The Relationship Between Property Location and Rental Yield in Plateau State
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Background of the Study
The rental yield in real estate refers to the return on investment an investor can expect from a rental property, often calculated as the annual rent income divided by the property value. Location has long been a critical factor in determining rental yields, with urban centers typically offering higher returns compared to rural areas. Plateau State, located in the central region of Nigeria, is a key area for real estate investment due to its unique geographical features, socio-economic dynamics, and historical significance. The state’s capital, Jos, has witnessed rapid urbanization over the past decades, with an increasing demand for housing, commercial properties, and mixed-use developments. The relationship between property location and rental yield is especially relevant in Plateau State, where different factors such as proximity to markets, schools, hospitals, and government institutions may play a significant role in influencing rental values.
Several studies have shown that property location significantly influences rental yields by affecting the desirability of the area (Olanrewaju & Abiodun, 2023). Urban areas and those close to economic hubs typically yield higher returns due to their increased demand, while rural or less developed areas may present lower yields despite their potentially lower acquisition costs (Adediran & Aliyu, 2024). Plateau State, with its relatively underdeveloped infrastructure outside major towns, presents an interesting case study of how location influences rental returns in both urban and semi-urban contexts.
In recent years, rapid population growth, infrastructural development, and governmental efforts to boost the local economy have heightened the interest in Plateau State’s real estate sector (Sulaimon et al., 2023). However, it remains unclear how these developments directly influence the rental yields across different locations within the state. This study aims to explore the varying factors associated with property location in Plateau State and assess their impact on rental yields. Understanding this relationship is crucial for real estate investors, developers, and policymakers who seek to make informed decisions regarding the real estate market in the region.
Statement of the Problem
The relationship between property location and rental yield in Plateau State remains underexplored, especially considering the state’s evolving socio-economic and infrastructural landscape. While factors such as infrastructure development, economic activity, and population density are known to influence rental yields (Bamidele & Adebayo, 2024), the specific dynamics within Plateau State have not been sufficiently analyzed. This gap in knowledge may lead to missed opportunities for investors and planners who seek to optimize property values in this region. Furthermore, understanding how varying locations within Plateau State can either enhance or detract from rental yields can aid policymakers in making decisions regarding urban planning, housing policies, and the allocation of resources to improve local infrastructures.
Despite Plateau State’s significant potential, there is a lack of detailed empirical data on how the location of properties within different towns and cities of the state correlates with rental returns. This study seeks to address this knowledge gap by providing insights into the impact of property location on rental yields, with a focus on factors such as proximity to urban centers, transportation networks, and the presence of key economic activities. It also aims to determine how these variables affect investor decisions in Plateau State’s real estate market, providing a framework for future investment strategies in the state.
Objectives of the Study
1. To analyze the impact of property location on rental yields in Plateau State.
2. To evaluate the role of socio-economic and infrastructural factors in determining rental yields in Plateau State.
3. To assess the relationship between urbanization and rental yield trends in Plateau State.
Research Questions
1. How does property location affect rental yield in Plateau State?
2. What socio-economic factors contribute to rental yield variations across different locations in Plateau State?
3. What role does infrastructure development play in influencing rental yields in Plateau State?
Research Hypotheses
1. There is a significant relationship between property location and rental yield in Plateau State.
2. Socio-economic factors significantly influence rental yield variations in Plateau State.
3. Infrastructure development positively impacts rental yields in Plateau State.
Scope and Limitations of the Study
This study will focus on assessing the relationship between property location and rental yields within the urban and semi-urban areas of Plateau State, particularly in Jos and surrounding towns. The study will examine residential, commercial, and mixed-use properties. The limitations of this study include the availability of data, as rental yields may be influenced by factors not easily quantifiable, such as informal market dynamics and private negotiations. Additionally, the rapid pace of urban development in Plateau State may lead to shifting trends in rental yields, which could limit the generalizability of the findings beyond the study period.
Definitions of Terms
• Rental Yield: The income generated from a rental property expressed as a percentage of the property's market value.
• Property Location: The geographical positioning of a property, including its proximity to urban centers, economic hubs, and infrastructure.
• Urbanization: The process through which rural areas transform into urban centers due to economic growth and population movement.
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