ABSTRACT
This study investigated the effect of road infrastructure improvement on rental values of residential properties in Markurdi, Benue. Rental values of residential accommodation before and after the road infrastructure improvement were determined and compared. A sample of 50 properties was selected using stratified random sampling technique. The stated hypothesis was tested using the paired students „T‟ test. It was discovered that rental values before and after the road infrastructure improvement were weakly and positively correlated (r=0.940, P<0.001) and that there was no significant average difference in the rental value before and after road infrastructure development (t23= - 7.221, P<0.001). The study therefore suggests that the relative increase in rental values may be attributed to other economic factors such as inflation, increase in population, etc. It was therefore recommended among other things that governments at all levels should encourage real estate research and that the Nigerian Institution of Estate Surveyors and Valuers should play a leading role in pointing to the direction of such researches.
CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
Infrastructure plays a key role in the wellbeing 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.
Transportation and property are important in physical and economic development of towns and cities all over the world. Property and land values tend to increase in areas with expanding transportation networks, and increase less rapidly in areas without such improvements. Rapid and continued rise in housing and land prices are expected in cities with transportation improvements and rapid economic and population growth (Goldberg, 1970).
Access to major roads provides relative advantages consequent upon which commercial users locate to enjoy the advantages. Modern businesses, industries, trades and general activities depend on transport and transport infrastructure, with movement of goods and services from place to place becoming vital and inseparable aspects of global and urban economic survival. Developments of various transportation modes have become pivotal to physical and economic developments. Such modes include human porterage, railways, ropeways and cableways, pipelines, inland waterways, sea, air, and roads (Said and Shah, 2025).
According to Oyesiku (2002), urbanization in Nigeria has a long history in its growth and development. Extensive development being a feature of the 19th and 20th centuries, with concentration of economic and administrative decision-making in Benue, Ibadan, Kaduna, Jos, and Benue, and high degree of specialization and larger population associated with greater specialization of goods and services. Wyatt (1997) states that urban areas have tendency to develop at nodal points in transport network and places with good road network will possess relative advantage over locations having poor network. Urban locations with such relative advantage are found where different transport routes converge with high degree of compactness, connectivity, density, length and accessibility exhibited within the intra- and inter- urban road networks.
Makurdi is a typical example in the history of growth and development of cities in Nigeria. The city became capital of Benue State in 1976 with improved road networks developed to cater for increase in concentration of pedestrian and vehicular movements. Similarly, commercial activities like banking, retail/wholesale businesses, and professional services congregated to take advantage of nearness to seat of governance. Concentration of activities attracted consumers and ancillary service providers. This partly caused increase in demand for commercial space and its concomitant effects on commercial property values along developed roads in the metropolis.
The present position concerning commercial properties in Makurdi is that majority are located along developed roads that deliver much of the vehicular and pedestrian movements. There have been increases in rental values along the individual developed roads although not at equal rates. It is against this background that this research analyzed the developed roads, determined the levels of accessibility, connectivity, traffic density of the individual developed roads, examined the pattern of commercial property values and the relationship between the explanatory variables of the road network in Makurdi Nigeria.
1.2 Statement of the Research Problem
The relationship between transportation and urban property values has been the focus of many studies (for example, Dewees, 1976; Damm et al, 1980; Wolf, 1992; Singh, 2005). Some of the earlier studies returned positive relationship between transport and property values while others showed negative relationship. For instance, in a study on the relationship between rail travel cost and residential property values, a replacement of streetcar with subway increased site rent at a location that is perpendicular to the facility within a one-third mile walk to the station (Dewees, 1976); and there was positive influence of permanent transportation improvements on land values (Wolf, 1992). It was established that there was statistically significant relationship between distance of a parcel of land to the nearest Metro station and land price (Damm, Lerner-Lam, and Young, 1980), while there was evidence that residential property prices decrease immediately around the transport investment or station value uplift through changes in land values (Singh, 2005).
Many of the aforementioned studies emphasized the effects of the factors on values of properties generally with little consideration given to road network pattern and its effects on values of commercial properties. Possible relationships between road networks, location attribute, demand and supply, and accessibility and commercial property values have therefore elicited the interest of the researcher in this direction. The relationship cannot be determined without due consideration given to the explanatory variables on one hand and commercial property values on the other. The use of roads leads to a study of urban areas in relation to land uses, especially commercial properties. It is against this background that this study was conceived.
Research Objectives
Research Aim
The aim of this study is to examine the effect of road infrastructure improvement on rental values of residential properties in Markurdi Benue from 2002 – 2017.
In order to achieve this aim this study intends to investigate the following:
1. To determine the rental values of residential properties in Markurdi Benue when the roads were bad between 2002 and 2009.
2. To determine the average rental values of residential properties in Markurdi Benue when the road situation improved between 2010 and 2017.
3. To compare the rental values of residential properties within the two periods and determine the rate of improvement (if any).
RESEARCH QUESTIONS
The following research questions will be investigated by this work:
1. What is the rental value of residential properties in Markurdi Benue from 2002 – 2009 representing the period when road situation was bad?
2. What became the average rental values of residential properties in Markurdi Benue from 2010 – 2017 representing the period when the road situation improved?
3. How can the average rental values of residential properties in Markurdi road be compared within the two periods (2002 – 2009 and 2010 – 2017)?
4. HYPOTHESIS FORMULATION
The following null hypothesis was put forward for this study:
Ho: Road infrastructure improvement has no significant effect on rental values of residential properties in Markurdi Benue.
1.6 Justification and Rationale for the Research
It is trite amongst earlier studies on accessibility in relation to property values that profitability and utility are determined by accessibility. The greater the accessibility of a location the greater the comparative advantage, and the greater the comparative advantages the greater the demand for property at the location.
This study borrows techniques found useful in other fields like operational research, geography, transportation and urban planning to explain and analyze road network for purpose of determining the relative accessibility of each of the developed roads. It is believed that the techniques used in these fields can be extended to studies in estate management, thereby making cross-fertilization of research ideas across various fields possible. In this regard, this research has become relevant in determining the relationship between road infrastructure and values of commercial properties in Makurdi.
In addition, it is essential to establish a technique that may be useful for determining relative accessibility of locations in the network of developed roads. Even when relative advantages are determined, there is need to develop models that will be useful for predicting commercial property values in Nigeria. The model may become tool for professional Estate Surveyors and Valuers to change their practice of using intuition to determine relative accessibility of locations in a road network. Similarly, there is the need to predict the supply of, demand for, and fair market values of commercial properties by developers, Estate Surveyors and Valuers, and feasibility and viability appraisers in present day’s risks and uncertainty in property development. This has underscored the importance of this study.
A review of literature showed that studies on Nigerian intra-urban road network using the graph-theoretic concept to determine accessibility effects on commercial property values are scanty, available ones were on USA and U.K. This study will therefore contribute to empirical studies on intra-urban road network and its influence on commercial property values in Makurdi, Nigeria.
1.7 Scope of the Study
The study covers the major residential streets in Makurdi, Benue state. Commercial streets were not included because the study is on rental values of residential properties.
1.8 Limitations of the Study
The study focused on analysis of developed roads and commercial property values in Makurdi. It did not attempt to investigate the structural stability of the road infrastructure or assess the methods and accuracy of methods adopted by respondents in fixing the values of commercial properties in the study area. It simply analyzed accessibility, connectivity, road infrastructure, distance to most central place in the study area, demand and supply of commercial properties in relation to commercial property values in the study area. Graph theoretic technique was used to analyze the road infrastructure while opinions of Estate Surveyors and Valuers practicing in the study area were relied upon. The accuracy, or otherwise, of such opinions although not in doubt was not investigated.
Some challenges were encountered during the study. By virtue of the busy nature of Estate Surveying and Valuation practitioners and “carefulness” of occupiers of the sampled commercial properties, there was considerable reluctance on their parts to volunteer information. Some of the respondents, especially Estate Surveyors and Valuers, delayed in completing the questionnaires and it took personal influence of the researcher (as their colleague) and assistance of the Benue State Branch Chairman of the Nigerian Institution of Estate Surveyors and Valuers to obtain their eventual impressive responses. In addition, the researcher took time to allay the fears of Occupiers by educating them about the essence of the research, that it would in no way expose them to imposition of levies or charges or any liability to the Benue State Government.
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