Another look at property market maturity framework and its application to Lagos property market, Nigeria

Publication Date05 Aug 2019
AuthorAbel Olaleye,Beatrice Oyinloluwa Adebara
SubjectProperty management & built environment,Real estate & property,Property valuation & finance
Another look at property market
maturity framework and its
application to Lagos property
market, Nigeria
Abel Olaleye and Beatrice Oyinloluwa Adebara
Department of Estate Management, Obafemi Awolowo University, Ile-Ife, Nigeria
Purpose The purpose of this paper is to re-examine the framework for determining property market
maturity by including the economic characteristics of a country in the measure.
Design/methodology/approach The examination was done in Lagos property market, which was
stratified into Mainland and Island markets. A total of 181 estate surveying and valuation firms and
87 property development companies, as represented by top-level managers, participated in the survey. Data
were collected on their perception of property market maturity attributes that included market openness,
presence of professionals, level of transparency and state of the economy, among others. The data were
analyzed using mean rating and mean deviation.
Findings The result showed that diversity of real estate products and formswas ranked highly and had
reached a mature stage in Lagos Mainland, Island and the aggregated Lagos market. Contrarily, the state of
the economy was still at immature stage in Lagos and its sub-markets. Overall, the results showed that the
Lagos property market was emerging and that the inclusion of economic features in the maturity framework
reduced the level of maturity of the market when compared with previous studies.
Practical implications The study implied that the assessment of the state of economy of a country, as
part of the attributes for measuring property market maturity, will impact on the result and should be taken
into consideration.
Originality/value The study adds to the previous studies on property market maturity by assessing the
impact of the economic characteristics of a country on the measure.
Keywords Developing economies, Lagos property market, Maturity framework, Application
Paper type Research paper
1. Introduction
The contributions of the property sector to economy of nations cannot be overemphasized.
For instance, property sector accounts for an average of 20.2 percent since 1998 in China
(Nie and Cao, 2014); constantly contributed 22.5 percent in Dubai annually until the time of
global financial crises (Falade-Obalade and Dubey, 2014); and according to British Property
Federation (2016), commercial property market contributed an average of 5.4 percent to the
total UK economy in 2016. These contributions appear to have resulted in the increase in
cross-border investments overtime (Baum and Murray, 2011); and created a need for
gathering dependable information on different countrys property markets. This is
important because where this information is unavailable, investors hold off from such
markets. To an investor, information on risks, uncertainties and expected return are of great
importance and determine the level of attractiveness of a countrys property market.
Therefore, the need for information in the property market has propelled studies on market
performanceframeworkssuchasmaturity,transparency, potential and attractiveness (See e.g.
Keogh and DArcy, 1994; Lee, 2005; Chin and Dent, 2005; Jones Lang LaSalle, 2010). Such studies
on market performance and framework are important for investors to make accurate investment
decisions so as to reduce subjectivity and deal with risk and uncertainties in property
investment decision making. Particularly, study on property market maturity is important
because it describes the openness of a particular market and the level of information available
for accurate investment decision making (Keogh and DArcy, 1994).
Journal of Property Investment &
Vol. 37 No. 5, 2019
pp. 486-502
© Emerald PublishingLimited
DOI 10.1108/JPIF-04-2019-0048
Received 9 April 2019
Accepted 14 May 2019
The current issue and full text archive of this journal is available on Emerald Insight at:
This paper focuses on re-examining the framework for determining property market
maturity, with particular attention on developing economies. The pioneer authors, such as
Keogh and DArcy (1994), Chin et al. (2006) and Jones Lang LaSalle (2010) have developed
frameworks for measurin g property market maturity . These frameworks includ e
components such as accommodation of a full range of use and investment objectives,
short- and long-run flexible market adjustment, presence of a quality property profession
with its associated institutions and networks and market openness to mention few.
However, it is certain that due to peculiar characteristics of property market from country to
country, a generalization of the framework may be misleading. This is because the
frameworks appear not to have captured the peculiarities of developing property market
like Nigeria and did not include the economic characteristics of a country. Meanwhile, as
opined by Akinbogun (2012) and Thontteh (2013), it is certain that the level of economic
development of any country will bear relevance to the level of market maturity of that
particular country.
Previous studies such as Dugeri (2011), Thontteh (2013), Akinbogun et al. (2014) that
have examined property market maturity in Nigeria built on the Keogh and DArcys (1994)
framework but included some others factors that suit the Nigerian property market.
However, the studies did not include the economic characteristics of the country. There is
therefore the need to have another look at the framework used to measure property market
maturity by including the countrys economic characteristics. This is because the condition
of an economy tells a lot about its maturity especially in emerging economies like Nigeria
(Akinbogun, 2012; Thontteh, 2013). It is certain that an investor will look first at the wider
economic performance of a country before considering the specific market.
To this end, the studyseeks to develop a maturity frameworkthat takes into consideration
the economic characteristics of a country. The framework was applied by examining the
Lagos real estatemarket maturity in Nigeria.This market was considered because,apart from
Lagos been thehub of the countrys commercialactivities, it is also used as a basismeasuring
the countrys investment attractiveness overtime (Jones Lang LaSalle, 2010).
2. Literature review
Keogh and DArcy (1994) developed a comprehensive tool for measuring real estate market
maturity. The author opined that there was need to provide a more specific and explicit tool,
apart from only economic investigations, in determining the performance of a property
market. The market maturity performance variables propounded by the author were:
accommodation of full range of use and investment objectives, market flexibility in both
short run and long run, availability of professional institutions, research activities and
information flow, openness of the market, standardization of property right and market
practice. This framework achieved its purpose, but did not take into account the economic
characteristics of the case study areas. This might be attributed to the fact that the markets
were developed, hence studying the specific characteristics of property market was of
greater importance.
The framework used by Chin et al. (2006) to examine the maturity of South-east Asian
property market built on the work of Keogh and DArcy (1994). The framework used were
market openness, property professional level, the presence of property intermediates, user
and investor opportunities, realistic market values and market stability, property
investment flexibility, market information, development stability and the urban design and
quality of property products. Even though the study concluded that market maturity was a
starting point for making investment decision, such decision might not be concrete if the
economic characteristics of the wider market is not examined.
Another study by Rothacher focused on determining real estate market maturity in
Tanzania and SouthAfrica. The study adopted the JLLmaturity benchmark. The benchmark

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