Appraisal of the Performance of Foreign Direct Investment in Commercial Real Estate in Nigeria from 2006 - 2017


Faculty: Environmental Sciences
Department: Estate Management


Obi, N. E.
Emoh, F.I.
Egolum, C. C.


Literature abounds on the performance of Foreign Direct Investments (FDIs) in banking, telecommunication and oil and gas in Nigeria. However, the performance of FDI in commercial real estate in Nigeria when compared to international benchmark figures is yet to be established and documented in literature. This aim of this work is to appraise the performance of FDI in commercial real estate in Nigeria from 2006 to 2017 in a bid to empirically assist foreign direct investors’ decisions on investing in the Nigerian commercial real estate sector. The objectives are to; ascertain and compare yield and capital growth rate of foreign direct investments in commercial real estate in Nigeria with international benchmark; examine how FDI tax responsibilities in Nigeria compare with the global benchmark rate, and the effect of ownership structure risk on sustainability strategies of foreign commercial real estate portfolios in the study area. The study adopted the survey approach. Primary data were collected using structured questionnaire and interview. The study is based on selected major foreign controlled commercial real estates in Lagos and Abuja. The study adopted the Jones Lang LaSalle benchmark settings for commercial real estate performance indicator due to its empiricism from an international perspective where yield is 5.7%, capital growth is 7% and rental growth is 5.5%. Data were collected on rental values, capital values, tax responsibilities and effect of ownership structure risk. Tables and percentages were used to present and analyse the data collected. T-test and Pearson Product Moment Correlation Coefficient were used to test the hypotheses. The study showed a yield of 4%, (t = 6.364; p < 0.05) and a capital growth rate of 21%, (t = 1.592; p > 0.05). There was no negative variation in the of FDI tax responsibilities in Nigeria and international benchmark rate cap of 30% (t = .8666; p > 0.05); Ownership structure risk has a significant effect on sustainability strategies of foreign direct commercial real estate investment in Nigeria (r = .867; p < 0.05).The results are consistent with the World Culture Theory of Globalisation and FDI. The yield of 4%, capital growth of 21% equal tax responsibilities and absorptive effect of ownership structure risk indicates a satisfactory performance. The study recommends that property managers should practice tenant mix and flexible leases and spaces. Government should implement investor’s friendly land and fiscal policies to improve FDIs.