Dynamics of the Inflation-Hedging Capabilities of Real Estate Investment Portfolios in the Nigerian Property Market
There has been a wide belief that real estate is a source of good investment portfolios because it has a hedge against inflation. Considering this notion, the present research examined the dynamics of the inflation-hedging capabilities of real estate investment in Nigeria?s three foremost property m...
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Multidisciplinary Digital Publishing Institute (MDPI)
2025
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| author | Nwosu A.E. Bello V.A. Oyetunji A.K. Amaechi C.V. |
| author2 | 58848547400 |
| author_facet | 58848547400 Nwosu A.E. Bello V.A. Oyetunji A.K. Amaechi C.V. |
| author_sort | Nwosu A.E. |
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| content_provider | Universiti Tenaga Nasional |
| content_source | UNITEN Institutional Repository |
| continent | Asia |
| country | Malaysia |
| description | There has been a wide belief that real estate is a source of good investment portfolios because it has a hedge against inflation. Considering this notion, the present research examined the dynamics of the inflation-hedging capabilities of real estate investment in Nigeria?s three foremost property markets, Abuja (Maitama and Central Business District), Lagos (Lekki and Victoria Island), and Port Harcourt (Rumu Ibekwe and Aba Road). To achieve this aim, this study was carried out by exploring the returns on different types of commercial properties in the chosen location and investigating the effect of inflation on such returns in order to come up with the hedging capabilities of the assets. Out of the four property prime locations in Nigeria?s market, these selected study sites were purposely selected for investigation because they comprise the most desirable and preferred properties regarding location, standards, aesthetics, and value. From the data collected, a mean return, coefficient of variation, and ordinary least square regression analysis were completed. In terms of the coefficient of variation (CV), the findings reveal that the duplex in Port Harcourt exhibits the most performed investment, with a value of 0.33, compared to other locations. However, in terms of the expected return (ER), the duplex outperformed other property types in the different locations, with a return of 39.56%. Results also show that inflation has an adverse effect on the returns of the office space for the three locations considered, with the expected returns below 1%. The block of flats in Abuja has a complete defence against the three components of inflation, with a coefficient beta of 0.5633, 0.6586, and 0.8440, respectively. Thus, investors should consider inflation and other investment attributes when making decisions among arrays of investments. This will help guard against the widespread perception that real estate has a hedge against inflation. This paper adds to the existing literature on inflation hedging by investigating the effect of inflation on the real estate investment returns of commercial properties. ? 2023 by the authors. |
| format | Article |
| id | my.uniten.dspace-37081 |
| institution | Universiti Tenaga Nasional |
| publishDate | 2025 |
| publisher | Multidisciplinary Digital Publishing Institute (MDPI) |
| record_format | dspace |
| spelling | my.uniten.dspace-370812025-03-03T15:47:17Z Dynamics of the Inflation-Hedging Capabilities of Real Estate Investment Portfolios in the Nigerian Property Market Nwosu A.E. Bello V.A. Oyetunji A.K. Amaechi C.V. 58848547400 22937200500 57192178716 57204818354 Commerce Dynamics Financial markets Location Office buildings Regression analysis Wooden fences Expected return Inflation dynamics Inflation hedge Property Property market Property market portfolio Property price Real-estates Return on investment Returns on investment Investments There has been a wide belief that real estate is a source of good investment portfolios because it has a hedge against inflation. Considering this notion, the present research examined the dynamics of the inflation-hedging capabilities of real estate investment in Nigeria?s three foremost property markets, Abuja (Maitama and Central Business District), Lagos (Lekki and Victoria Island), and Port Harcourt (Rumu Ibekwe and Aba Road). To achieve this aim, this study was carried out by exploring the returns on different types of commercial properties in the chosen location and investigating the effect of inflation on such returns in order to come up with the hedging capabilities of the assets. Out of the four property prime locations in Nigeria?s market, these selected study sites were purposely selected for investigation because they comprise the most desirable and preferred properties regarding location, standards, aesthetics, and value. From the data collected, a mean return, coefficient of variation, and ordinary least square regression analysis were completed. In terms of the coefficient of variation (CV), the findings reveal that the duplex in Port Harcourt exhibits the most performed investment, with a value of 0.33, compared to other locations. However, in terms of the expected return (ER), the duplex outperformed other property types in the different locations, with a return of 39.56%. Results also show that inflation has an adverse effect on the returns of the office space for the three locations considered, with the expected returns below 1%. The block of flats in Abuja has a complete defence against the three components of inflation, with a coefficient beta of 0.5633, 0.6586, and 0.8440, respectively. Thus, investors should consider inflation and other investment attributes when making decisions among arrays of investments. This will help guard against the widespread perception that real estate has a hedge against inflation. This paper adds to the existing literature on inflation hedging by investigating the effect of inflation on the real estate investment returns of commercial properties. ? 2023 by the authors. Final 2025-03-03T07:47:17Z 2025-03-03T07:47:17Z 2024 Article 10.3390/buildings14010072 2-s2.0-85183379250 https://www.scopus.com/inward/record.uri?eid=2-s2.0-85183379250&doi=10.3390%2fbuildings14010072&partnerID=40&md5=1004850ed9d8b52dc64bdb246d873ae1 https://irepository.uniten.edu.my/handle/123456789/37081 14 1 72 All Open Access; Gold Open Access Multidisciplinary Digital Publishing Institute (MDPI) Scopus |
| spellingShingle | Commerce Dynamics Financial markets Location Office buildings Regression analysis Wooden fences Expected return Inflation dynamics Inflation hedge Property Property market Property market portfolio Property price Real-estates Return on investment Returns on investment Investments Nwosu A.E. Bello V.A. Oyetunji A.K. Amaechi C.V. Dynamics of the Inflation-Hedging Capabilities of Real Estate Investment Portfolios in the Nigerian Property Market |
| title | Dynamics of the Inflation-Hedging Capabilities of Real Estate Investment Portfolios in the Nigerian Property Market |
| title_full | Dynamics of the Inflation-Hedging Capabilities of Real Estate Investment Portfolios in the Nigerian Property Market |
| title_fullStr | Dynamics of the Inflation-Hedging Capabilities of Real Estate Investment Portfolios in the Nigerian Property Market |
| title_full_unstemmed | Dynamics of the Inflation-Hedging Capabilities of Real Estate Investment Portfolios in the Nigerian Property Market |
| title_short | Dynamics of the Inflation-Hedging Capabilities of Real Estate Investment Portfolios in the Nigerian Property Market |
| title_sort | dynamics of the inflation-hedging capabilities of real estate investment portfolios in the nigerian property market |
| topic | Commerce Dynamics Financial markets Location Office buildings Regression analysis Wooden fences Expected return Inflation dynamics Inflation hedge Property Property market Property market portfolio Property price Real-estates Return on investment Returns on investment Investments |
| url_provider | http://dspace.uniten.edu.my/ |