Macro Economic Determinants of Rental Values of Commercial Real Estate in Ilorin, Nigeria

Abstract

The goal of any real estate investor is to maximize return. However, property investment is characterized by a huge initial capital outlay and is influenced by some key factors. Thus, it is pertinent that the economics of rent influencing factors are understood to enhance property market penetration. This study assessed the influence of these key factors on commercial property rental variation in the commercial areas of Ilorin, Kwara State. Primary data for the study were collected from commercial property occupiers and estate surveyors and valuers operating within these areas. Secondary data for the study included macro-economic variables obtained from the National Bureau of Statistics (NBS) and the Central Bank of Nigeria (CBN). The study utilized descriptive analytical techniques and multiple regression to analyze the variation in rental performance and the influence of macroeconomic factors on the rental value and general investment performance of commercial properties in Ilorin. Results of data analysis revealed an increasing trend of rental values over the years under study, influencing economic factors. With the economic challenges currently faced due to the COVID-19 pandemic, the economic implications of the pandemic on the rental performance of commercial properties in the city require a carefully designed strategy to minimize the vacancy rate.