Analysis of Selected Macroeconomic Variables and Property Development in Kwara State, Nigeria: Implications on Investment Decisions

Abstract

The widening gap between housing need and supply has created a void for private developers to fill in housing delivery in Nigeria. However, the uncertainty and instability of the economy across countries of the world as indicated by macroeconomic variables appears very important to be considered. Thus, the study's objective was to evaluate the effect of macroeconomic variables on private residential property development in Ilorin, Kwara state, Nigeria, for investment decision making. This study focused on three macroeconomic variables which include GDP, Interest rate and Inflation rate. The research utilized both primary and secondary data. The primary data were collected via structured questionnaires administered on Real Estate Development Association Practitioners (REDAN) in Ilorin, Kwara State. The secondary data which include GDP, Interest rate and Inflation rate from 2010 to 2020 was also obtained from the Central Bank of Nigeria (CBN) and Nigeria Bureau of Statistics (NBS). The information obtained were analyzed using Trend analysis and multiple regressions. Trend analysis aimed at projecting macroeconomic movement from 2010 to 2030, while the multiple regressions was used to investigate the effects of macroeconomic variables on private housing development in Ilorin Metropolis. The result of the analysis revealed among others that macroeconomic variables affect property development as they show significant effect on private residential property development with GDP producing positive significant effect on residential property development, while interest rate and inflation rate have negative significant effect on property development. Therefore, this study recommends that real estate investors in Ilorin metropolis should consider the macroeconomic environment, and evaluate their risk exposure to make informed investment decisions.