CHAPTER ONE
- INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Shelter is a basic necessity in life. An individual can satisfy
this need by either occupying his own (owner’s occupier) property or
renting another persons property. In our traditional society, the need
for shelter is mainly met through the first alternative, that is owner
occupation. With the emergency of urban centres, the situation has
changed. Many people are no longer about to own property because of the
difficulty in the acquisition of land and the high cost of building
construction. Therefore, they are left with the alternative of renting
other people’s properties in order to satisfy their need for shelter.
Consequently two classes of urban resident have emerged, the landlord
and the tenant under this arrangement the tenant pays to the landlord a
certain amount of money in consideration for his use of the landlord’s
house. This amount is popularly known as rent.
During the civil war the Nigeria that is 1966 to 1970 many landed
properties in the urban areas of the former Eastern Region of Nigeria,
including Port-Harcourt , were destroyed. Consequently, there was a
sharp decline in the supply of landed properties after the war.
Furthermore, the post – civil war period witnessed an unprecedented
number of the rural population trooping into the urban centres due to
the conspicuous prosperity brought about in the urban area by the oil
boom. This resulted to high demand for the existing limited supply of
landed properties. Consequent upon these, rent for landed properties
increased considerably.
This trend has continued with the effect that “the average worker
is paying between 30% to 40% of his salary as rent ” (Oshadiya, 1985).
Thus the increase in rents on the properties has led to the variation
of rent on properties.
In urban area due to location advantage (for example prime
location) which some properties offer above others for commercial and
residential uses, rent tend to very on account of the type of use which
a property can offer.
1.2 STATEMENT OF PROBLEM
Location of economic properties has been a difficult concept to
understand. Although the primary objective of commercial properties is
the derivation of financial gains, while that of residential properties
is for habitation, shelter and comfort, the demand for land is a
refection of the profitability or utility derivable from it use. The
greater the benefit to be obtained from a particular use, the higher
the rent that the user will be willing to pay for it.
There appear to be wide ranging differences in the levels of rent
passing on residential and commercial properties in Port-Harcourt and
Nigeria generally.
This research is seeking among other things to find out the causes
of rental variation in commercial and residential properties in
Nigeria, Ogui New Layout as a case study.
1.3 PURPOSE OF THE STUDY
The main purpose of this research is to examine the reasons for
rental variation in commercial and residential properties with a view
to provide tool to be used in catching issues related to rent on these
properties in Port-Harcourt and Nigeria generally.
In order to achieve the standard goals, the following objective are to be undertaken;
- To identify the current level of rents for commercial and residential properties in the study area.
- To ascertain and examine the factors influencing the rents being commanded by these properties.
- To specify the implications of rental variation on decisions to acquire those properties.
- To determine the trend in rental values for residential and commercial properties in the study area.
1.4 SIGNIFICANCE OF THE STUDY
The finding of this study will be of benefit to the following;
Firstly, tenants who are charged rents based on different reasons,
especially when the properties are of the same nature (physically).
This will again enable the investors not only to understand how
occupier thinks, but also why and the things they consider before
acquiring properties for certain uses. For example residential and
commercial use.
Secondly, the generality of the public can now understand the
reason why the rents being commanded by these properties have to
differ.
Lastly, this research work will help to determine the factors
influencing, commercial and residential properties which is an
essential pre-requisite to successful development as well as
stimulating interest in the students to carryout out further research
on the topic.
1.5 SCOPE OF THE STUDY
The study covers a period of three years (2002 to 2004) and it is
restricted to selected properties (Residential and commercial)
comprising blocks of flat and tenements in Ogui New Layout,
Port-Harcourt .
1.6 LIMITATION OF THE STUDY
Expectedly, this work met with some hindrances during the stage of
data collection. The issue of rent passing on a property (residential
or commercial) is usually regarded as classified information, which is
not easily disclosed to people particularly researchers. This was
largely suspected to be the reason why some Estate surveyors, property
owners, tenants, Estate firms, property companies and even Estate agents
who where approached through oral interviews, discussions and
visitations found it rather difficult to reveal essential information
despite every explanation that the exercise is strictly for academic
purposes, a good number of them, still nursed the fear that it may be
for property rating and taxation purposes. There was also the problem
of logistics occasioned by the society. The researcher worked with a
very light budget throughout the period of study as the frequent and
repeated visits to relevant persons and offices entailed quite some
money. Moreover, also recall that some of the interview respondents
were not co-operative as they kept on playing to the gallery as a means
of avoiding supplying the required information. On a general not
however, the researcher ensured that these bottle – necks never
affected the findings of this study since the success far outweighed the
hindrances as enumerated.
1.7 DEFINITION OF KEY TERMS
In a study of this magnitude, it is necessary to define the
various terms to distinguish between operational definitions and
constitutive definitions to avoid ambiguity. Constitutive definition
involves substituting the concept or construct being defined with other
concepts or constructs. Operational definition requires that the
concept or construct be assigned a type of meaning which one wants it
to carry throughout the study (Asika, 1999).
Facilities Management, as applied to the
hospitality sector, is defined as the proactive management of
constructed facilities and organizational assets to improve their
efficiency and add value to their performance and services (Okoroh,
Jones and IIozor, 2003). This is in tandem with Alexander’s (1996: 1)
definition as ‘the process by which an organization delivers and
sustains support services in a quality environment to meet strategic
needs’. This study borrows from these two definitions and proposes that
facilities management, as applied to the property business, is the
proactive management of facilities, support services and organizational
assets to improve their efficiency and add value to the core
accommodation they provide for their customers to meet organizational
strategic objectives. Facilities, in the context of property s, include
buildings, industrial kitchen equipment, restaurant, halls of all
categories, central air-conditioning system, fans, elevators, lifts,
electrical installations, escalators, bakery equipment, recreational
facilities including golf courses. This essentially tallies with the
Royal Institution of Chartered Surveyors’ Facilities Management Skill
Panel’s (1993) [Cited in Owen, 1993] assertion that FM consists of the
management of support services; the management of property and the
management of information technology. This research adopts this
definition totally and as an exploratory study focuses on the three
(support services, property and information technology) as they apply
to property organizations.
Property Effectiveness
Effective property combines resources and activities to generate
the property environment vital to the success of the organization. At
corporate level, it contributes to the delivery of strategic and
tactical objectives. On a day-to-day level, effective property
provides a safe and efficient working environment which is essential
to the performance of the establishment and give the customer what he
wants and needs at a price he is prepared to pay while the property
sells itself.
Property Stakeholders
Property stakeholders are the people who are involved in property
organizations either as investors, general managers, and property
workers of all categories including line staff and facilities managers
and property users or customers.
Management Style
This refers to property asset sustenance method that is being
applied in the running of the property and it could be maintenance
management, property management or facilities management
Operational Excellence: This according to Torkildsen
(1992) is anything or everything being done to satisfy customers’
requirements and meet the organizational goals and objectives in a
sustainable way. This study adopts this definition for its operation.
Support Services: These are functions that are
accessories or adjunct to the core services in many organizations. For
property businesses some are rendered as revenue yielding activities
while some are part of the total package. They include mail services,
fleet cars, catering, reception, housekeeping, and office
administration; refuse disposal, reprographics, car park management,
horticulture and porterage. This is in agreement with the schedule of
support services as identified by (Owen, 1995).
Strategic Estate Management
Aakers (1984:6) defined strategy as “the development of a
sustainable competitive advantage with which to compete in a chosen
product/market”. However, in line with Thorncroft’s (1965) view and for
this research, strategic estate management means property assets’
management decisions that determine the overall direction of business
and its ultimate viability in the light of the predictable, the
unpredictable and the known and unknown changes that may occur in its
most immediate surrounding environments which are considered
sustainable. Such decisions may include adoption of facilities
management, sales and lease back and change of use of strategic
properties.
1.8 THE STRUCTURE OF THE THESIS
The thesis consists of seven chapters, organized in a logical
manner in order to enable the readers to appreciate the thoughts of the
author in achieving the objectives of the study. The chapters are
organized as follows:
Chapter One is the introductory chapter and it provides the
background of the study, the statement of the research problem, aim and
objectives, justification for the study, scope of the research,
limitation of the research, definition of key terms and the structure of
the thesis.
Chapter Two deals with the review of the related literature, which
is structured into a discussion of the whole essence of facilities
management detailing its history, goals, and functions. Further the
chapter reviews previous empirical studies, which basically are current
research studies laden with quantitative analysis of facilities
management and property businesses.
Chapter Three presents the concept and the theoretical framework
of the research. It is composed of the outlines of the researcher’s
process of thought, summary of a priori expectations and the
theoretical framework.
Chapter Four describes the research method. It is composed of the
setting of the study, the research design, population of study,
sampling design/sampling frame, sampling size, data requirements, method
of data collection, the techniques of refuting a priori expectations,
method of developing the conceptual framework of the facilities
management compliant property and method of data analysis.
Chapter Five presents the analysis of data and interpretation of
results while Chapter Six discusses the results. Finally, Chapter Seven
focuses on the summary of findings, conclusion and discussion of
implication for theory, practice and research.
1.9 CHAPTER SUMMARY
This introductory chapter deals with the research theme and the
nature of the problem to be investigated. Others include the research
problem, the aim, objectives, and justification of the study, the study
area, and definition of key terms. The next chapter dwells on the
review of related literature.