool. The result of the findings reveals that; the challenges of housing investment in Osogbo includes: lack in integration of policies between the three tiers of government, inadequacy of finance, high cost of building materials and high infrastructural development cost.The findings further show that the factors affecting the development of residential property investment in Osogbo includes: liquidity, market condition, income level, and government policy. Therefore, it is recommended that government should intensify its involvement in private housing market by creating favourable macro-economic environment. In particular; government should shore up the Naira against further depreciation, reduce rates of interest and keeps inflation below double digits, more subsidies in the form of tax relief, grants, loans at low interest rate should be made availableto the mortgage finance institutions, which should pass on these incentives to housing loans borrowers. To mention but a few.
Table of Content
- Title Page
- Table of Content
- List of Tables
- 1.1 Background of the Study
- 1.2 Statement of the Problem
- 1.3 Objective of the Study
- 1.4 Research Questions
- 1.5 Research Hypothesis
- 1.6 Significance of the Study
- 1.7 Scope of the Study
- 1.8 Limitation of the Study
- 1.9 Definition of Terms
- 1.10 Organisations of the Study
Review of Literature
- 2.1 Conceptual Framework
- 2.2 Theoretical Framework
- 2.3 Empirical Review
- 3.1 Research Design
- 3.2 Population of the Study
- 3.3 Sample Size Determination
- 3.4 Sample Size Selection Technique and Procedure
- 3.5 Research Instrument and Administration
- 3.6 Method of Data Collection
- 3.7 Method of Data Analysis
- 3.8 Validity of the Study
- 3.9 Reliability of the Study
- 3.10 Ethical Consideration
Data Presentation and Analysis
- 4.1 Data Presentation
- 4.2 Analysis of Data
- 4.3 Answering Research Questions
- 4.4 Test of Hypotheses
Summary, Conclusion and Recommendation
- 5.1 Summary
- 5.2 Conclusion
- 5.3 Recommendation
1.1 Background to the Study
The benefit derived in the residential property investment can not be over emphasized likewise the problem encounter in the management of such investment.
Thus residential property investment involves making a current commitment of fund in order to obtain an uncertain future returns, the study will examines various investment in the property with emphasis on the residential property investment.
However, the appreciation in property value depends upon the location of the property, its demands and supply, the uses to which it can be put in the local market place, because of its appreciation potential, real estate is viewed as a good hedge against inflation. The tendency of construction cost makes it escalate faster than general inflation.
The problem of the residential property investment in Osun State (a case study of Amorite Estate Osogbo) is particularly dealt with and the solution will be preferred for all the problems identified in this study.
This study shall also deal with the other types of investment that are available in the in the property market, like industrial, commercial and Agricultural property investment and also in stock market,
The various ways of financing such project shall also be considered.
Amorit Housing Estate which is also refers as “living spring homes” is one of the housing Estates that provide adequate accommodation in Osogbo Osun State. The Estate is situated along Ede road Abere, opposite state Secretariat Osogbo, Osun State which had a total land area of 7.9 hectares with a good land leveled surface. The Estate is sharing boundary with an uncompleted housing Estate on the ring side (west ward), a large expanse of land on the left side (East ward) and delineated in the North by an express road.
Amorit housing Estate started construction in the early 2007 in Osogbo with the aim of providing about 100 housing units consisting of two (2) and three (3)bedrooms respectively for convenience and full accommodation to reduce housing problem in Osun State. The construction of the Estate is divided in to two phase’s i.e phase one and two.
The phase one consist of two (2) and three (3) bedroom bungalow of over forty – five (45) housing unit which was the first part to be completed, the buildings were all suited with adequate space for relaxation. Amorit Housing Estate was officially commissioned on the 24th of April, 2009 by Amorit International Limited in partnership with the Federal Ministry of works, housing and urban development and was occasioned by the then Honorable Minister of State for Work, Housing and urban development Chief (Mrs) Grace Ekpewhre (jp) with royal father HRM Oba Munirudeen Adesola Lawal (Laminisa) Timi of Ede Land.
However, the Estate Started the construction of the second phase immediately after the completion of the first phase, the second of three (3) bedroom bungalow with duplex on request all ensuit with adequate space. The housing Estate has a conducive environment with aesthetic view with different flower and trees for beautification of the Housing Estate. The Estate has varies facilities to improve standard of living of the residents which includes laws tennis court, shopping mall, swimming pool for relaxation of the residents and constant supply of water and electricity supply and adequate security for the Estate.
Further more, the administration work is headed by the director in person of Mr. Kayode Oyewole, assistant of the housing Estate. There are various departments that contribute to the administrative work of the estate which includes:
- Marketing department
- Accounting department
- Maintenance department and
- Engineering department
For proper administration of the housing estate.
Finally, the process for holding a unit in the estate can be gained by purchasing of the application for form #5,000 fees non-refundable and one can be issued with the application form which must be completed by the applicants and must be submitted with the applicant passport.
The mode of payment for the allocation of the housing unit includes the following:
- Outright payment
- Installmental payment
However, Amorite Housing Estate has really established a home for people of Osun state that is measurably the best.
1.2 Statement of the Problem
It has been observed that the available residential accommodation in the state is grossly inadequate to cater for the population of over 3.2 million in the state. This warrant the need for public private partnership in the provision of residential housing accommodation for people.
Closely associated with the housing provision as an investment are the income and the risk attached to it. The researcher; however deem it well to examine the viability of residential investment in the state as well as the risks and problems peculiar to the residential property investment in the state.
Various factors influencing the realization of the targeted income from residential property investment will equally be examined in order to enlighten interested investors and participant in the provision of residential housing in the state.
1.3 Objective of the Study
This study aim at analyzing and examining the residential property investment in Osun state and its associated problems using Amorite Estate Osogbo as a case study.
In order to achieve the aim, the following objectives shall be adopted.
- Find out the challenges of housing investment in Osogbo.
- Find out the factors affecting the development of residential property investment in Osogbo.
- Ascertain the role of the Government in managing the challenges encountered in residential property investment in Osogbo.
1.4 Research Questions
The study will be guided by the following questions;
- What are the challenges of housing investment in Osogbo?
- What are the factors affecting the development of residential property investment in Osogbo?
- What is the role of the Government in managing the challenges encountered in residential property investment in Osogbo?
1.5 Research Hypothesis
- Ho: The existing problems has no significant effect on residential property investment in Osogbo.
- Ha: The existing problems has a significant effect on residential property investment in Osogbo.
1.6 Significance of the Study
The needs for this study are so many at this period of time and these may be summarized as follows:
The study is necessary in the state being a young state in yearning for rapid development especially in the residential aspect especially capital of the state (Osogbo) so as to make housing unit available for the people who are coming into the state.
The study is also necessary in the sense that it will serve as a guide to those that may be interested in going into the property investments so as to know such area where they could encounter problems and how to deal with the problems.
This study will also enhance the knowledge of an interested investors and expose them to sources of financing their investment.
1.7 Scope of the Study
The scope of this work shall cover residential property investment in Osun state and is limited to the problems associated with Amorite estate and development. Although effort would be made to discuss other type of real estate investment in Osun state.
1.8 Limitation to the Study
Like in every human endeavour, the researchers encountered slight constraints while carrying out the study. The significant constraint was the scanty literature on the subject owing to the nature of the discourse thus the researcher incurred more financial expenses and much time was required in sourcing for the relevant materials, literature, or information and in the process of data collection, which is why the researcher resorted to a limited choice of sample size. Additionally, the researcher will simultaneously engage in this study with other academic work. More so, the choice of the sample size was limited as few respondent were selected to answer the research instrument hence cannot be generalize to other secondary schools. However, despite the constraint encountered during the research, all factors were downplayed in other to give the best and make the research successful.
1.9 Definition of Terms
This is any property designated by a municipality for single-family homes, condos, cooperatives, townhouses, and any other area in which people reside.
Investment involves making a current commitment of fund in order to obtain an uncertain future returns, it is a risky business that demands information on how the risky thereof can be solve in order not to have (risk) impact on the capital and income and also to ensure there is adequate security for capital and income.
1.10 Organization of the Study
The study is categorized into five chapters. The first chapter presents the background of the study, statement of the problem, objective of the study, research questions and hypothesis, the significance of the study, scope/limitations of the study, and definition of terms. The chapter two covers the review of literature with emphasis on conceptual framework, theoretical framework, and empirical review. Likewise, the chapter three which is the research methodology, specifically covers the research design, population of the study, sample size determination, sample size, and selection technique and procedure, research instrument and administration, method of data collection, method of data analysis, validity and reliability of the study, and ethical consideration. The second to last chapter being the chapter four presents the data presentation and analysis, while the last chapter(chapter five) contains the summary, conclusion and recommendation.
Summary, Conclusions and Recommendations:
This chapter summarizes the findings on residential property investment and its associated problems usingAmorite Estate Osogbo, Osun stateas a case study. The chapter consists of summary of the study, conclusions, and recommendations.
5.2 Summary of the Study
In this study, our focus was on residential property investment and its associated problems using Amorite Estate Osogbo, Osun state as a case study. The study was specifically focused on find out the challenges of housing investment in Osogbo, find out the factors affecting the development of residential property investment in Osogbo and ascertain the role of the Government in managing the challenges encountered in residential property investment in Osogbo.
The study adopted the survey research design and randomly enrolled participants in the study. A total of 50 responses were validated from the enrolled participants where all respondent are staff of Amorite Estate.
In the light of the analysis carried out, the following conclusions were drawn.
- The challenges of housing investment in Osogbo includes: lack in integration of policies between the three tiers of government, inadequacy of finance, high cost of building materials and high infrastructural development cost.
- The factors affecting the development of residential property investment in Osogbo includes: liquidity, market condition, income level, and government policy.
- The role of the Government in managing the challenges encountered in residential property investment in Osogbo includes: long term housing finance suitable for construction of affordable housing, provision of means to dispose the completed housing units to encourage property developers, infrastructural provision and development, provision of adequate security for property right, titles, tenures and elimination of administrative and procedural delay in the loans facilitation.
Based on the findings the researcher recommends that;
- Government should intensify its involvement in private housing market by creating favourable macro-economic environment. In particular; government should shore up the naira against further depreciation, reduce rates of interest and keeps inflation below double digits, more subsidies in the form of tax relief, grants, loans at low interest rate should be made available to the mortgage finance institutions, which should pass on these incentives to housing loans borrowers.
- Less emphasis should be placed on direct provision of housing, in fact, the provision of housing accommodation to government functionaries, as recommended by the Revenue Generation and Allocation commission should be monetized lo stem mis-investment of government funds and reduce social and political injustice.
- Arrangement should be put in place, whereby retiring contributors who did benefit from the loan scheme, should be paid their contribution with interest along with their gratuities. This will reduce anxiety over the refund of the contributions. The FMBN should review its lending conditionality and ensure that not less than 76% of the fund is loaned out. This will give encouragement and hope to the contributors.
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