ABSTRACT
The
essence of town planning regulations in
urban centres is to ensure that activities are organised and developed in
physical space with due consideration for protection of public interest which
includes health, safety, convenience, efficiency, energy conservation,
environmental quality, social equity, social choice and amenity. The planning
regulations are the various town planning framework (technical and legal) put
in place which are to be strictly adhered to in order to achieve the goals of
orderly development within the society. The study therefore examined the
effects of planning regulations and identified issues that could be resolved to
enhance commercial property values in metropolitan Lagos using Ikeja and
Victoria Island as case study. Respondents were Estate Surveyors and Valuers
practising in Ikeja and Victoria Island areas of the metropolis. A total of one
hundred and ten (110) structured questionnaires were administered on the
respondents. Data collected were analyzed using frequency count and percentages,
mean and standard deviation, Pearson’s correlation and linear regression. The
study revealed that there was a significant relationship between planning
regulations and commercial property values. It also revealed that there was a
significant difference in the individual effect of various planning regulations
on commercial property values as development control, zoning, setback/ air
space, plot coverage and parking requirement that affected property values in
the outlined descending order. It is therefore recommended that government
should ensure proper land use planning and that people should be made to comply
with all statutory regulations. There is also the need for the proper
coordination of all government agencies responsible for land use activities.
TABLE OF CONTENTS
Title
page i
Certification ii
Dedication iii
Acknowledgements iv
Table
of Contents v
List of
Tables vii
List of
Figures ix
Abstract x
CHAPTER ONE: GENERAL INTRODUCTION
1.1 Background of the Study 1
1.2 Statement of
Problem 3
1.3 Research Questions 5
1.4 Aim and Objectives 5
1.5 Research Hypothesis 6
1.6 Significance of the Study 6
1.7 Scope of the Study 7
1.8 Limitations of the Study 9
1.9 The Study Area 9
CHAPTER TWO: LITERATURE REVIEW
2.1
Introduction 12
2.2 Town Planning 12
2.2.1 Town Planning Ordinances Experience in
Nigeria 15
2.2.2 The Land Use Act (Cap. 202 of the laws of Nigeria 1978) and physical planning 19
2.2.3 The 1978 Land Use Act and Land-use planning in Nigeria 20
2.2.4 Urban and Regional Planning Act of 1992 and Commercial
Propertie 21
2.3
Planning Regulations 24
2.4 Planning Regulations that Affects
Commercial Property Values 25
2.5 Tools of Development Control 33
2.6
Effects of Planning Regulations on Property Values 41
2.7 Concept of Property and Property Values 43
2.8 Determinants of Property Values 45
CHAPTER
THREE: RESEARCH METHODS
3.0
Introduction 50
3.1 Research
Design 50
3.2 Method of Data
Collection 51
3.3 Sample
Frame 51
3.4
Sample Size 51
3.5 Sampling Techniques and Procedure 52
3.6 Research Instrument 52
3.6 Analytical Techniques
53
CHAPTER FOUR: DATA ANALYSIS AND FINDINGS
4.0
Introduction 54
4.1
Socio-economic Status of Respondents 54
4.2 Types of
Planning Regulation that Affects Commercial Activities 57
4.3: Effect of
Planning Regulations on Commercial Property Values 58
4.4 Importance of Planning Regulations
to Commercial Property Values in the Study Area
62
4.5 Hypothesis Testing 63
CHAPTER FIVE: SUMMARY OF FINDINGS,
RECOMMENDATIONS AND CONCLUSION
5.1 Introduction 68
5.2 Summary of
Findings 68
5.3
Recommendations 70
5.4 Conclusion 71
REFERENCES
APPENDIX: Questionnaire
LISTS OF TABLES
Table Page
Table
3.1 Sample Size of the Study Area 52
Table 4.2.1.
Gender of Respondents 54
Table 4.2.2 Professional Qualification
of Respondents 55
Table4.2.3Highest Educational
Qualification of Respondents 55
Table 4.2.4 Post Qualification Work
Experience of Respondents 56
Table 4.2.5 Types of Planning Regulations
that Affects Commercial Property Values in Lagos Metropolis 57
Table4.2.6 Effects of Planning
Regulations on Commercial Property Values 58
Table4.2.7: Rental Values of Commercial
Properties at Ikeja 59
Table 4.2.8: Rental Values of Commercial
Properties at Victoria Island 60
Table 4.2.9 Factors Influencing Rental Values of Commercial
Properties in the Study Area 60
Table 4.2.10:
Importance of Planning Regulations on Commercial Property Values in the Study
Area 62
Table4.3.1
Planning Regulations and Commercial Property Values 63
Table 4.3.2:
Model Summary 64
LIST OF FIGURES
FIGURE PAGE
Fig 1.1: Map of Metropolitan Lagos 11
Fig 2: Factors Determining Property Values 47
CHAPTER ONE
1.0 INTRODUCTION
1.1 Background of the
Study
Various
authorities and scholars (Sukuran & Ho, 2008; Owei et al., 2010; Nnah et
al., 2007) have given different definitions of town and physical planning. According to Sukuran and Ho (2008), town planning system
is principally a system of preventive control of various land uses patterns
where the controlling authority would not allow any approval for development
activity if adverse impact on surrounding environment was visualized. Town
planning can be seen as a means of increasing the values of private and
profitable uses of land. Yet fragmented and multiple private interests in land
restrict private owners from altering radically or enhancing the overall pattern of use, and multiple ownership
simultaneously retards the transfer of
land to more profitable users and inhibits large –scale development.
Therefore, in this context, town planning can be seen both as means of
establishing complementarity of land
uses while keeping conflicting uses apart through such devices as zoning, and
as a means of speeding up the transfer of land between uses. By creating a
climate of greater certainty; the zoning and density control aspects of town
planning eliminate some of the imperfections of the property market, and enable
land to move more readily to its highest and best use (Balchin, et al., 1995)
Owei et al. (2010) described physical planning
as a process aimed at achieving orderly physical development with the overall
aim of evolving a functional and live-able environment where individual and
common goals can be achieved. The
above definitions infer that planning is aimed at helping the society achieve
various beneficial goals. Planning is regarded as a mechanism for the
government to exercise its control on the urban development process.
In
Nigeria, Town Planning is interpreted in section 18 of the Town Planners
Registration Council Decree No. 3 of 1988 (TOPREC), as the theory and practice
of town and country planning by the ordering and control of the citing and
erection of buildings and other structures and the provision of open spaces and
such similar use of land, as the case may be, for the improvement of the human
environment. Essentially, town planning is concerned with the spatial ordering
of land use both in the urban and rural settings for the purpose of creating
functionally efficient and aesthetically pleasing environment for living,
working, circulation and recreation. For any system to work as expected there is always the
need for control and, balance which is a form of regulation for necessary
operation. According to Nnah et al. (2007), Planning seeks
to guide the way our towns, cities and countryside develop. This
includes the use of land & buildings, the appearance of buildings,
landscaping considerations, highway access and the impact that the development
will have on the general environment.
Regulations are enforced as part of the planning
strategy ‘to conserve and promote public health, safety convenience, and
general welfare of the people and to provide for the future growth and
improvement of the area’ (Booth, 2007).
The planning regulations are the various town planning framework
(technical and legal) put in place which are to be strictly adhered to in order
to achieve the goals of orderly development within the society. To this end, it is the systematic assessment
of land and water potential, alternatives for land use, and economic and social
conditions in order to select and adopt the best land-use options. (Young,
1993).
As mentioned by Dale and Mclaughlin (1999), there are two basic
approaches to regulating how land is developed and used. This can be by way of
Legislation applying to all properties uniformly: This includes a wide variety of rules governing the
physical location of economic activities within jurisdictions; regulations
governing the design, height, or capital intensity of commercial and industrial
property and a permit system in which a
property owner must make application at the time of a proposed development. Considering
commercial property in Lagos metropolis, a commercial property is a bundle of
goods. It refers to buildings or land intended to generate a profit, either
from capital gain or rental income. Commercial property includes office
buildings, industrial properties, hotels, malls, retail stores, warehouses,
farm land and garages.
As
it is being experienced in Lagos metropolis, most areas are changing
residential property to commercial use largely because they command high rental
value and a property owner is always inclined to that use that will command
highest and best value (Osagie et al., 2012). Various reasons have been given
for this, part of which includes town planning regulation. It is against this background that this
research examines the effectiveness of planning
regulation in relation to commercial property values in the Lagos Metropolis to
determine the effects that adherence to planning regulation has on commercial
properties.
1.2.
Statement of Problem
Jaeger (2006) asserted that planning regulations could affect the market
value of a property in a variety of ways. He also noted that while some of the
effects might be straightforward; in most cases they are complex and can easily
be misunderstood or misinterpreted. In correlation with the above assertion, it
has been observed that different people have different perspectives about the
level of positivity or negativity of planning regulations as regards commercial
properties. For instance, when a regulation restricts the use of a particular
commercial property due to strict adherence to zoning regulations, which is
meant to control haphazard development in the city, such a plan may end up
increasing the economic value of the property especially in the Central
Business Districts (CBDs).
In such a situation, the demand
for commercial properties exceeds the supply in the vantage area and will
resultantly inflate the value of such properties. This will have positive
effects on the commercial property owners but can be seen in a negative manner
by the end users of properties in such an area due to high rental values.
Further discussing likely problems that may
arise from planning regulations, Jaeger (2006) stated that land-use regulations
could cause a reduction in property value where the supply of land for an
allowed use was higher than it would have been without the land-use regulation,
while additional supply could cause a drop in the market price due to downward
sloping demand. Thus the major problem of haphazard development in some
planning regulation is that of abnormally high property values in some areas
while lowering value in other areas. It is of pertinent that more studies are
carried out to identify planning regulations that affect commercial property
value for equal benefit of owner and tenants of the properties. Data on these
issues are lacking and hence, this study is necessary to identify types of
planning regulations affecting commercial property values in the Lagos
metropolis. This study will resolve the following research questions.
1.3 Research Questions
This
study focuses on the effect or impact of planning regulations on commercial
property values in metropolitan Lagos. Some pertinent
questions to enable the study attain its stated objectives are as follows:
1.
What are the types of
planning regulations that affect commercial property values in the study area?
2.
Is there any relationship
between planning regulations and commercial property values?
3.
What are the effects of
planning regulations on commercial property values in the study area?
4.
What is the relative
importance of various planning regulations on commercial property values?
1.4 Aim and Objectives
The
aim of this research is to determine the effects of planning regulations on
commercial property values in metropolitan Lagos. The objectives are to:
a.
To identify the types of
planning regulations that affect commercial property values in the study area.
b.
To investigate the
relationship between planning regulations and commercial property values
c.
To evaluate the effects
of these planning regulations on commercial property values in the study area.
d.
To analyze the relative
importance of various planning regulations on commercial property values in the
study area.
1.5 Research Hypothesis
Hypothesis 1
There
is no significant relationship between planning regulations and commercial
property values in Lagos metropolis.
Hypothesis 2
There
is no significant difference in the individual effects of various planning
regulations on commercial property values
1.6 Significance of the
Study
Various
studies have been conducted on the effects of planning regulations on property
values.
According
to Jaeger (2006), the planning system can have a significant impact on land
values. He stated that for example, in
the United Kingdom, a piece of property can be worth a few thousand pounds
before the grant of permission and millions afterwards. Land-use regulations in one part of a city may cause downward value
changes, but at the same time may increase the value of land in another
locality where the regulations do permit development. Property owners tend to
assume that if only planning regulations did not stand in their way, a
lucrative type of development would “land” on their own plot of land (Moore,
2005).
Ajibola et al. (2011) examined the
relationship between urban planning and residential property values in some
selected neighbourhoods within Agege Local Government council area of Lagos
metropolis. He found out that there is significant level of difference in
residential property values between the planned and unplanned residential
areas. It has been assumed that
land-use regulations invariably reduce property values when, in fact, they
often have positive effects (Jaeger, 2006).
It
has also been observed that the relationship between land use regulations and
property values has been the focus of many studies neglecting planning a
service that provides a scheme that facilitate physical development in an urban
area. Grout, Jaeger, and Plantinga (2009) examined how Oregon’s land use
planning system affects land prices in the Portland metro area. Since Oregon’s
land regulations are intended to guide and control the location of development
rather than to limit the supply of developable land, they should not produce
scarcity-induced price increases. Using data on land values for vacant parcels
in and around the Portland Urban Growth Boundary (UGB), they employ a
regression discontinuity design. The researchers concluded that, Oregon’s
landmark land use planning system was designed to influence the location of
development, but not to constrain the amount of development.
According to Jeager and Plantiga (2007) when a land use regulation disallows or restricts a particular type of
development or use of a property. If the restricted use of the property would
yield higher profits to the landowner than its current use, the regulation
would decrease the value of the property. If a property is essentially not
feasible to develop then no decrease in value would result from a regulation
that restricts development (Jeager and Plantiga, 2007).
This study is vital as a means of assisting planners to have a full
understanding of the market implications and as a means of plugging the gaps in
academic research on the subject. It will also help government agencies in
determining more fairly appropriate charges and taxes to levy in order to
recapture value increments in commercial property arising from planning
regulations.
1.7
Scope of the Study
The study focused on commercial properties in
Metropolitan Lagos. Due to the magnitude, terrain and complex
nature of Lagos State, the study was limited to Ikeja and Victoria Isalnd.
Reason for this is that most estate surveyors and valuers are predominant in
Ikeja and Victoria Island which itself are part of four zones identified within
the larger Lagos metropolis. The four zones (Lagos Island, Apapa, Lagos
Mainland, and Ikeja) represent commercial hubs of Lagos metropolis. Other
studies reveal that there are five types of commercial properties in the study
area. Viz, retail shop premises, banking spaces, office properties ware house
and non-specific commercial properties.
This research, however, focused on offices, shops, banking spaces, and
other types of commercial uses in the study area to the exclusion of residential,
industrial, and non-specific type of commercial properties. Some factors have
dictated the choice of Victoria island and ikeja. Firstly, the property market
in the study area is well developed and it is possible to identify and analyze
variations. Comprehensive data are available on commercial property values in
the study area which is one of the few cities in Nigeria offering opportunity
for comprehensive survey of its commercial properties, with enlightened
occupiers of commercial premises thereby making data collection possible.
Secondly, a number of property magazines are in circulation in the city where
estate surveyors and valuers advertise commercial properties available for sale
or letting. This makes the property market very active and up-to-date with
stakeholders, prospective tenants, property owners, and investors versatile and
having a good knowledge about the goings-on in the market.
Data on the values of commercial properties in Lagos metropolis would be
gathered from practicing estate surveyors and valuers that operate in Victoria
Island and Ikeja because large numbers of registered firms have their offices
located in these locations and they also serve as the commercial hub in Lagos
metropolis. According to NIESV (2014), more than fifty (50) percent of estate
surveyors and valuers have their offices in the Lagos metropolis indicating
that Lagos state has the highest population of practicing estate surveyors and
valuers in Nigeria. This serves as a basis for choosing Lagos based practitioners
as the study population.
1.8 Limitations of the Study
The study focused on the effects of planning regulations on commercial
property values in Lagos metropolis. The study therefore analyzed the effects
of planning regulations especially development control, building regulations,
zoning, height restrictions and fencing on commercial property values in
Victoria Island and Ikeja. The data were gathered through personal observation
and opinions of Estate Surveyors and Valuers practicing in the study area as elicited through the use of a structured
questionnaire. The accuracy, or otherwise, of such opinions although not in
doubt was not investigated. Apart from these, some challenges were encountered
during the study. By virtue of the busy nature of estate surveying and
valuation practitioners there was considerable reluctance on their part to
volunteer information. Some of the respondents estate surveyors and valuers,
delayed in completing the questionnaires and it took personal influence of the
researcher (as their colleague) to obtain their eventual impressive responses.
These limitations however neither affected the quality of data collected nor
the conclusions drawn from it.
1.9 The Study Area
The study is limited to metropolitan Lagos which is home to many
companies and industries. The city is
located in the south-western part of Nigeria. The city of Lagos was under the
Lagos City Council. The regions of Ikeja, Agege, Mushin, Ikorodu were under the
former Western Region. According to Oni (2001), the boundaries of metropolitan
Lagos as consisting of the territory within Latitudes 6°34′60″N and Longitude
3°19′59″E along the West African coast. Lagos was the capital city of the
country before it was replaced with Abuja on 12th December, 1991. However,
Lagos remains the commercial nerve centre of Nigeria as more than half of
Nigeria’s industrial capacity is located there. It is the largest metropolitan
area in Nigeria (Ayeni, 1979). Lagos State is made up of twenty local
government council areas out of which sixteen form the metropolitan Lagos.
The state is the smallest state in Nigeria in land area with an area of
about 358,861 hectares or 3577sq.km (Odumosu, 1999). This represents only 0.4
percent of the entire area of the country.
Lagos metropolis lies generally on low lands, with about 17500 hectares
of built-up area. The population growth rate of
Lagos has serious implications on the trend of urban land use and development. This
has serious consequences on land use planning in the state especially in urban
areas. The city is a typical example in the history of growth and development
of urban areas in Nigeria. This has dictated the choice of Lagos metropolis to
know the planning regulations that are in place and to also know their effects
on commercial property value.
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