AN ASSESSMENT OF FACTORS AFFECTING RESIDENTIAL PROPERTY RENTAL VALUE IN BIRNIN KEBBI

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AN ASSESSMENT OF FACTORS AFFECTING RESIDENTIAL PROPERTY RENTAL VALUE IN BIRNIN KEBBI

ABSTRACT

This study is an an assessment of factors affecting residential property rental value in Birnin Kebbi. Specifically the study seek to identify the types of residential properties in Birnin Kebbi, ascertain the trends in rental value of residential properties in Birnin Kebbi, ascertain the various factors that affecting residential property rental values and to evaluate the effects of such factors on residential properties rental value in the study area. The research adopted survey designs which allow the gathering of relevant information using questionnaire, observations, and oral interviews of stakeholders. The data gathered were presented and analyzed using the descriptive statistics. The research reveals that property location, and infrastructural facilities have a very significant impact on residential property development patterns and rental value in the study area. Finally, it is recommended that the government harness development potential within the study area to create enabling environment for property development and urban infrastructures that will enhance property value in Birnin Kebbi the capital of Kebbi State – Nigeria.

CHAPTER ONE

INTRODUCTION

1.1       Background of the Study

Property is a multi-dimensional product and the number and nature of factors that influence its value are equally of different kinds. 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, 2017).

Residential properties have continued to attract the investment interest of real estate developers. This is because of the increasing demand for residential properties in the urban centres (Olujimi and Bello, 2009); and because of the increase in rent (value), which is usually attached to the property (Oduwaye, 2017). Several factors exist that determine value of residential real properties. According to Britton (2019), determinants of individual property value include location, time, property interest, state of repair, accommodation details and services/facilities. These factors affect properties thereby causing either “appreciation” or “depreciation” in its values. Adebayo (2016) affirmed that infrastructures as one of the factors can cause property value to appreciate and depreciation may occur in property values due to infrastructural degradation. Nubi (2012) describes infrastructure as the aggregate of all facilities that allow a city to function effectively. They include housing, electricity, pipe borne water, drainage, waste disposal, roads and sewage among others. The importance of infrastructural facilities in a residential property and indeed human life cannot be overemphasized.

According to Babarinde (2018), the efficiency of any form of human activity system largely depends on the provision of adequate infrastructural facilities. Studies have shown that the level of availability of infrastructure in most developing countries is drastically low.

The value of access is capitalized into the land value and access is measured through market participants’ willingness to pay. Essentially, this view suggests that accessibility measures may be inferred from land prices. The relationship among accessibility, property values and land use patterns has been the pre-occupation of earliest theorists with indication that travel costs were traded off against property rents and population densities from Central Business District (CBD) to suburbs of a mono-centric city (Oni, 2009).

Quality of the environment is also another factor that affects the rental values in residential property. Residential property value does not only depend on the physical characteristics of a building but also the environment that surrounds the building. Developments of various transportation modes have become pivotal to physical and economic developments. Access to major roads provides relative advantages to residential users (Rosen, 2014).

Modern business, industries, trades and general activities depend on transport and transport infrastructures, with movement of goods and services from place to place becoming vital and inseparable aspects of global and urban economic survival. Bello, M.O and Bello V.A (2007) stated that the factors affecting property values are generally classified into external and internal factors. It is against this background that this study assesses the factors affecting residential property rental value in Birnin Kebbi.

1.2       Statement of Problem

According to Egbenta (2012), housing is one of the basic needs of life together with food and clothing. When demand for it increases in an area, rental values in such areas are bound to increase just like every other economic need. Birnin Kebbi have attained urban status and a very fertile ground for investors in residential real estate development with the establishment of several higher institutions in the city, being the commercial hub of the state and its proximity to other states such as Sokoto and Zamfara and surrounding nations such Benin Republic and Niger, the city have been facing tremendous influx of people which poses serious stress on the existing residential properties. These have cause an increase in the rental values of residential properties over the years. Demand had by far outstripped supply of residential accommodation units and this had continued to impact positively on rents of different types of residential properties. The market failures had pushed market rents of residential properties up to an alarming degree. Consequently, there have been perceived fears among users and operators of properties in Birnin Kebbi that very soon rents of housing accommodation will rise above the affordability level of the people, this fear was founded on the fact that there was demand pressure on residential properties. It is on these bases that this research seeks to assess the factors affecting residential property rental values Birnin Kebbi.

1.3       Aim and Objectives

The aim of this research is to assess the factors affecting residential property rental values in Birnin Kebbi, the capital city of Kebbi state. To achieve this aim, the following specific objectives shall be pursued:

1. Identify the types of residential properties in Birnin Kebbi
2. To ascertain the trends in rental value of residential properties in Birnin Kebbi.
3. To ascertain the various factors that affecting residential property rental values in the study area
4. To evaluate the effects of such factors on residential properties rental value in the study area.

1.4       Research Questions

1. What are the predominant types of residential properties in Birnin Kebbi?
2. What are the trends in rental value of residential properties in Birnin Kebbi?
3. What are the factors that affecting residential properties rental value in the study area?
4. What are the effects of such factors on rental values of residential properties in the study area?

1.5       Significance of Research

This research work will tend to enlighten the prospective developers and investors in the study area in view of the various factors affecting residential property rental value.

The research will be of great significant to the government especially the Kebbi State Government in ascertaining the right tax and rates to be collected on residential properties founds within the area having known the various factors affecting the rental values of such properties.

The research will also serve as a resource material to other researchers who are interested in making further research in this domain as the research contributes to the wealth of knowledge.

            1.6       Scope and Limitation of the Study 

The scope of the study shall be restricted to the assessment of the factors affecting residential property rental value in Birnin Kebbi so as to bring the research work to a manageable size and to avoid complication.

Nevertheless, genuine efforts were made to ensure that a thorough work was carried out based on the observation and data obtained from different sources. Hence, all the data collected and presented on which all references and conclusion are made, were made as accurate as possible.

1.7       Definition of Term

Property: This is the embodiment of tangible ownership right or bundles of right in real estate. It could also be described as a concept of right which can be held separately (Babatunde, 2013)

Rental Value: This is the worth or value of property in an open market. It is also the value arising out of the lease or renting out of a property on a periodic basis usually yearly.

Residential Property: it is a building that is used or suitable for dwelling purpose. They are dwelling house such as bungalows, duplex, detached houses, semi-detached houses, etc.

Value: This is the monetary worth of a thing. It is expressed as the value of a goods or services measured by the amount of other goods and services for which it will exchange. It is a determination or quality of an object, which involves any sort of appreciation or interests. Such appreciation involves feeling and ultimate desire or tendencies. Value is basically the worth of a thing. (Olayonwa 2016).

1.8       Area of the Study

Kebbi State is a state in the northwestern Nigeria, Kebbi State is bordered east and north of Sokoto and Zamfara states, and to the south by Niger state while its western border forms part of the national borders with Benin Republic and Niger. Named for the city of Birnin Kebbi – the state’s capital and largest city, Kebbi state was formed from Sokoto state on 27 August 1991. Of the 36 states of Nigeria, Kebbi is the tenth largest in area and 22nd most populous, with an estimated population of about 4.4 million as of 2016. The state is known as land of equity.

History

Kebbi state is traditionally considered by Sarki mythology as the homeland of the Banza bakwai states and Hausa kingdoms. A major local event was the conquest by Songhai in the second half of the fifteenth century CE. Kebbi resisted the Fulani jihad of the early 19th-century, but in the later 19th-century, the area largely converted to Islam through peaceful means.

Geographical Location

Geographically, the state is within the tropical West Sudanian savanna eco-region. Important geographic features of Kebbi state include the Sokoto River, which flows through Kebbi into the River Niger, which continues south before reaching the Kainji Lake, half of which is in Kebbi. Among the state’s nature are a number of fish species exhibited during the massive Argungu Fishing Festival, along with hippopotamus, West African manatee, and transient African bush elephant populations.

Ethnic Groups

Ethnically, Kebbi state is inhabited by various ethnic groups, with the Fulani, Hausa, and Zarma peoples living throughout the state, while the Achipa (Achipawa), Boko-Bala, Dendi, Dukawa, Kambari, Kamuku, Lela, Puku, and Shanga peoples live along the state’s diverse western and southern borders. Religiously, the majority of the state’s population (~80%) are Muslims with smaller Christian and traditionalist minorities at about 10% each, respectively.

In the pre-colonial period, the area that is now Kebbi state was mainly controlled by the Kebbi Kingdom, a Hausa Banza bakwai state, until the early 1800s, the Fulani jihad seized part of the area and attempted to incorporate it into the Gwandu Emirate under the Sokoto Caliphate. Over the succeeding century, Kebbi rulers fought Sokoto on-and-off until the 1900s and 1910s, when the British seized control of the area as a part of the Northern Nigeria Protectorate, which later merged into British Nigeria, before becoming independent as Nigeria in 1960.  Originally, modern-day Kebbi state was a part of the post-independence Northern Region until 1967, when the region was split and the area became part of the North-Western state. After the North-Eastern state was split, Sokoto state was formed in 1976 alongside ten other states. Twenty years afterward, a group of LGAs in Sokoto state’s west and south was broken off to form the new Kebbi state

Economic Activities

Economically, Kebbi state is largely based around fishing and agriculture, mainly of sorghum, groundnuts, millet, onion, and rice crops. Other key industries are trading, especially in the city of Birnin Kebbi, and the livestock herding of camels, cattle, goats, and sheep. Kebbi state has the lowest Human Development Index and sixth lowest GDP in the country.

Demographics

Kebbi state is mainly populated by the Hausa people, with some members of Zarma, Fulani, Lelna (Dakarkari), Bussawa (generally speakers of Busa), Dukawa, Kambari, Gungawa and Kamuku ethnic communities. Most people who live in Kebbi are Muslims.

Climate

Like other Nigerian states, Kebbi state is also characterised with the tropical weather conditions of coldness, wetness and harmattan. The annual rainfall of Kebbi state has the average of 787.53 and 112.21mm, since rainfall is a climatic resource in the state, which aids agricultural production. The rainy season in the state is between mid-May and mid-September, while the dry season constitutes a period of seven months. The temperature of Kebbi state has an annual variation between 65⁰F and 104⁰F. The cloud of Kebbi state is clearer around November to March of the succeeding month, while he state is usually cloudy between March and November at 68% annually. There is a relatively high humidity between seven months, April and November of every year, with November to July being the windiest.

Agriculture

Kebbi state is one of the major producers of rice in Nigeria. The current participation of more than 70,000 farmers in the Anchor Borrowers Rice and wheat farming, is heading towards making Kebbi state a new destination and hub for agro-based commodities of the country.

To reiterate his commitment to ensure that Kebbi state is not only dependent on federal government allocation, the active governor of the state, Abubakar Atiku Bagudu paid a visit to Benin Republic last year and while on the trip, signed a number of bilateral trade protocols with the government and business community of Benin Republic with a view to fostering trade, industrial and tourism relationships with the country.

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