APPRAISAL OF THE EFFECT OF PROPERTY MANAGEMENT ON PROPERTY VALUE

ABSTRACT

The property industry in Nigeria has been confronted with pressure due to population growth and urbanization challenges, which trigger the rising needs for both residential and commercial spaces. Lack of ethical and strategic approach to management, limited recognition of the value of these assets by property users and operational decision makers, gradual shift in emphasis on quality and ethics have eroded the significance of property management. This has however generated the influx of “quacks” creating a major set-back in the property management parlance, despite the traditional focus on providing management service. The study adopts extensive fieldwork to practicing estate surveyors and valuers (i.e. statutorily recognized property managers) firms through in-depth interview and questionnaires administration. The finding established the necessity to shift the practice emphasis on quality and ethical conduct. It also reveals that the statutorily recognized property managers are still lagging behind in implementing necessary qualitative management approaches, this as a result of property market forces. It is therefore recommended that further training and workshops should be instituted in addition to annual.

 

                                         CHAPTER ONE

                                      INTRODUCTION

1.1 Background of study

The issue of property management has persisted in the Nigeria society for quite some time. Property management is the art and science of real estate with respect to its development, maintenance, cash flow from users and occupiers in order to achieve optimum benefits for the owner and all parties interested in the property within the ambit of relevant laws.

It is observed that for many years. Most properties have lacked proper management due to absence of qualified property managers who are professionally equipped to handle property management.

Many property owners (Landlords) do not usually engage the services of estate surveyors and valuers. They appoint “caretakers” to look after or take care of their properties. These caretakers in turn have limited powers as they can only collect rent from tenants and engage in minor repairs of the properties. Moreover, they are mostly laymen and not trained in estate management. This has affected the value of some properties in the market.

Therefore, the ability of a property to yield highest returns and possess a long physical and economic life depends on good property management. Good property management has transcended ordinary maintenance of property based on tenant’s complaints and graduated into purposeful planning of building services and efficient accounting system with due regard to the legal, economic and social interests of the tenants and Landlord alike.

If we look around and study some of the multi-storey and public properties in some of our state capitals, most especially Awka, one can easily distinguish between the well managed and the neglected ones.

Proper management of our landed properties is as important as the construction of these properties and it is vital to the economics, historical, social and cultural development of our nation and it should be accorded its due importance both privately and publicly.

1.2 STATEMENT OF THE PROBLEM

Property developers as well as governments all over the world especially in developing countries embark on the development of properties. Although these properties were approved by the town planning authorities, they present physical, economic, environmental, financial and social problems.

Physically, the property becomes a source of discomfort to occupants due to wear and tear of the physical structure of the property. Any person looking for accommodation for residence or business may not like to take up the property that is old or lacked maintenance.

Economically, the property does not generate income as it used to when it was newly constructed.

Environmentally, these properties contribute to the degradation of the environment. They also pose a threat to people’s life as they can collapse and kill the occupants.

The social effect borders mainly on the property driving away high standard people. It was observed that these properties have turned out to become properties of low standard. All these result from poor management and lack of maintenance.

1.3 OBJECTIVES OF THE STUDY

1. i) To ensure that the property is kept in a good state of repairs through regular maintenance within the estate.
2. ii) To ensure that all those management tools such as letting, maintenance schedule, rent collection etc are properly articulated.

iii) To elongate the economic life or useful life of a property through activities which tend to remove physical, economic and functional obsolescence.

1. iv) To identity the well managed and neglected properties in the study area with a view to comparing their levels of income as well as state of maintenance.
2. v) To proffer necessary measures that should be taken in remedying the identified anomalies in poorly managed properties.

1.4 RESEARCH HYPOTHESES

H0: There is no significant relationship between commercial property values and independent explanatory variables in the study area.

H1: There is a significant relationship between commercial property values and independent explanatory variables in the study area.

 

H0: There are no differences in individual contributions of explanatory variables to variability in commercial property values in the study area.

H2: There are differences in individual contributions of explanatory variables to variability in commercial property values in the study area.

1.5 SIGNIFICANCE OF THE STUDY

The findings of this study will no doubt be of immense benefit to several state holders and interest groups in the real estate development industry.

This study will also be particularly significant to the entire society, the Anambra state government and inhabitants, as it will come out with remedial measures towards the eradication of improper management of landed properties which does no one any good.

In addition, it will be of great benefit to professionals in the building industry, real property investors, occupiers, and scholarly future researcher in related areas, policy and law makers, students and a host.

1.6 SCOPE AND LIMITATION OF THE STUDY

The scope of the work is limited only to commercial properties in Awka. The metropolis in question has over the years witnessed poor management of landed properties owned by both private and public bodies due to the ignorance of property owners.

Work has however been limited to the appraisal of the effect of property management on the value of commercial properties.

It is a fact that nothing is foolproof on earth. This position was equally the case with this study, firstly, there was the problem of logistic. Our people are known to have very poor research culture.

This was manifested in the cold attitude which some people approached for information showed and their unwillingness to fill the questionnaire given to them.

Time constraint was experienced, as there was not enough time to carry out more research on this work.

Some people were not convinced about the objective of this study and so they held back certain vital information for obvious reasons known only by them.

Financially difficulty also created hindrance as funds for transportation to source materials and fill the questionnaire posed a great problem.

All the same, the study has been carefully conducted for one to have a good insight into the subject matter.

1.7 DEFINITION OF TERMS

Appraisal: Appraisal is defined as an act of assessing something or someone.

Property:  property is that which belongs to or with something, whether as an attribute or as a component of said thing. In the context of this article, property is one or more components (rather than attributes), whether physical or incorporeal, of a person’s estate; or so belonging to, as in being owned by, a person or jointly a group of people or a legal entity like a corporation or even a society.

Management: Management (or managing) is the administration of an organization, whether it is a business, a not-for-profit organization, or government body. Management includes the activities of setting the strategy of an organization and coordinating the efforts of its employees (or of volunteers) to accomplish its objectives through the application of available resources, such as financial, natural, technological, and human resources. The term “management” may also refer to those people who manage an organization.

Property Management: Property management is the operation, control, and oversight of real estate as used in its most broad terms. Management indicates a need to be cared for, monitored and accountability given for its useful life and condition. This is much akin to the role of management in any business.

Property value: Real estate appraisal, property valuation or land valuation is the process of developing an opinion of value for real property.

1.8 ORGANIZATION OF THE STUDY

This research work is organized in five chapters, for easy understanding, as follows Chapter one is concern with the introduction, which consist of the (overview, of the study), statement of problem, objectives of the study, research question, significance or the study, research methodology, definition of terms and historical background of the study. Chapter two highlight the theoretical framework on which the study is based, thus the review of related literature. Chapter three deals on the research design and methodology adopted in the study. Chapter four concentrate on the data collection and analysis and presentation of finding.  Chapter five gives summary, conclusion and also recommendations made of the study.

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