Mixed Methods

83 minister of agriculture and rural development Dr. Akinwumi Adesina in Abuja at a summit in

“realising the potentials of agriculture in Africa” organised by the Rockefeller Foundation (RF) as parts of the foundations centenary celebration. According to Adesina, “Mr President has said that we should remove the land use act from the constitution, there is a presidential committee on land reforms that has been put in place and the committee has been given the task to ensure that Nigeria can begin to have land titles because if you want to do agriculture and you do not have titles to land, you cannot use it as collateral for lending or accessing funds”. The land use Decree 1978 from all indications affects the maturity of the Nigerian property market.

However, still on the constraints to property market maturity, (Keogh & D‟Arcy, 1994) pointed out that commercial property market is a market of many structures. Each of these structures can act as barriers in the effective and efficient operation of the market performance. These structures include rental, lease and institutional structures. These structures in the commercial as well as the residential property markets and their effects on the maturity of the market will be discussed below.

84 handy to real estate practitioners. In spite of these advantages listed in Onatunde (2012), Olaleye (2004) stated that the provision of statistical information on rental values and returns have equally been observed to be weak.

Oladapo (2011) while lamenting on the unavailability of published studies on the data relating to structure and performance of the market across the globe, noted that within the rental structure, the feature of market maturity is diversity of property products capable of meeting participants‟

objectives. She observed that office property within the overall commercial property has been historically observed to lack good quality data on property transactions. All these contribute to making market transactions in the property market informal, disorganized and decentralized.

Furthermore, (Dunse et.al, 1997) observed that another problem that might be encountered even when information is available is that of rent definition as rents are being interpreted and measured differently by different providers. This could be explained from some classic theories of urban location and rent. Wyatt (1999) posits that the consideration of the relationship between location of urban land uses and rent began in earnest at the beginning of twentieth century. He stated that Hurd (1903) applied the theory of economic competition among farmers for agricultural land developed by Adam Smith, David Ricardo and Johann Von Thunen to businesses in urban areas. He further attempted to explain the cause of different land values within an urban area and suggested that since value depends on economic rent and rent on location and location on convenience and convenience on nearness, we may eliminate the intermediate steps and say that value depends on nearness. Thus, suggesting that the central business district (CBD) will have the highest values and rent because this is where transport facilities maximise labour availability, customer flow and proximate linkages .Also, Alonso‟s

85 theory of land rent (Alonso, 1964) asserted that rents decline outward from the CBD to offset declining revenue- earning ability and higher cost such as transport. He equally cited (Haig, 1926) who suggested that rent appears as the charge which the owner of a relatively accessible site can impose because of the saving in transport cost which the use of the site makes possible.

According to (Wyatt, 1999), this theory emphasised the correlation between rent and transport costs, the latter being the payment to overcome the friction of space; the better the transport network, the less the friction. The classic theories of urban locations clearly put the greatest emphasis on accessibility as the prime determinant of rent and rent variation over space. Apart from accessibility, the market participants employ other factors like the facilities in a building, the age of the building, the quality of the environment and others in the determination of rent.

Watkins et.al (2001) stated that the market structure can give rise to a spatial distribution of rental values that is quite different in form from that derived from the location theory. In line with this, Oladapo (2011) stated that as the property agents often incorporate property characteristics in the determination of rental values, the approaches used by them in the description of property characteristics often differ. Each of them operates independently so that how they categorise properties that vary in unit size, age, quality, depreciation and specification also differ. Conclusively, the paucity of information on the property market transactions in the property market mostly caused by the market participants and the different measures employed in the measurement and interpretation of rent affect the maturity of the property market.

86 2.8.3 The Lease Structure

A lease could be seen as a relationship/ agreement that exist between a landlord and a tenant or between a property owner and user in which the specific responsibilities of the lessee and the lessor are spelt out or implied. Usually, the landlord acquires land and develops it and agrees to give the developed land to the tenant to use the premises for a specific period over a period of time called the lease period and at an agreed sum of money called rent. Leases could be created by express grant, by contract, by atonement, and by statute. Oladapo (2011) observed that constraints may not have risen if the definition (that is the terms of the lease) is upheld by the parties involved. However, the property managers are often employed in the management of these leases because of the problems that do arise in the execution of the lease agreement/ terms by the property owners and users. On the other hand, sometimes leases created by statute may not be favourable on the parties involved and may act as constraints to the development of the property market. Sayce et.al (2006) noted that in UK, commercial leases are usually from 10-25 years with periodic rent reviews typically five yearly. According to them, traditional leases tend to have upward only rent reviews, so at rent review, a higher rent is negotiated if market rents are rising but the rents remains fixed if market rents are falling. At the end of the lease, possession may revert to the freeholder due to the operation of statutory controls. In periods of high economic growth, property owners will benefit from rising rents at review, while in periods of low growth or deflation the upward only rent review protects the investor from falls in income.

Problems often arise when the statutes that govern these leases favour one party against the other. At other times, the attitude of market participants or the parties in the lease agreement hinders the maturity of the property market. For example, rigid adherence to long lease in the phase of dwindling economic conditions, property owners full control of letting terms, lack of

87 technical know-how to develop lease innovation, lack of market analysis to determine lease incentives or rational lease agreement, lack of co-operation among owners and users on suitable lease terms, litigation due to misrepresentation of lease arrangement by the parties, lack of co-ordination of lease market by professional institution, lack of knowledge to ascertain who the market favours and tenants perception of super-normal profit (Oladapo, 2011).

In summary, problems not only emanate from the terms of express and implied leases, but also from the behavioural attitude of the market participants/parties to a lease in connection with leases. These negatively affect the development and maturity of the property market.