Real Estate Investment Performance Measurement in Nigeria: Problems and Constraints Facing Professionals in a Highly Active but Opaque Market

Abstract

Real estate investment plays a vital role in the economic system and the measurement of its performance provides a basis for the analysis of the state of the market and investment decision making at any point in time either at the property level, portfolio level or the property sector level. As a key indicator in the ranking of property markets across the world, real estate investment performance measurement has become an important index in the market maturity framework. However, the Nigerian real estate investment market has continued to be constrained by the absence of recognized performance measurement framework due to several factors. This study, which is part of an extended research, examines the problems and constraints that have militated against the construction of a performance measurement indices for the Nigerian market. The study carries out a questionnaire survey on a sample of 276 Estate Surveying and Valuation firms spread across the Nigerian real estate market. The data collected was analysed using the mean score to rank 21 identified factors that have limited the measurability of the market performance comparative to other globally recognized indices in other real estate markets.  Out of the 21 limiting factors, 14 factors were specifically identified as having high impact levels on investment performance measurement of real estate in Nigeria. Among the 14 factors include absence of data unit that tracks market performance by the firms, inadequate information about the real estate market, lack of uniform performance measurement benchmark in the industry, limited knowledge of the performance measures by practitioners and the other factors. The study recommends urgent intervention by the Nigerian real estate professional body and its regulator in partnership with investors by creating an online based real estate specific information and data centre to address the identified problems in order to increase the measurability and transparency of the market.