A COMPARATIVE ANALYSIS OF RELATIONSHIP BETWEEN RENTAL RESIDENTIAL AND COMMERCIAL PROPERTIES IN NIGERIA

Background of the study

A home is one of life's most fundamental need. This need can be met for an individual in one of two ways: either by occupying his own property as an owner's occupier or by renting a property from someone else. In our more traditional society, the primary means by which the requirement for a place to live is satisfied is the first alternative, which is owner occupation(Adegoke, 2022). The situation has evolved as a direct result of the crisis in the metropolitan centers. Due to the difficulties in acquiring land and the high cost of building construction, a large number of individuals are no longer in a position to own their own real estate. As a consequence of this, the only option that is available to them to fulfill their need for shelter is to lease space in the homes of other people. As a direct result of this, two distinct groups of urban residents have come into existence: the landlord and the tenant. According to the terms of this agreement, the tenant is responsible for providing the landlord with a certain sum of money in exchange for the use of the landlord's home. This amount is often referred to as the rent(Adegoke, 2022). At this time, when the focus is on investment performance analysis in many areas of the globe, it is extremely essential to evaluate the performance of real estate investments, whether residential or commercial. This is true for both types of real estate investments. This is of much greater significance in Nigeria, where very few research have been conducted on the extent of the returns that may be generated via investing in real estate. In addition, the effect of continuing shifts in the global and local economies on the success of real estate investments serves to underscore the need of giving this factor significant attention when making decisions about investments(Ajayi, 2020). Since the 1990s, there has been an exponential increase in the demand for retail and commercial outlets across the country's most populous urban centers. This is due to the fact that the economic downturn forced those who were previously jobless as well as those working in the public sector to consider engaging in trade activities in addition to their regular occupations. The response of the investors to this turn of events has been to expand the number of retail and commercial outlets while decreasing the number of residential property constructions. As a consequence of this, open areas that are located in close proximity to public institutions in numerous towns and cities throughout Nigeria have been unreasonably built to accommodate stores and other retail enterprises(Amidu, 2022). The problem is made even more complicated by the widespread belief, held many Nigerian property investors, that investing in commercial property yields higher returns than investment in residential property does. However, investors can no longer rely their decisions on an intuitive comprehension of the market, which Bello, (2021) judged to be an unsatisfactory strategy for achieving success in property projects. Many landed properties in the metropolitan districts of the old Eastern Region of Nigeria, including Enugu, were destroyed during the Nigerian civil war that took place from 1966 to 1970. As a direct result of this, there was a significant reduction in the availability of landed holdings following the war. In addition, in the years after the end of the civil war, there was an enormous influx of people from rural areas into urban centers. This was a direct result of the extraordinary economic growth that the oil boom brought to the metropolitan areas. As a consequence of this, there was an increased level of demand for the restricted amount of landed properties that was already available. As a direct result of these factors, the monthly rent for landed properties rose significantly.

Because to the persistence of this pattern, "the typical worker now spends between 30 and 40 percent of his wage on rent." [Citation needed] (Brueggman, 2021). As a result, the variance in rent on properties is a direct result of the rise in rent that has been applied to the properties.

Rents in urban areas tend to vary according on the sort of commercial and residential uses that may be accommodated by a given property. This is because some properties in metropolitan areas provide advantages in terms of location over others, such as a more desirable prime location.