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ABSTRACT
This paper sought to investigate the risk factors associated with residential property development process. The aim was to establish and identify prioritized risk factors in residential development that possibly influence development process with a view to providing information that could enhance investment decision-makingprocess. A survey was conducted using questionnaire to obtain both qualitative and quantitative information from members of Real Estate Developers Associations (REDAN) in Abuja. The questionnaire used elicited stage-wise information on the risk associated with residential property development process to establish significant risk factors that are important to each stage of development process. All the 65 real estate developers in the study participated in the survey. The data obtained was analyzed with the use of descriptive statistics and exploratory factor analysis (EFA). Findings revealed that location is rated as the most critical factor in the initiation stage, followed by, interest rate in the feasibility stage, and site condition is rated high in the design and planning stage while workforce availability and community acceptability influence the construction and marketing stage of residential property development. Information provided by the study as to the associated risks with residential property development process enabled a risk measure response that will minimize the likely effect to be put in place in the study area. In conclusion, the study provided information on how risk factors could influence investment decision making at different stages of residential property development in Nigeria. In addition, this paper provided an empirical-based analysis of property development risk factors in Nigeria and may possibly form the basis for further detailed risk factor analysis to be carried out in the real estate development industry.
Keywords: development process, real estate developers, residential property, risk factors
1. Introduction
Real estate development generally is a long-term investment that is prone to a lot of risks and uncertainty (Graaskamp, 1992) and it comprises of activities that span through stages from inception to commissioning of the project development. This risk-prone nature of real estate development could result in variation between the expected and the actual outcome of an investment appraisal. However, real estate developers are faced with a lot of development decision-making and one of the decisions to relate to knowing the risks associated with the real estate development process and...