AN ASSESSMENT OF THE EFFECT OF THE URBAN INFRASTRUCTURE ON RESIDENTIAL PROPERTY VALUES

AN ASSESSMENT OF THE EFFECT OF THE URBAN INFRASTRUCTURE ON RESIDENTIAL PROPERTY VALUES

(A CASE STUDY OF KARU ABUJA)

ABSTRACT

Housing represent the most basic human need and it has a profound impact on the wealth, welfare, and productivity of individuals for housing to produce these impacts, it must be adequately provided with functional infrastructure. In Nigeria urban centres, these basic infrastructure have suffered major neglect over a long period of time in the hands of government and its different agencies that are expected to provide and maintain the infrastructure. Therefore, property developers are responsible for the provision of the infrastructure in their properties which have increased the development of the properties. For the property developers to continue to invest in property development, the rental values of the property must continue to be attractive to allow developers recoup back the investment on such property. This study therefore, investigated into the available infrastructure facilities in residential properties in Karu. The study administered so sets of questionnaire on randomly selected residence of Karu. The study reveals that infrastructural provision has significant impact on the value of residential properties. The study recommends comprehensive road rehabilitation as a way forward.

CHAPTER ONE

1.0     INTRODUCTION

1.1     GENERAL BACKGROUND OF THE STUDY

An important barometer for measuring an urban areas functionality, liveability and development is its physical infrastructure. The efficiency of any urban area depends largely on the provision of efficient infrastructural facilities and services (Babarinde, 1998). Okusipe (1999) posited that apart from being a major pointer to environmental quality urban infrastructure is a critical agent for the socio-economic development of any urban area. He further asserted that urban infrastructure plays an important and indispensible role in economic, social and environmental aspects of life of an urban setting. It has tremendous impact on the quality of urban life. It is a key developmental asset of any country in that it provides the backbone for industrial concerns located within an urban area to effectively and efficiently drive their production processes.

Urban infrastructure cover a wide spectrum of services and facilities, namely; electricity, water, roads, walkways, waste disposal systems, communication, primary health facilities and services, schools and housing. These are more often provided by the government. Where urban infrastructure is adequately provided and efficiently managed productive and profitable land uses are usually attracted towards the area. These uses out bid/out compete less productive uses through better rent offers. This competition for locations with good urban infrastructure usually results in an increase in land and property values, either sales or rentals (Harvey 1993). This study therefore examines the state of urban infrastructure in Karu and its effects on residential property values.

1.2     STATEMENT OF THE PROBLEM

Real estate developers are consistently faced with the issue of making decisions on the types of property to invest their earned income or highly competitive secured mortgage funds, which were attached with high lending rate. One of the different sections that are begging for such investment is residential property development. This study will assess the effect of available in infrastructure in residential property on its rental values in Karu, F.C.T.

1.3     AIM AND OBJECTIVES

The aim of this study is to assess the effect of urban infrastructure on residential property values in Karu, federal capital territory. In order to achieve this aim, the following objectives are critical:

1. To identify the types and state of infrastructure available in the study area.
2. To examine the problems associated  with provision and maintenance of the facilities and the consequential effects on residential property values in the area.
3. To examine the consequential effect in the study area.
4. To make appropriate recommendations to examine the impact of infrastructure with the provision identified on residential property values in the study area.

1.4     JUSTIFICATION OF THE STUDY

Many factors interplay to create property values. This could be economic, institutional or environmental. Factors that negatively affect the value of real property injure ownership motives and goals. They also damage the investor’s interest and discourage subsequent investment.

For instance, Udo and Egbenta have examines the effects of domestic waste dumpsite on rental values of residential properties in Enugu, Nigeria. They confirmed that contrary to popular belief, waste dumpsite  does not necessarily affect property values negatively. However, other factors could be harnessed to boost rental values of properties in our cities. Since infrastructural facilities are regarded as booster to social well-being of city dwellers, hence the choice of infrastructural facilities as factors that may likely affect the rental value of residential properties in Nigeria cities is considered to be appropriate.

1.5     SCOPE OF THE STUDY

The researches work is confined to the study of the effects of urban infrastructures mainly in Karu, Abuja. It shall deals with rental value of residential properties such as single room, two bedroom flats and three bedroom flats which are the common types of residential properties found in the study area. The work activities however, will cover the provision of road network within a period of 2009-2013.

1.6     DEFINITION OF TERMS

Some of the key words used in this work and their meaning as contain and used in the research are:

Infrastructure: This is seen as a wide range of economic and social facilities crucial to creating an enabling environment for economic growth and enhances the quality of life.

Property: The term is used in this research to mean the rights that one individual has in land or grow to the exclusive of other right gained from  the ownership of wealth.

Value: Value is basically the worth of a thing which depend largely on the basis of assessment and unit of measurement.

Property Value: The measure to properly value is a function of its degree of unity and scarcity relative to comparable utilities.

1.7     HISTORICAL BACKGROUND OF THE STUDY AREA

Abuja the Nigeria City came into existence by virtue of decree No. 6 1976. However, it assumed the state of the nation capital on the 12^th December 1991 when the seat of government was moved from Lagos. The process to relocate the capital began in assumption of office by the Late General Murtala Ramat Mohammed who notice the deteriorating conditions of Lagos and try to find a lasting solution to it as it become obvious and impracticable for Lagos to be retain as the federal capital territory (F.G.N 1976).

In other to solve those problems once and for all, the late General Murtala Mohammed inaugurated a committee on 19^th August, 1975under the leadership of retired honourable justice Akinola Aguda. The committee was charge among other things, with the task of recommending suitable and alternative location, having regard to the need for easy accessibility and their report was submitted to the federal government on the 20^thDecember,1975 by stating that the total land area in Lagos was estimated to be about 6112sq Km which was grossly inadequate to be used for as federal capital city not to even sharing it with Lagos state government (F.G.N 1976).

The recommendation proceeded that the federal capital should be moved from Lagos and to be relocated to the centre of the country, an area covering about 5000Sq Km, situated at the sought of the present Suleja-Niger State (Aguda 1975)  this recommendation was accepted by the Head of state who prompted the promulgation of federal capital territory on 15^thFebruary 1976 and vested the ownership and control of all land in the federal capital territory on federal government as well as the administration of the capital territory.

According to the national population and housing census (2006) the study area (Karu) has an estimate population of about 111, 246 inhabitants.

Karu the study area is characterised with large markets which enhance the economic activities of the neighbourhood, the major activities found there are: subsistence farming, industrial activities, banking, markets and recreational areas nevertheless many people in the study area earned above 2000 per day which make life meaningful and to grade the area on average in the society.

CHAPTER TWO

2.0     LITERATURE REVIEW

2.1     CONCEPT AND CHARACTERISTIC OF INFACSTRUCTURE

Infrastructure network is a very social-economic climate created by the institutes (public or private) that serve as conducts of trade and investment. The roles of infrastructure in the context of integration are transformative, helping to change resources into outputs or to enhance trade by removing barriers.

Therefore, an improvement in a country’s infrastructure is one of the key factors affecting the long term growth of such a country. The linkages between infrastructure and economic growth are varied and complex.

Infrastructure does not only affect production and consumption directly, it also creates many direct and indirect externalities. It involves large flow of expenditure, thereby creating additional employment. Equally, infrastructure can have a significant impact on output, income, employment, international trade, and quality of life.

Nubi (2002) describe infrastructure as the aggregate of all facilities that allow a city to function effectively it is also seen as a wide range of economic and social facilities crucial to creating an enabling environment for economic growth and enhances quality of life.

This includes housing, electricity, pipe-borne, water, drainage, waste disposal, roads, sewage, health, education, telecommunication and  institutional structures like police station fire fighting station, banks and post offices e.t.c. infrastructure is the large scale public services or systems, service and facilities of a country or region that are necessary for economic activity. Including power and water supplies, public transportation, roads and schools.

Donald (1974) also defines infrastructure as the physical structures and facilities that are developed or acquired by public agencies to enhance government functions and provides water, power, waste disposal, transportation or similar services to facilitate the achievement of common social and economic objectives.

Akujuru (2000) identified the following characteristics of infrastructures.

Ø It enjoys considerable economic of scales which result in monopolies.

Ø It requires a large sum of investment, this perhaps justifies the reason why the citizens usually look forward to their government for the provision of the facilities.

Ø It has intermediate input characteristics.

Ø It posses important network effects.

Ø It posses difficulties in cost recovery.