THE IMPACT OF THE RECESSED ECONOMY ON REAL ESTATE PRACTICE IN ABUJA

THE IMPACT OF THE RECESSED ECONOMY ON REAL ESTATE PRACTICE IN ABUJA

(A CASE STUDY OF GARKI)

ABSTRACT

This study examines the impact of the recessed economy on real estate practice in Abuja a case study of Garki. The researcher in attempt to the aim of the study assess the management of property by real estate firms in the study area during the recessed period, determine the average rental value of properties during the recessed period and evaluate the effects of recession on real estate market. The research adopted the survey design which offers the opportunity to gather information through the use of questionnaires, personal interview and observation. A structured questionnaire was administered to the respondents which comprise the tenants/landlords of both commercial and residential properties and professionals in real estate. Data were presented and analysed using simple statistical tools. The study revealed that there is generally under performance of real estate firms with respect to property development and management as they hardly embark on new project and a general fall in demand for real estate services, real estate firms adopted both short and long term strategies to survive economic recession, the study also revealed that there is a steady increase in rental value of the properties before the recessed period. Finally, it is recommended that real estate firm should take proactive measures that will enable overcome the adverse effects of the economic recession to ensure they remain in the business of property development and management in the real estate sector.

CHAPTER ONE

1.0                                                     INTRODUCTION

1.1       Background of the Study

In today’s business world, international experience has become critically important. Global trends have had an impact on the processes and outcomes of business fortunes even in developing countries; and have caused industrial relation actors to think differently about their goals. The current global economic crisis has been interpreted in many ways, chief of which is that it signals the end of capitalism or free market economic doctrine as exemplified by the American economic system. It is said to reincarnate the world economic depression of the 1930s which saw huge loss of wealth in both the money and capital markets around the capitalist world and led to actual and attempted suicide by many investors. It was a crisis that arose from the failure of the market to correct itself. Global economic recession describes the growing economic, political, technological, and cultural linkages that connect individuals, communities, businesses, governments and countries around the world and the negative impacts it carries with it as felt in the economies of different states and countries (Ajanlekoko, 2001).

The Nigerian economy faces the rippling effects of the global economic crises resulting to breakdown and decline in economic vigor. The effects find expression in downsizing, mass unemployment, and crashes in the money market. There is need to understand the dynamics of the present global economic meltdown with careful study and examination of the issues involved (Zubairu, 2001). The Nigerian economy has continued to witness renewed and sustained recession, characterized by galloping inflation, unemployment and declining businesses. The general business cycle of recessions affects human resource management. Such factors as interest rates, inflation, and economic growth help determine the availability of workers and figure into organizational plans and objectives. Decision on wages, overtime, and hiring or laying off workers all hinge on economic conditions (Mailafia, 2005).

According to Ebie (2005), the Nigerian situation has been tagged feeble due to the negative effects the global economic meltdown has had on the country. Every industry has had its fair share of the troubles and companies are licking their sores with resultant effects on the masses. While retrenchment and downsizing appear to be a way out, there is no sense in making it massive. This contributes to the growth of jobless individuals in the street since there are no jobs to which these individuals will find themselves attached when retrenched in one. Therefore, the thrust of this study investigates the nexus between economic recession and human resource management. The paper will examine economic recession and its aggravating factors, the relationship between economic recession and human resource management, and the various challenges to the effective management of human resources arising from economic recession. It will also proffer strategies for coping and suggests policy options. This work therefore relays the means and strategies of combating the unavoidable problems of downsizing and retrenchment affecting human resources in a global economic crisis.

1.2       Statement of the Problem

Real estate practice has continued to express divergent views on the impact of the current economic recession in Nigeria on the nation’s real estate market. While some operators are complaining of low demand, over supply, falling prices and many unsold/unoccupied houses with no buyers or tenants, others see the crash in the property market as opportunities for brave investors with expectation of high returns when the country climbs out of recession.

Most of the houses and estates in high-brow areas like Asokoro, Gwarinpa, Maitama, Wuse II, Utako, Katampe districts are unoccupied as a result of the high cost of renting or leasing. Houses and estates in Gaduwa, Apo, Dei-Dei, Gwarimpa, Lugbe, Kubwa, Gudu, Life Camp, are also in similar situation of no buyers or renters. But in spite of the glut in the real estate market, property values have stagnated and in most cases have increased tremendously in the low and medium income neighbourhoods in Abuja.

However, private partnership participation has enable more person to benefit from the business to improve their personal standard of living. However, the researcher is examining the impact of recessed economy on real estate practice in Abuja.

1.3       Aim and Objectives of the Study

The aim of this project is to examine the impact of the recessed economy on real estate Practice in Abuja with particular interest in Garki.

The following specific objectives are pursued:

1. To assess the management of property by real estate firms in the study area during the recessed period.
2. To determine the average rental value of properties during the recessed period within the study area.
3. To evaluate the effects of recession on real estate market

1.4       Research Questions

1. What are the numbers of properties managed by your firm during the recessed period?
2. What is the average rental value of properties between 2014 to 2018 within the study area?
3. What are the effects of recession on real estate market?

1.5       Significance of the Study

The following are the significance of this study:

Findings from this study will be a useful guide to the policy makers and the government of the day on how real estate sector can contribute to the nations development and how the housing policies can be implemented effectively to boost economic growth.

It is hoped that this study would help estate developers to appraise the significance of recession in real estate while investing in real estate development.   The research will be of great benefit to the local government, investors in the real estate sector such as property developers, end users and government parastatals on the situation of recession on real estate development in the study area. This would enable them to know the essence of recession in real estate practice. This research will also serve as a resource base to other scholars and researchers interested in carrying out further research in this field subsequently, if applied will go to an extent to provide new explanation to the topic.

1.6       Scope and Limitations of the Study

The scope of this study on the impact of recession on real estate practice in Abuja will cover the structure and activities of real estate in Nigeria and its contribution to the nation’s economy.

Limitation of the Study

Financial constraint– Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint– The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

1.7       Definition of Terms

Real Estate: Is “property consisting of land and the buildings on it, along with its natural resources such as crops, minerals or water; immovable property of this nature; an interest vested in this (also) an item of real property, (more generally) buildings or housing in general.

Recessed Economy: An economy is said to be recessed when it has faced a negative economic growth for two consecutive quarters.

Management: the process of dealing with (planning, organizing/directing and controlling/supervising) things or people towards achieving set objectives.

Property: A thing or things owned or possessed by someone. For the purpose of this paper, however, property shall mean the rights one holds in the ownership (as by a landlord) or possession (as by a tenant) of any land or landed property.

Property Management: Is an act of intermediation between owners and occupiers on issues affecting the parties arising from ownership and occupation of buildings.

1.8       Historical Background of the Study Area

The Federal Capital Territory Abuja as create in 1976 by decree No. 6 of (1978) which also established the Federal Capital Developments Authority (FCDA) as the Federal Government Agency responsible for the design contraction, and administration of the territory. The decree vested ownership and control of land in the three territories in the federal government of Nigeria.

            Location

The territory which is located at the center of country cover an case of 8,000 square kilometric is therefore more than twice the land area of Lagos State (3,535/km) and about two third of that Imo state (31,032/KM) because of its central location the major cities to Abuja is easily accessible form all part of Nigeria.

The Federal Capital City itself which is located in the eastern fringe of the territory designated to cover an area of the territory and at full development the city is expect to have a total population of 3.2 million.

This means that 7344 square kilometer (97%) of the land are of the territory constitute the city regional component to be utilized for other service such as the development of agriculture to supply the population of the city and the development of satellite town to absorb the excess population of the city.

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