JEFMS Journal

ABSTRACT:

Performance of FDI in commercial real estate in Nigeria when compared to international benchmark figures is yet to be established and documented in literature. The aim of the study was 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 were to; ascertain and compare returns from foreign direct investments in commercial real estate in Nigeria with international benchmark; and to examine how FDI tax responsibilities in Nigeria compare with the global benchmark rate. The study adopted ex post facto research design, and the unit of analysis was selected foreign controlled commercial real estate investments 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 was analyzed using T-test. 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), while there was no negative variation in FDI tax responsibilities in Nigeria and international benchmark rate cap of 30% (t = .8666; p > 0.05). The study recommended that property managers should practice tenant mix and flexible leases and spaces.

Keywords-

Commercial Real Estate, FDI, Real Estate Performance Benchmarking, Real Estate Returns

REFERENCES:

1) Abobaker, S. (2015). Key success factors impacting foreign direct investment and technology transfer: A comparative study of Libya and Egypt. Unpublished thesis, University of Gloucestershire.

2) Acharyya J. (2009). FDI, growth and the environment: Evidence from India on CO2 emission during the last two decades. Journal of Economic Development, 34 (1) 43 – 58.

3) Alfaro, L., Kalemli-Ozcan, S.and Volosovych, V. (2008). Why doesn't capital flow from rich to poor countries? An empirical investigation. The Review of Economics and Statistics, MIT Press, 90(2), 347-368.

4) Amal, M., Raboch, H. and Tomio, B. (2009).Strategies and determinants of Foreign Direct Investment (FDI) from developing countries: Case study of Latin America. Latin American Business Review, 10, 73- 94

5) Aniagolu, C.O., Obodo, M.C. and Ewurum, N.I. (2018). An assessment of commercial real estate performance as an investment option in Nnewi, Anambra State, Nigeria. International Journal of Innovation Engineering and Science Research, 2(1).

6) Balasubramanyam, V., Sapsford, D. and Salisu, M. (2017). Foreign Direct Investment and growth. Working Papers ec13/94, Department of Economics, University of Lancaster.

7) Baum, A. (2009). Commercial real estate investment: A strategic approach. New York: Routledge

8) Baum, A. (2002). Commercial real estate investment. London: Estate Gazette.

9) Baum, A. and Crosby, N. (1988). Property investment appraisal. London: Routledge

10) Bello, M. and Adewusi, A. (2009). A comparative analysis of the performance of real estate and financial assets as security for mortgagelending in Nigeria. FIG Working Week 2009: Surveyors Key Role in Accelerated Development

11) Bello, N., Jolaoso, A. and Olanrele, O. (2018). Comparative analysis of investment attributes of hotel and commercial property in South-Western Nigeria. African Journal of Built Environment Research, 2(1)

12) Bello, N.A. (2012). Comparative analysis of commercial property and stock-market investments in Nigeria. International Journal of Social, Management, Economics and Business Engineering, 6(10).

13) Bello, N.A. (2014). Comparative analysis of commercial property and stock-market investments in Nigeria. World Academy of Science, Engineering and Technology International Journal of Social, Management, Economics and Business Engineering 6 (10).

14) CBN (2001). Central Bank of Nigeria Annual Report and Statement of Accounts for the Year Ended 31st December, 2001. Abuja: Central Bank of Nigeria.

15) Dabara, D.I., Odewande, A.G., Olatunde, A.L., Ankeli,I.A. and Abefe-Balogun, B.A. (2016). Performance Evaluation of Investments in Real Estate and Selected Financial Assets in Nigeria. International Journal of Business and Management Studies, 05(01), 197–210.

16) De Mooij, R.A. and Ederveen, S. (2005). Explaining the Variation in Empirical Estimates of Tax Elasticities of Foreign Direct Investment. Tinbergen Institute Discussion Paper, TI 2005-108/3. Synthesis of Empirical Research. International Tax and Public Finance, 10(6)673-693.

17) De Mooij, R. and Ederveen, S. (2003). Taxation and Foreign Direct Investment: A Synthesis of Empirical Research. International Tax and Public Finance, Springer; International Institute of Public Finance, 10(6), 673-693.

18) Edrak, Gharleghi, Fah and Tan (2014). Critical success factors affecting Malaysia’ SMEs through inward FDI: Case of Service Sector. Asian Social Science; 10, No. (16).

19) Esmer, S. (2008). Performance Measurements of ContainerTerminal Operations. Dokuz Eylül Üniversitesi Journal Sosyal Bilimler Enstitüsü Dergisi.

20) Fleming, A. and Ling, J. (2010). The Indian Automotive Market-Overview. Automotive report.

21) Görg, H. and Greenaway, D. (2004). Much Ado about Nothing? Do Domestic Firms Really Benefit from Foreign Direct Investment? World Bank Research Observer, World Bank Group, 19(2) 171-197.

22) Jones Lang LaSalle (2016). JLL Property Index Q2 2016. Retrieved from jll.co.uk_united-kingdom_en-gb_Documents_UK Property-Index-Q2-2016-JLL, 3/13/2017.

23) Kalu, I.U. (2001). Property valuation and appraisal. Nigeria: Adyudo Press.

24) Mba, W. (2009). A comparative analysis of the potentials of commercial banks’ securities and real property investments in Nigeria, 2001 to 2006. Unpublished Dissertation, Department of Estate Management, University of Nigeria.

25) Misiewicz, S. (2014). Top 5 Key Performance indicators for property investors. Retrieved from

26) LinkedInShare.com/property/performance indicators 3/4/2017.

27) MSCI (2018). MSCI global intel measures. Retrieved in January 15, 2019 from msci.com/documents/1296102/8952522/global-intel-measures-guide-2018.pdf

28) National Bureau of Statistics (2018). Corporate tax in Nigeria. Nbs.gov (accessed December 11, 2018).

29) Nweze, C. (2010). World Bank pumps $58.8b into weak countries. The Nation, Friday, January 1

30) Obi-Aso, N.E. (2019). Appraisal of the performance of foreign direct investment in commercial real estate in Nigeria from 2006 to 2017. PhD Dissertation, Department of Estate Management, Nnamdi Azikiwe University, Awka, Anambra, Nigeria.

31) OECD (2011). Competitive neutrality and state–owned enterprises: Challenges and policy options. Paris: OECD.

32) OECD (2009). Guidelines for recipient country investment policies relating to national security. Paris: OECD.

33) OECD – UNCTAD (2011). Fifth Report on G20 Investment Measures, 24 May.

34) OECD – UNCTAD (2010b). Fourth Report on G20 Investment Measures, 4 November.

35) OECD – UNCTAD (2010a). Third Report on G20 Investment Measures, 14 June

36) Prasad, E., Rajan, R. and Subramanian, A. (2007). Foreign capital and economic growth. Brookings papers on economic activity, economic studies program, The Brookings Institution, 38(1), 153-230.

37) Richard, M.H. (1984:317). Modern human relations. New York: CBS College Publishing.

38) Udo, G.O. (2003). Model building in property valuation. Enugu: Institute of Development Studies University of Nigeria

39) Udobi, A., Onyejiaka, J. and Nwozuzu, G. (2018). Analysis of the performance of commercial and residential property investments in Onitsha metropolis, Anambra State, Nigeria. British Journal of Earth Sciences Research, 6(2): 21-32.

40) Udobi, A.N., Kalu, I.U. and Elekwachi, C.M. (2016). Challenges of international real estate investment in an emerging economy: The Nigerian Experience. Civil and Environmental Research, 8(3). Retrieved from www.iiste.org. 7/8/2017

41) Uzoma, M.A. (1998). International business: Concepts, operations and strategies. Owerri: Serve Publishing Co. Ltd