An Assessment of the Market Performance of Commercial and Residential Property Investments in Lekki, Lagos, Nigeria

Abstract

The housing deficit issue in Lagos is creating investment opportunities for prospective investors to profit from in prime zones. Still, some investments are executed by investors with the assumption that their location or remitted rents validate their investment soundness. The purpose of this research was to assess the market performance of commercial and residential property investments in Lekki, Lagos, Nigeria with the target of directing sound investment decision-making amongst investors. Its objectives include; the examination of the drivers of demand for the two classes of property investment, the determination of the user demand hierarchy of the investment classes, the observation of factors that determine the market performance of the investment classes and the measurement of market performance of the investment classes in the study area. The Survey Research Design was adopted, while the sample selection was via Krejcie and Morgan’s technique. A total of 108 questionnaires were distributed across registered professional firms within Lekki. A total of 78 questionnaires were retrieved and a 72.23% response rate was achieved. Holding Period Return (HPR), Coefficient of Variation, Standard Deviation and Geometric Mean Return were employed in data analysis. It was discovered that the major driver of demand for commercial property investment in each zone of the Lekki axis is its business hub status, while the drivers for its residential counterpart are; Phase 1 (Prestige), Ikate (State of the economy) and Ikota (Level of infrastructure). The findings reveal that within Lekki, Ikota (11.4 & 9.63) had a better market performance of residential and commercial property investments compared to Ikate (10.87 & 9.16) and Phase 1 (10.08 & 9.04) in terms of their average holding period return and time weighted rate of return. The study recommended the consideration of the Ikota and Ikate axis for future residential and commercial investments by potential investors.