Criteria for Evaluating Commercial Property Investment Performance: Evidence from Lagos, Nigeria

Abstract

Property investment performance evaluation has evolved as a strategic business framework for assessing the profitability and comparative advantages of one investment over another. This study examines the criteria considered critical in evaluating commercial property investment performance in Lagos, Nigeria. The study population comprised 368 registered entities, made up of 318 property firms registered with the Nigerian Institution of Estate Surveyors and Valuers (NIESV), Lagos State Branch, and 50 active property investors in Lagos State. A systematic random sampling technique was adopted in the selection of a sample of 47 respondents, representing approximately 13% of the population, and structured questionnaires were administered to elicit information on the factors critical to commercial property investment performance. Data was analysed using Factor Analysis with Principal Component Extraction and Varimax rotation to identify and extract the most significant determinants. Three critical factors emerged from the analysis, jointly accounting for 69.35% of the total variance: (i) property physical structure and mode of transportation (35.46% of variance); (ii) possibility of natural disasters (17.39% of variance); and (iii) effectiveness and efficiency of title processing and legal framework (16.50% of variance). The study recommends a comprehensive restructuring of the legal and institutional framework governing commercial property investment, with particular attention to the security of property rights and title, streamlining of building plan approvals, ease of Certificate of Occupancy (C of O) registration, availability of land with clear title, and the integrity of the legal system. Furthermore, land documentation processes and their institutional frameworks require systematic reorganisation to enhance efficiency in title acquisition. This is a factor identified as a major determinant of commercial property investment performance in Lagos.