The Impact of a Volatile Economy on Viability Indicators of Investment Projects in the Lagos Real Estate Market
DOI:
https://doi.org/10.5281/Keywords:
impact, ,investment projects, real estate market, viability indicators, volatile economyAbstract
In recent times, investors and businesses have been affected by an uncertain and volatile business environment. Real estate investment projects are one of the major sectors impacted by the uncertainty in the economy due largely to its capital-intensive nature. This study, therefore, examines the impact of fluctuations in selected economic variables and their effect on the indicators of viability of real estate investment projects in the Lagos real estate market. Adopting a cross-sectional survey design, the study collected data using a structured questionnaire administered to a sample of 96 estate surveying and valuation firms with expertise on feasibility and viability analysis. Data was analyzed utilizing both descriptive and inferential statistics. Results indicate that interest rate, exchange rate, and inflation were identified as the economic variables that affect viability indicators such as property prices, rental income, construction cost, financing cost, market demand and project profitability/viability. The study recommends among others, a real estate-focused policy intervention by the government to revitalize the sector and achieve faster economic growth. In addition, a follow-up study to investigate the actual viability of the real estate investment projects based on the viability indicators analyzed by the estate surveying and valuation firms should be carried out using respondents drawn from the population of the investors (developers, agents, property owners and financiers).
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