Evaluation of Risk Elements In Real Estate investment In Nigeria: The Case Of Uyo Metropolis, Akwa Ibom State

Abstract

Risk is a common feature of all forms of investment including real estate which involves the creation of new income yielding assets from land and its resources based on capital analysis of expected costs and benefits within a given time. While some real estate investments have a high-risk profile, others have low-risk profile depending on the type, location and lease term. This study was designed to evaluate the different elements of risk in relation to different stages of real estate development in Uyo Metropolis, Akwa Ibom State. A total of 200 project sites were randomly selected and visited for data collection. Accordingly, 200 sets of questionnaire containing items bordering on types of risk/ project development were administered to the private estate developers while simple percentages was employed to analyse data. Findings indicated that the nature of risk encountered by investors varied according to the stages of project development, especially during preparation of development plans and building construction. Majority of respondents identified lack of access to project finance, delay in issuance of C-of-O and default in rent payment as the major risk elements in their investment. Based on these findings, it was recommended that real estate investors and managers should evolve effective and efficient management strategies to mitigate dominant risk elements for enhanced investment opportunity in the real sector.