Risk-return Performance of Residential Property Investment in Lagos, Nigeria: A Quantitative Survey Analysis From 2001 to 2021

Abstract

Aim: To evaluate the risk-return performance of residential property investment between 2001 and 2021 in Lagos, Nigeria. Study Design: Quantitative Survey research. Place and Duration of Study: Eti-osa and Somolu LGA, Lagos State, 2022. Methodology: Survey with structured questionnaire collected primary data on non-owner-occupied residential property investments in Somolu and Eti-Osa, Lagos, Nigeria. Estate surveying and valuation firm provided the data. Analysis used descriptive statistics (charts, tables, standard deviation, and coefficient of variation) and trend analysis over 20 years (2001-2021) to assess risk-return performance. This included rental index, rental growth rate, standard deviation, and coefficient of variation. Results: In Eti-Osa, duplexes had a high expected return of 54.04% with a risk of 18.58. Bungalows and flats had lower returns of 44.61% and 41.8% with risks of 16.38 and 15.39, respectively. Duplexes performed best with a coefficient of variation of 0.34, followed by bungalows and flats at 0.37 each. In Somolu, self-contained and duplex properties performed best with returns of 19.12% and 19.08% but higher risks of 14.82 and 17.08. Bungalows and tenement buildings had returns of 15.5% and 15.32% with lower risks of 10.43 and 8.25. Self-contained apartments had the lowest return of 13.31% and low risk of 6.57, performing best in risk-return with coefficient of variation of 0.49. Overall, Eti-Osa properties performed better than Somolu. Conclusion: The study shows that rental prices experienced an overall upward trend, with flats and bungalows exhibiting higher rental growth rates compared to other property types. Appreciation rates varied across property categories, with duplexes in Eti-Osa and bungalows in Somolu showing higher average annual appreciation rates. Anticipated yield and risk varied among property types, with duplexes having the highest anticipated yield but also the highest level of risk. Therefore, this study recommends that investors prioritize flats and bungalows in Eti-Osa and Somolu, Lagos for higher rental growth and appreciation. Evaluate duplex risks, as they offer greater returns but entail elevated risk.