An Investigation into the Significance of Location as a Determinant of Office Rental Values in Port Harcourt, Nigeria

Abstract

In recent times, office space rental values for Port Harcourt and its environs has been on the rise. This is inspite of the general opinion that the national economy is contracting across most sectors including Rivers State. The aim of this research is to test the significance of location as a rental value determinant across some selected commercial districts in Port Harcourt. It also seeks to examine the role of locational elements such as proximity to the Central Business District (CBD) in influencing rental levels. Six commercial districts with differences in distance to the (Central Business District) were selected for the study. With the use of questionnaires, primary data on office rents over a five year period (1999 - 2013) was supplied by office occupiers and Estate Surveyors & Valuers. This is in additional to data on explanatory variables such as physical characteristics of building, neighborhood characteristics and Lease/Contract term. The data set was analyzed using multiple regression and analysis of variance (ANOVA) techniques. The results indicate that there is a variation of rental values amongst these six commercial districts and this not by chance. Secondly; the locations closes to the CBD commands higher rental values. Thirdly; in land use decisions; location is considered more important above other factors such as physical attributes of the building, lease/contract terms and economic factors. These results further confirms the assertion of the economic theory of location that location matters. Based on these findings, it is recommended to property developers and investors that in order to reap acceptable return on investment, location is an important determinant which deserves good attention in investment decision making.

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