DOWNLOAD THE COMPLETE PROJECT

2992 Users found this project useful

ARTERIAL ROAD NETWORK AND COMMERCIAL PROPERTY VALUES

CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

Transportation and property are important in physical and economic development of towns and cities all over the world. Property and land values tend to increase in areas with expanding transportation networks, and increase less rapidly in areas without such improvements. Rapid and continued rise in housing and land prices are expected in cities with transportation improvements and rapid economic and population growth (Goldberg, 1970).

Man, nations, regions and the world would be severely limited in development without transportation, which is a key factor for physical and economic growth (Oyesiku, 2002). Transportation systems and land use are interdependent. Indeed findings of earlier studies indicate compelling and consistent connections amongst them (Ewing and Cervero, 2001; Polzin, 2004). According to Bailey, Mokhtarian, and Littlel (2008), transportation route is part of distinct development pattern or road network and mostly described by regular street patterns as an indispensable factor of human existence, development and civilization. The route network coupled with increased transport investment result in changed levels of accessibility reflected through Cost Benefit Analysis, savings in travel time, and other benefits. These benefits are noticeable in increased catchment areas for services and facilities like shops, schools, offices, banks, and leisure activities. Road networks are observed in terms of its components of accessibility, connectivity, traffic density, level of service, compactness, and density of particular roads. Level of service is a measure by which the quality of service on transportation devices or infrastructure is determined, and it is a holistic approach considering several factors regarded as measures of traffic density and congestion rather than overall speed of the journey (Mannering, Walter, and Scott, 2004).

Access to major roads provides relative advantages consequent upon which commercial users locate to enjoy the advantages. Modern businesses, industries, trades and general activities depend on transport and transport infrastructure, with movement of goods and services from place to place becoming vital and inseparable aspects of global and urban economic survival. Developments of various transportation modes have become pivotal to physical and economic developments. Such modes include human porterage, railways, ropeways and cableways, pipelines, inland waterways, sea, air, and roads (Said and Shah, 2008).

According to Oyesiku (2002), urbanization in Nigeria has a long history in its growth and development. Extensive development being a feature of the 19th and 20th centuries, with concentration of economic and administrative decision-making in Lagos, Ibadan, Kaduna, Jos, and Enugu, and high degree of specialization and larger population associated with greater specialization of goods and services. Wyatt (1997) states that urban areas have tendency to develop at nodal points in transport network and places with good road network will possess relative advantage over locations having poor network. Urban locations with such relative advantage are found where different transport routes converge with high degree of compactness, connectivity, density, length and accessibility exhibited within the intra- and inter- urban road networks.

Ikeja is a typical example in the history of growth and development of cities in Nigeria. The city became capital of Lagos State in 1976 with improved road networks developed to cater for increase in concentration of pedestrian and vehicular movements. Similarly, commercial activities like banking, retail/wholesale businesses, and professional services congregated to take advantage of nearness to seat of governance. Concentration of activities attracted consumers and ancillary service providers. This partly caused increase in demand for commercial space and its concomitant effects on commercial property values along arterial roads in the metropolis.

The present position concerning commercial properties in Ikeja is that majority are located along arterial roads that deliver much of the vehicular and pedestrian movements. There have been increases in rental values along the individual arterial roads although not at equal rates. It is against this background that this research analyzed the arterial roads, determined the levels of accessibility, connectivity, traffic density of the individual arterial roads, examined the pattern of commercial property values and the relationship between the explanatory variables of the road network in Ikeja Nigeria.

1.2 Statement of the Research Problem

The relationship between transportation and urban property values has been the focus of many studies (for example, Dewees, 1976; Damm et al, 1980; Wolf, 1992; Singh, 2005). Some of the earlier studies returned positive relationship between transport and property values while others showed negative relationship. For instance, in a study on the relationship between rail travel cost and residential property values, a replacement of streetcar with subway increased site rent at a location that is perpendicular to the facility within a one-third mile walk to the station (Dewees, 1976); and there was positive influence of permanent transportation improvements on land values (Wolf, 1992). It was established that there was statistically significant relationship between distance of a parcel of land to the nearest Metro station and land price (Damm, Lerner-Lam, and Young, 1980), while there was evidence that residential property prices decrease immediately around the transport investment or station value uplift through changes in land values (Singh, 2005).

The urban areas all over the world offer a number of advantages in terms of concentration of people followed by demand for commercial properties and transportation. Ikeja is a classical example of a city that has developed rapidly since 1976 when it became the Lagos State capital. Construction of roads increased substantially with the opening up of residential precincts that also benefitted from increasing demand for lettable spaces in commercial properties. Many private companies, retail stores, commercial banks aggregate in the metropolis to take advantage of opportunities afforded by locations near the seat of governance thus attracting complimentary services. This led to high concentration of vehicular and pedestrian movements especially along the access roads.

The roads exhibit a number of nodes and linkages to form networks of both arterial and minor routes along which commercial properties locate. Commercial users displaced residential users, causing sites to be at highest and best uses with concomitant increases in the values of commercial properties. Accessibility within the road network is affected by the compact nature of various routes that sometimes impede volume of traffic. The road network is made up of nodal points and links that determine the degree of connectivity and accessibility in the network.

A number of factors affect values of properties. These factors may be intrinsic or extrinsic. The extrinsic factors include increase in demand for lettable space, location, condition of adjoining properties, nearness to park and leisure, local and national economic conditions. External factors are due to natural characteristics of the property which affect the city where the property is located. Intrinsic factors arise from within the nature of the property itself and relate to the physical attributes, including size of room, state of repair, decoration, and facilities. Other attributes that increase or decrease the amount that users are willing and able to pay in an open market transaction include physical characteristics of the structure, change in taste and demand, effect of adjacent activities, economic activities, inflation, and changes in legislation. The demand for commercial properties itself is affected by changes in population, planning and development schemes, legislation, and availability of good road networks (Hendon, 1971; William, Davies, and Johnson, 1980; Richmond, 1982; Millington, 1982; Olayiwola, Adeleye and Oduwaye, 2006).

Earlier theorists (Burgess, 1925; Hoyt, 1939; Harris and Ullman, 1951; Lean and Goodall, 1977) generally believe that sites adjacent to main transport routes have relative advantages over those located some distance away, and other sites located at route intersections possess relative advantage with greater advantages belonging to sites located at focus of transport system. These advantages are determined in relation to accessibility, which has different characteristics in relation to individual sites thus differentiating between sites in terms of accessibility advantages.

Many of the aforementioned studies emphasized the effects of the factors on values of properties generally with little consideration given to road network pattern and its effects on values of commercial properties. Possible relationships between road networks, location attribute, demand and supply, and accessibility and commercial property values have therefore elicited the interest of the researcher in this direction. The relationship cannot be determined without due consideration given to the explanatory variables on one hand and commercial property values on the other. The use of roads leads to a study of urban areas in relation to land uses, especially commercial properties. It is against this background that this study was conceived.

1.3 Research Questions

The foregoing has elicited a number of questions in terms of road network analysis and values of commercial properties in Ikeja, Nigeria to which answers are to be proffered. The relationship between arterial road network and commercial property values cannot be determined without due consideration given to variables that make up the network, especially those that relate to arterial roads and other explanatory variables and values of commercial properties. Some pertinent questions to enable the study attain its stated objectives are as follows:

1. What is the pattern of arterial roads in Ikeja?

2. What are the spatial pattern and trend of commercial property values in the study area?

3. What are the relationships between commercial property values and arterial road network in the presence or absence of other explanatory variables?

4. What are the individual contributions of the explanatory variables to variability in commercial property values?

5. What are the models to explain and predict the relationship between the explanatory variables and commercial property values?

1.4 Aim and Objectives of the Research

The aim of this research is to analyze the network of arterial roads and other explanatory variables and commercial property values in Ikeja, while the specific objectives are to:

a.  Analyze the arterial road network pattern in the study area;

b. Examine the spatial pattern and trend of demand, supply and values of commercial properties in the study area;

c. Determine the relationships between commercial property values and road network, in the presence or absence of other variables, in the study area;

d. Determine the contributions of individual explanatory variables to variability in commercial property values in the study area;

e. Derive models for predicting variability in commercial property values in relation to the explanatory variables.

1.5 Research Hypotheses

Consequently, the following hypotheses were postulated:

1. There is no significant relationship between commercial property values and independent explanatory variables in the study area.

2. There are no differences in individual contributions of explanatory variables to variability in commercial property values in the study area.

1.6 Justification and Rationale for the Research

It is trite amongst earlier studies on accessibility in relation to property values that profitability and utility are determined by accessibility. The greater the accessibility of a location the greater the comparative advantage, and the greater the comparative advantages the greater the demand for property at the location. Lean and Goodall (1977), for instance, stated that urban areas naturally develop at nodal points in the transport network and those locations with good transport access to other areas have relative advantage over locations with poorer transport facilities and that urban locations having such relative advantages are likely to be where transport routes converge. Similarly, Estate Surveyors/Valuers and Planners believe that accessibility has great impacts on property values, with properties along major roads and at nodal points having greater values (Ogunsanya, 1986; Oduwaye, 2004; Omoogun, 2006). However, accessibility discussed in these studies was based on intuition without empirical basis to justify what relative accessibility advantages the locations have.

This study borrows techniques found useful in other fields like operational research, geography, transportation and urban planning to explain and analyze road network for purpose of determining the relative accessibility of each of the arterial roads. It is believed that the techniques used in these fields can be extended to studies in estate management, thereby making cross-fertilization of research ideas across various fields possible. In this regard, this research has become relevant in determining the relationship between arterial road network and values of commercial properties in Ikeja.

In addition, it is essential to establish a technique that may be useful for determining relative accessibility of locations in the network of arterial roads. Even when relative advantages are determined, there is need to develop models that will be useful for predicting commercial property values in Nigeria. The model may become tool for professional Estate Surveyors and Valuers to change their practice of using intuition to determine relative accessibility of locations in a road network. Similarly, there is the need to predict the supply of, demand for, and fair market values of commercial properties by developers, Estate Surveyors and Valuers, and feasibility and viability appraisers in present day’s risks and uncertainty in property development. This has underscored the importance of this study.

Based on complexity of commercial, industrial, real estate activities and degree of urbanization exemplified by the study area, deductions and findings from the study may be applicable to other cities in Nigeria. The study will also arouse the interest of researchers in estate surveying and valuation particularly along transportation valuation, an aspect that probably has not been explored in Nigeria. A review of literature showed that studies on Nigerian intra-urban road network using the graph-theoretic concept to determine accessibility effects on commercial property values are scanty, available ones were on USA and U.K. This study will therefore contribute to empirical studies on intra-urban road network and its influence on commercial property values in Ikeja, Nigeria.

1.7 Scope of the Study

Roads may be classified as international, inter-city or intra-city. International and inter-city roads are usually major or arterial roads, while intra-city roads are routes within a city and may be minor or major (arterial). The study focused on arterial roads in the intra-urban network of Ikeja. There are ninety roads in Ikeja out which thirty-seven are arterial. From the thirty-seven arterial roads in the study area, only twenty traverse the commercial axes while others serve institutional, industrial, and residential neighbourhoods. This study therefore covered all major roads serving the commercial axis and inner areas of Ikeja to the exclusion of inter-city roads such as Lagos/Abeokuta Expressway, Oworonsoki/Apapa Expressway, Ikorodu Road, and Lagos/Ibadan Expressway that form rings around the study area. Preliminary study revealed that there are five types of commercial properties in the study area. These are retail shop premises, banking spaces, office properties, warehouses, and non-specific commercial properties. In respect of this research, focus was on offices, shops, banking spaces and other types of commercial users along the arterial routes to the exclusion of residential, industrial, and non-specific type of commercial properties.

Due to the magnitude, terrain and complex nature of Lagos State roads, the study was limited to Ikeja intra-city roads. Ikeja is the predominant component of Ikeja Local Government, which itself is one of four zones identified within the larger Lagos metropolis. The four zones (Lagos Island, Apapa, Lagos Mainland, and Ikeja) represent commercial hubs of Lagos metropolis, which as revealed by preliminary observation, shows activity areas where employment, commercial, transportation terminals, and other businesses are concentrated (Oni, 2008). Road network analysis was carried out to determine the levels of accessibility and connectivity of nodal points as well as road and traffic densities in the hope of predicting commercial property values along each arterial road. In doing so, only the arterial roads identified as commercial axes in the study area were the focus of the research to the exclusion of secondary connector roads, while the relationship between arterial roads and commercial properties in the study area were examined.

Many factors have dictated the choice of Ikeja. First, it is the capital of Lagos State of Nigeria and a socially heterogeneous city with variety of local, state and federal government roads. Second, the property market in the study area is well developed and it is possible to identify and analyze variations. Comprehensive data are available on commercial property values in Ikeja, which is one of the few cities in Nigeria offering opportunity for comprehensive survey of its commercial properties, with enlightened occupiers of commercial premises thereby making data collection possible. Third, a number of property magazines are in circulation in the city where professional Estate Surveyors and Valuers advertise commercial properties available for sale or letting. This makes the property market very active and up-to-date with stakeholders, prospective tenants, property owners, and investors versatile and knowledgeable about the goings-on in the market. Fourth, judging from what is applicable in Nigeria, the Ikeja road network is one of the most complex in terms of linkages, human and vehicular movements with availability of computerized and up-to-date data and satellite images of the road network.

1.8 Limitations of the Study

The study focused on analysis of arterial roads and commercial property values in Ikeja. It did not attempt to investigate the structural stability of the arterial road network or assess the methods and accuracy of methods adopted by respondents in fixing the values of commercial properties in the study area. It simply analyzed accessibility, connectivity, arterial road network, distance to most central place in the study area, demand and supply of commercial properties in relation to commercial property values in the study area. Graph theoretic technique was used to analyze the arterial road network while opinions of Estate Surveyors and Valuers practicing in the study area were relied upon. The accuracy, or otherwise, of such opinions although not in doubt was not investigated.

Some challenges were encountered during the study. By virtue of the busy nature of Estate Surveying and Valuation practitioners and “carefulness” of occupiers of the sampled commercial properties, there was considerable reluctance on their parts to volunteer information. Some of the respondents, especially Estate Surveyors and Valuers, delayed in completing the questionnaires and it took personal influence of the researcher (as their colleague) and assistance of the Lagos State Branch Chairman of the Nigerian Institution of Estate Surveyors and Valuers to obtain their eventual impressive responses. In addition, the researcher took time to allay the fears of Occupiers by educating them about the essence of the research, that it would in no way expose them to imposition of levies or charges or any liability to the Lagos State Government.

The populations of commercial properties and occupiers in the study area were indeterminate. The study population was too large and there was no census available to ascertain them thereby making determination of their number somewhat tasking. The researcher however found a way out of the challenge by using a form of sampling based on estimated population of occupiers and adopting direct observation of the sampled properties to determine the average number of occupiers. These limitations however neither affected the quality of data collected nor the conclusions drawn from it. The various opinions of Estate Surveyors and Valuers were relied upon, in some cases, to the exclusion of those of occupiers especially in respect of questions that required a form of professional opinion. This was consequent upon the findings from the pilot tests earlier conducted which showed that the occupiers found such questions too technical. Hence, questions like rating of the roads in the study area in terms of accessibility, supply and demand of commercial properties were subsequently limited to the Estate Surveyors and Valuers.