Appraisal of Residential Real Estate Investment Diversification Prospects in South-South, Nigeria

Abstract

The study examined the diversification prospects of residential real estate investments in South-South, Nigeria. Data on residential real estate investment returns were obtained from 132 Estate Surveying and Valuation firms practicing in the region. 132 copies of questionnaire were used to obtain the primary data. The study covered the period between 2005 and 2019. Pearson Correlation was used in analyzing the relationship between residential real estate returns by property types across the region. The result revealed that a portfolio can be well diversified by combination of 5-bedroom maisonettes in Uyo and 5-bedroom maisonettes in Port Harcourt into one portfolio as they have a negative correlation. Also investing in 5-bedroom maisonettes in Uyo and 3-bedroom bungalows in Port Harcourt can produce a well-diversified portfolio as they have a negative correlation. This supports the conclusion that diversification by property types across places is better than diversification by property types within a place. It was recommended that investors should consider investing in different classes of residential properties across the region. This will help reduce their investment portfolio risk while maximizing their portfolio returns.

Keywords: Diversification, residential, real estate, investment, returns

DOI: 10.7176/EJBM/13-24-09

Publication date: December 31^st 2021