The 19

th th The 19 AfRES Annual Conference

ANNUALAfRES CONFERENCE

Developing New Frontiers for the African Real Estate Sector

TUESDAY 10 - FRIDAY 13 SEPTEMBER, 2019 ARUSHA INTERNATIONAL CONFERENCE CENTRE, ARUSHA, TANZANIA ISBN 978-9987-01-008-0

th THE 19

ANNUAL CONFERENCE

Developing New Frontiers for the African Real Estate Sector

TUESDAY 10-FRIDAY 13 SEPTEMBER 2019

ARUSHA INTERNATIONAL CONFERENCE CENTRE, ARUSHA, TANZANIA

THE SCIENTIFIC COMMITTEE

Catherine Kariuki Kenneth Cheruiyot Emmanuel Kofi Gavu OmoKolade Akinsomi Felician Komu Rob McGaffin Francois Viruly Robert Simons Luke Boyle Tunde OladokunKola Ijasan Samwel Alananga Victor Akujuru Wilbard Kombe Wilfred Anim-Odame Agnes Mwasumbi Taiwo Afinowi Hidaya Kayuza Aly Karam

Compiled by Aly Karam

ISBN: 978-9987-01-008-0

ii The 19th AfRES Annual Conference TABLE OF CONTENTS THE SCIENTIFIC COMMITTEE ...... ii TABLE OF CONTENTS ...... iii PREFACE ...... xv

...... 1

UNDERWRITER REPUTATION, MARKET ADJUSTED INITIAL RETURNS AND ABNORMAL RETURNS: EVIDENCE FROM LISTED REITS ON THE JOHANNESBURG STOCK EXCHANGE Oluwaseun Damilola Ajayi, Omokolade Akinsomi ...... 2 AN EMERGING MORTGAGE MARKET IN AFRICA: THE CASE OF GHANA Dr. Omokolade Akinsomi...... 3 ARE FOREIGN-BIASED REITS WORTHWHILE? Omokolade Akinsomi1 Mabuse Moja2 ...... 4 AN ASSESSMENT ON THE LEVEL OF COMPETENCY OF ESTATE AGENT’S EMOTIONAL INTELLIGENCE IN LAGOS PROPERTY MARKETING AKINWAMIDE, David Oluwatofunmi, BELLO, Victoria Amietsenwu ...... 5 AFRICAN REAL ESTATE TRENDS AND FORECAST: CASE STUDY OF GHANA Gad Asorwoe Akwensivie ...... 6 MORAL HAZARD BEHAVIOUR AMONG PROPERTY MARKETS ACTORS: AN ANALYSIS OF ITS IMPACT ON REAL ESTATE PRICES IN KINONDONI, TANZANIA Samwel Alananga, PhD ...... 8 PUBLIC HOUSING MANAGEMENT IN GHANA: ORGANISATIONAL CHALLENGES Samson Aziabah ...... 10 STAKEHOLDERS’ PERSPECTIVES ON HOUSE PRICE DETERMINANTS IN GHANA Kingsley Tetteh Baako, Wejendra Reddy, Woon-Weng Wong ...... 11

The 19th AfRES Annual Conference iii EXAMINING THE VIABILITY OF SECONDARY MORTGAGE MARKETS (SMM) IN RAPIDLY DEVELOPING AFRICAN ECONOMIES: THE CASE OF RWANDA Aha, Bismark, Asinyaka, M., and Umugwaneza, C. and Mugisha, R...... 12 THE EFFECTS OF TRANSFER DUTY EXEMPTION ON HOUSING DEMAND IN THE THREE METROS IN GAUTENG PROVINCE, SOUTH AFRICA Cheruiyot, Koech ...... 13 PERFORMANCE OF REITS IN EMERGING MARKETS: THE CASE OF NIGERIAN PROPERTY MARKET Daniel Ibrahim Dabara and Olusegun Adebayo Ogunba ...... 14 DRIVERS AND MARKETABILITY OF PERI-URBAN DEVELOPABLE SITES IN SOUTHWEST NIGERIA Oluwatosin B. FATEYE1, Olaseni O. ADETOKUNBOH2 ...... 16 RESOLVING THE HOMEOWNERSHIP QUAGMIRE OF LOW-INCOME HOUSEHOLDS THROUGH INCREMENTAL HOUSING DEVELOPMENT STRATEGY: PERSPECTIVES FROM ILE-IFE, NIGERIA Job Taiwo Gbadegesin, Daramola Thompson Olapade, Olutayo Isaac Ayorinde, Robert Ereola Shiyanbola, Bioye Tajudeen Aluko ...... 17 HOUSING MORTGAGE FINANCING IN AFRICA 2010-2018 Egino Millanzi, Henry Myingo and Mats Wilhelmsson ...... 18 COMMERCIAL PROPERTY RENT DYNAMICS Rachael Mirembe ...... 19 A SCHEMATIC ANALYSIS OF COMMERCIAL SPACE SUB-MARKETS COMPETITIVENESS IN DEVELOPING COUNTRIES: A CASE OF DAR ES SALAAM CITY Vianey .J. Mushi & Frank I. Kanizio ...... 20 REGULATORY PLANNING AND AFFORDABLE HOUSING IN KIGALI CITY: POLICIES, CHALLENGES AND PROSPECTS Fred Nkubito, Andrew Baiden-Amissah ...... 22 WHY DO STARTUPS CHOOSE COWORKING IN DEVELOPING COUNTRIES? CASE STUDY OF NIGERIA Tayo Odunsi & Ayo Ibaru, ...... 23 HOW REAL ESTATE INVESTMENT TRUSTS (REITS) MAKE PROPERTY INVESTMENT DECISIONS: A REVIEW OF THE LITERATURE iv The 19th AfRES Annual Conference Itua Omokhomion, Charles Egbu, Herbert Robinson ...... 24 REAL ESTATE RETURN CYCLES AND THE CONTRIBUTIONS TO A MIXED ASSET PORTFOLIO Glenn R. Mueller Andrew G. Mueller ...... 25 THE ASSESSMENT OF THE STRUCTURE AND PERFORMANCE OF THE LISTED PROPERTY MARKETS IN BOTSWANA FOR INTRODUCTION OF REITS Loyd Sungirirai, Abba Sungirirai ...... 26

AN ANALYSIS IF THE DIFFERENT TYPES OF PROPERTY TAX IN BOTSWANA Johnson Kampamba, Milidzani Majingo and Yaone Blessings Molefhe3 ...... 30 EXAMINATION OF THE ROLE OF QUALITY MARKET RESEARCH IN COMMERCIAL REAL ESTATE INVESTMENT IN DEVELOPING COUNTRIES (CASE STUDY OF LAGOS, NIGERIA) Nworah Joseph C...... 31 DIRECT REAL ESTATE INVESTMENT GUIDELINES FOR INNER CITY URBAN REGENERATION: CASE OF JOHANNESBURG Prisca Simbanegavi, Michael Kodinye, Thobeka Mbhele, and Thokozani Msimanga ...... 33 LAND GOVERNANCE ...... 35 LAND TENURE SYSTEMS AND AGRICULTURAL PRODUCTIVITY IN GOMBE NIGERIA Daniel Ibrahim Dabara, Omotoso Kabir Lawal, Olusegun Joseph Omotehinshe, Augustina Chiwuzie & John Oyekunle Soladoye ...... 36 LAND RIGHTS GOVERNANCE IN PRESENT DAY AFRICA AND IT'S EVOLUTION Stephen Drani ...... 38 LAND ADMINISTRATION AND MANAGEMENT UNDER THE DEVOLVED GOVERNMENT IN KENYA. CASE OF KIAMBU AND MACHAKOS COUNTY Dr. Catherine W. Gateri and Evans Omagwa ...... 40

The 19th AfRES Annual Conference v CHALLENGES OF MAKING LAND AVAILABLE FOR LARGE-SCALE INVESTMENT IN COMMERCIAL AGRICULTURE IN TANZANIA: THE CASE OF MISSENYI DISTRICT J.M. Lusugga Kironde ...... 41 LAND DISPOSSESSIONS AND WATER APPROPRIATIONS: POLITICAL ECOLOGY OF LAND AND WATER

E.D. Kuusaana; E.A. Adams; B.B Campion and A. Ahmed ...... 45 THE URBAN LAND NEXUS: CHALLENGES AND OPPORTUNITIES OF REGULARISING INFORMAL SETTLEMENTS: THE CASE STUDIES OF DAR ES SALAAM AND MWANZA IN TANZANIA Alphonce G. Kyessi, Fredrick B. Magina & Wilbard J. Kombe ...... 47 TRANSFORMING COMPULSORY PURCHASE AND COMPENSATION INSTITUTIONS IN TANZANIA Martin Mpandikizi ...... 48 FADING CUSTOMARY PRACTICES IN AFRICA – OPPORTUNITY FOR ENHANCING ACCESS TO LAND FOR WOMEN IN TANZANIA Agnes Mwasumbi, PhD ...... 49 LAND ACQUISITION, COMPENSATION AND RESETTLEMENT IN KENYA: EMERGING CHALLENGES Luke M. Obala, PhD ...... 51

INTERGENERATIONAL COMPENSATION OF INDIGENOUS LAND-OWNING FAMILY AS A STRATEGY TO CURB CHALLENGES OF INADEQUATE COMPENSATION IN LAND ACQUISITION PROCESS: PERSPECTIVES FROM LAGOS, NIGERIA Olawale OJIKUTU, Daramola Thompson OLAPADE and Bioye Tajudeen ALUKO2 ...... 52 EMERGING ISSUES CONCERNING COMPULSORY LAND ACQUISITION IN KENYA- LAND GOVERNANCE OR POLITICS? Washington H. A. Olima ...... 53 CHALLENGING INSTITUTIONAL FRAMEWORKS IN LAND ADMINISTRATION: MANY INSTITUTIONS, BUT LESS PROPERTY RIGHTS Turimubumwe Prosper ...... 55

vi The 19th AfRES Annual Conference CUSTOMARY LAND TENURE RULES IN TRANSITION: IMPLICATION TO WOMEN RIGHTS IN MATRILINEAL SOCIETIES IN TANZANIA Jenesta Urassa ...... 56

EMERGING ISSUES OF CORRUPTION IN CONSTRUCTION PROJECTS AND FACILITY DEVELOPMENT IN NIGERIA – AN EMPIRICAL APPROACH Adindu, C. C; Yusuf, S. O; Diugwu, I. A & Musa, A. M ...... 58 FACTORS INFLUENCING THE CHOICE OF AUTOMATING SYSTEMS USED IN HIGH-RISE BUILDINGS IN LAGOS, NIGERIA Cyril Ayodele Ajayi and Orayinka Stephen Awosode ...... 59 PROMPT RESPONSE OF SERVICE PROVIDERS IN COMMERCIAL OFFICE BUILDINGS IN TANZANIA: IMPEDIMENTS AND MOTIVATIONS Evodius Henerico ...... 61 THE PROCUREMENT PRACTICES FOR REAL ESTATE SERVICES BY PUBLIC INSTITUTIONS: EMERGING ISSUES IN THE AFRICAN CONTINENT Catherine Kariuki1, Nicky Nzioki2 ...... 62 FACTORS AFFECTING IMPLEMENTATION OF BUILDING INFORMATION MODELLING (BIM) FOR FACILITY MANAGEMENT (FM): PERSPECTIVES FROM LAGOS, NIGERIA Daramola Thompson Olapade, Funmilayo Moyinola Araloyin, and Bioye Tajudeen Aluko ...... 64

REAL ESTATE EDUCATION IN INDIA – JOURNEY SO FAR AND THE ROADMAP AHEAD Dr. Ritika Bhatia ...... 66 BLOCKCHAIN AND ITS EFFECT IN THE REAL ESTATE INDUSTRY Peter Lewis & Jevans Otieno ...... 67 EVALUATION OF THE BACHELOR OF REAL ESTATE BUSINESS MANAGEMENT OF MAKERERE UNIVERSITY: A STAKEHOLDERS ANALYSIS Rachael Mirembe ...... 68

The 19th AfRES Annual Conference vii ETHICAL DILEMMAS ON REAL ESTATE CODE OF CONDUCT TO REAL ESTATE PRACTITIONERS IN DAR ES SALAAM Lucky Mrema ...... 69 ASSESSMENT OF SUSTAINABLE REAL ESTATE TRAINING TRENDS IN THE EASTERN AFRICAN REGION Nicky Nzioki & Catherine Kariuki ...... 70

A CRITICAL REVIEW OF PROPERTY VALUATION FOR EXPROPRIATION IN ZIMBABWE Partson Paradza; Joseph Yacim and Benita Zulch ...... 72 VALUATION OF HERITAGE ASSETS: IMPLICATIONS FOR SOUTH AFRICA Mashilo Pitjeng ...... 73 DETERMINATION OF RESIDENTIAL PROPERTY VALUE IN FLOOD RISK AREA ...... 74 Siti Hafsah Zulkarnain, Maki Tsujimura, Muhamad Ali Yuzir, Muhammad Najib Razali, Zakri Tarmidi ...... 74 BIG DATA ACCESSIBILITY MEASURES AND URBAN LAND VALUATION Steven C. Bourassa, Martin Hoesli, Louis Merlin and John Renne .... 75 ANALYSES OF FARMLAND COMPENSATION VALUATION METHODS IN GHANA Danso Abena Tweneboah ...... 76 EMPIRICAL CONCEPTUALISATION OF RESIDENTIAL RENTAL VALUES IN GHANA – UNDERSTANDING LOCATION AND NEIGHBOURHOOD EFFECTS Emmanuel Kofi GAVU ...... 77 IVS ADOPTION: WHAT DOES IT MEAN?: AN EXAMPLE FROM THE NETHERLANDS Prof. Em. Aart Hordijk PhD ...... 78 A CRITICAL INVESTIGATION OF RESIDENTIAL VALUATIONS PRACTICES IN NAMIBIA: A CASE STUDY OF WINDHOEK Frieda M Kaluwa ...... 79 A VALUATION APPROACH IN HOUSING BOOM AND BUST CYCLES Donald C. Keenan, Taewon Kim and Daniel C. Lee ...... 81 viii The 19th AfRES Annual Conference REVISION OF THE INSTITUTION OF SURVEYORS OF KENYA (ISK) VALUATION STANDARDS ‘THE BLUE BOOK’ Raphael Kieti, PhD ...... 82 ANALYSIS OF REAL ESTATE VALUE DETERMINANTS – THE CASE OF VALUATION PRACTICE IN TANZANIA Felician Komu, Phd (Real Estate) ...... 84 COMPULSORY LAND ACQUSITION AND COMPENSATION IN BOTSWANA: THE CASE OF PITSANE-TLHARESELEELE ROAD PROJECT Lekgori, N., Paradza, P. and Chirisa I ...... 85 VALUATION OF UN REGISTERED COMMUNITY LAND IN KENYA – ADDRESSING THE FUNDAMENTALS Mwenda K. Makathimo, PhD ...... 86 AN INVESTIGATION INTO THE LEVEL OF DATA SHARING EFFICIENCY ON THE ZAMBIAN RESIDENTIAL PROPERTY MARKET: CASE STUDY OF LUSAKA Christopher Mulenga ...... 87 THE IMPACT OF SHORT-TERM LISTING PLATFORMS ON RENTAL HOUSING MARKETS (BIG DATA) ALONG BAGAMOYO ROAD, DAR ES SALAAM, TANZANIA Judith Mwanri ...... 88 DEPRECIATION MODELLING IN THE USE OF DEPRECIATED REPLACEMENT COST FOR THE VALUATION OF PLANT AND MACHINERY Ogunba, Olusegu and Ogunniyi, Kehinde ...... 90 APPLICATION OF DISRUPTIVE TECHNOLOGIES IN REAL ESTATE PRACTICE IN NIGERIA; CONSTRAINTS AND OPPORTUNITIES92 Utchay A. Okorji ...... 92 AN EVALUATION OF THE CONCEPT OF ADEQUATE COMPENSATION IN COMPULSORY ACQUISITION PRACTICE IN NIGERIA Utchay A. Okorji ...... 93 CONTENDING ISSUES OF YP DUAL RATE IN LEASEHOLD VALUATION: THE NEED FOR RESOLUTION Olusegun O. Olanrele, Rosli Said, Anuar Alias and Tomisi O. Adegunle ...... 94

The 19th AfRES Annual Conference ix A CRITICAL REVIEW OF PROPERTY VALUATION FOR EXPROPRIATION IN ZIMBABWE Partson Paradza; Joseph Yacim and Benita Zulch ...... 95 VALUATION OF HERITAGE ASSETS: IMPLICATIONS FOR SOUTH AFRICA .... 96 Mashilo Pitjeng ...... 96 DETERMINATION OF RESIDENTIAL PROPERTY VALUE IN FLOOD RISK AREA Siti Hafsah Zulkarnain1, 3Maki Tsujimura2, 1Muhamad Ali Yuzir3, 4Muhammad Najib Razali4, 4Zakri Tarmidi5 ...... 97

SUSTAINABLE REAL ESTATE MUST BE HOLISTIC TO EQUATE SUSTAINABILITY. Kwame Addae-Dapaah ...... 100 TOWARDS DE-POLITICIZATION OF URBAN REGENERATION AND CHANGING URBAN GOVERNANCE IN AFRICA: A FRAMEWORK FOR ANALYZING REDEVELOPMENT OF MUNICIPAL MARKETPLACE INFRASTRUCTURE Lewis Abedi Asante ...... 101 SUSTAINABLE ACCOMMODATION INVESTMENT IN SUB-SAHARAN AFRICA: THE CASE STUDY OF THE SOUTHERN CIRCUIT NATURE TOURISM IN TANZANIA Eward Athanas ...... 102 LAND-BASED FINANCING OF URBAN DEVELOPMENT AND INFRASTRUCTURE PROVISION IN GHANA CITIES: POLICY AND PRAXIS Samuel B. Biitir ...... 103 FINDING BIRNIN ZANA: IN PURSUIT OF AN AFRICAN SMART CITY ...... 104 Luke Boyle ...... 104 PUBLIC SUBSIDIES FOR GREEN BUILDINGS: EMPIRICAL OUTCOMES FROM AUSTRALIA’S NATURAL EXPERIMENT Jeremy Gabe ...... 105 THE USE OF NON-DESTRUCTIVE TECHNOLOGIES FOR THE DETECTION OF UNDERGROUND UTILITIES Louis Germishuys and Chris Cloete ...... 106 x The 19th AfRES Annual Conference THE IMPACT OF CHINESE CONSTRUCTION COMPANIES ON AFRICA’S PROPERTY MARKET Catherine Kariuki Nicky Nzioki ...... 108 THE REAL ESTATE DEVELOPMENT DILEMMA IN URBAN AREAS FOR DEVELOPING NATIONS ...... 110 Augustine Juma Katiambo, Nicky Nzioki ...... 110 URBAN SPRAWL AND INNER CITY CONGESTION: NATURE AND EXTENT OF CITY EXPANSION IN GHANA Kosoe, E.A.; Kuusaana, E.D. & Ninminga-Beka, R ...... 112 PRE-TENDER COST ESTIMATES AND ITS EFFECT ON REAL ESTATE INVESTMENT DECISION MAKING IN DAR ES SALAAM TANZANIA Justine Mselle ...... 113 GREEN REAL ESTATE DEVELOPMENT IN TANZANIA: CHALLENGES, OPPORTUNITIES AND THE NEED Leonard Emmanuel Mwassa ...... 114 A CALL TO UNLEASH POTENTIALS OF HAZARDOUS LAND IN DAR ES SALAAM: A CASE OF JANGWANI AND MSIMBAZI RIVER VALLEY Meckson Lorden Nzogela ...... 116 THE COSTS AND BENEFITS-IN-USE OF ENVIRONMENTALLY SUSTAINABLE BUILDINGS IN NIGERIA Ogunba, Olusegun Adebayo, Gbadegesin Job Taiwo and Oyedele, Joseph ...... 117 THE IMPACT OF GREEN LABEL ON SUSTAINABLE COMMERCIAL OFFICE DEVELOPMENT IN AN EMERGING MARKET-LAGOS Austin Otegbulu ...... 118 TOWARDS DEVELOPING A CONSTRUCTION CERTIFICATION SCHEME FOR GHANA Esther N. Terkper, MSc ...... 119 ADOPTION OF SUSTAINABLE DEVELOPMENT GOAL NO.11 AS SOLUTION TO HOUSING AFFORDABILITY IN TANZANIA Boniface Yumba ...... 121

The 19th AfRES Annual Conference xi THE UNDERRATED CONTRIBUTION OF THE INFORMAL REAL ESTATE AGENCY SECTOR IN ATTAINING THE SUSTAINABLE DEVELOPMENT GOALS; CASE OF DAR ES SALAAM Emmanuel Christopher Njavike ...... 122

CONFLITS FONCIERS DANS L’OUEST IVOIRIEN: LE CAS DE LA RÉGION DE LA RÉGION DE LA NAWA Par Dédou Zozo Alain ...... 124 PROGRAMMES DE CONSTRUCTION DE LOGEMENTS SOCIAUX ET RÉACTION SOCIALE DANS LE DISTRICT D’ABIDJAN Par DẺDOU Zozo Alain ...... 125 LA PERSISTANCE DE L’ARTISANAT MINIER CLANDESTIN EN CÔTE D’IVOIRE: LES CONDITIONS D’ÉMERGENCE ET LE PROCESSUS KOUAME Aimé Richard ...... 126

ORGANISATIONAL CHALLENGES OF LOCAL AUTHORITY MANAGED PUBLIC HOUSING. A GHANAIAN EXPERIENCE ...... 128 Samson Aziabah ...... 128 PERFORMANCE OF REITS IN EMERGING MARKETS: THE CASE OF NIGERIAN PROPERTY MARKET Daniel Ibrahim Dabara and Olusegun Adebayo Ogunba ...... 156 ANALYSIS OF THE RELATIONSHIP BETWEEN INFLATION AND INDIRECT REAL ESTATE INVESTMENTS IN NIGERIA Daniel Ibrahim DABARA, Augustina CHIWUZIE1 Olusegun Joseph OMOTEHINSHE, Anthony TINUFA and John Oyekunle SOLADOYE ...... 212 PROGRAMMES DE CONSTRUCTION DE LOGEMENTS SOCIAUX ET RÉACTION SOCIALE DANS LE DISTRICT D’ABIDJAN Par DẺDOU Zozo Alain and KOUAKOU Konan Isidore ...... 238 EMPIRICAL CONCEPTUALISATION OF RESIDENTIAL RENTAL VALUES IN GHANA – UNDERSTANDING LOCATION AND NEIGHBOURHOOD EFFECTS xii The 19th AfRES Annual Conference Emmanuel Kofi GAVU and Dietwald GRUEHN ...... 256 NUANCES OF COMPULSORY LAND ACQUISITION AND COMPENSATION IN BOTSWANA: THE CASE OF THE PITSANE-TLHARESELEELE ROAD PROJECT Lekgori, N., Paradza, P. and Chirisa, I...... 300 VALUATION OF UN REGISTERED COMMUNITY LAND IN KENYA – ADDRESSING THE FUNDAMENTALS Mwenda K. Makathimo, ...... 319 REAL ESTATE RETURN CYCLES AND THE CONTRIBUTIONS TO A MIXED ASSET PORTFOLIO Glenn R. Mueller ...... 336 CHALLENGES OF ACQUIRING TRIBAL LAND IN GIYANI, LIMPOPO PROVINCE, SOUTH AFRICA FOR COMMERCIAL DEVELOPMENT Xongile Muthambi, Chris Cloete and Laetitia Cook ...... 355 PHYSICAL DEPRECIATION MODELLING IN THE USE OF DEPRECIATED REPLACEMENT COST FOR THE VALUATION OF PLANT AND MACHINERY Ogunba, Olusegun & Ogunniyi, Kehinde ...... 377 TITLE: EMERGING ISSUES ON COMPULSORY LAND ACQUISITION IN KENYA - LAND GOVERNANCE OR POLITICS? Washington H. A. Olima ...... 405 A CRITICAL REVIEW OF PROPERTY VALUATION FOR EXPROPRIATION IN ZIMBABWE Partson Paradza; Joseph Yacim and Benita Zulch ...... 424 ELITES IVOIRIENNES, HÉVÉACULTURE ET QUESTION FONCIÈRE EN PÉRIODE POST-CONFLIT TARROUTH Honnéo Gabin ...... 450 CHALLENGING INSTITUTIONAL FRAMEWORKS IN LAND ADMINISTRATION: MANY INSTITUTIONS, BUT LESS PROPERTY RIGHTS (CASE OF BURUNDI) Turimubumwe Prosper ...... 470

The 19th AfRES Annual Conference xiii FACTORS INFLUENCING THE CHOICE OF AUTOMATING SYSTEMS USED IN HIGH-RISE BUILDINGS IN LAGOS, NIGERIA Cyril Ayodele Ajayi and Orayinka Stephen Awosode ...... 494 AN ASSESSMENT ON THE LEVEL OF COMPETENCY OF ESTATE AGENT’S EMOTIONAL INTELLIGENCE IN LAGOS PROPERTY MARKETING AKINWAMIDE, David Oluwatofunmi and BELLO, Victoria Amietsenwu ...... 512 USING THE PROPERTY REGISTER TO ENABLE MUNICIPAL SUSTAINABILITY Janet Channing ...... 525 LAND RIGHTS GOVERNANCE IN PRESENT DAY AFRICA AND IT'S EVOLUTION HRH Drani, Stephen Izakare...... 536 THE PROCUREMENT PRACTICES FOR PROPERTY MANAGEMENT SERVICES BY PUBLIC INSTITUTIONS: THE CASE OF TWO PUBLIC INSTITUTION IN KENYA Catherine Kariuki and Nicky Nzioki ...... 542 HOW REAL ESTATE INVESTMENT TRUSTS (REITS) MAKE PROPERTY INVESTMENT DECISIONS: A REVIEW OF THE LITERATURE Itua Omokhomiona, Prof. Charles Egbub, Prof. Herbert Robinsona, b, ...... 559 HOUSING AFFORDABILITY AS A CHALLENGE IN IMPLEMENTATION OF THE SUSTAINABLE DEVELOPMENT GOAL NO.11 Boniface Yumba ...... 578

xiv The 19th AfRES Annual Conference PREFACE

Dear Conference Delegates, In our edition of the proceedings, we are happy to welcome you to our AfRES annual conference for 2019 held in Arusha, Tanzania. Arusha is a city in north eastern Tanzania of about half a million population. It is about 623 kilometers north of Dar es Salaam the capital of Tanzania. It is only 270 kilometers south of Nairobi, Kenya’s capital. It is accessible by all means of transport, planes, cars and busses. Many people prefer the drive from Nairobi as it is shorter than from Dar. Arusha is the arrival point for those who would like to brave up Mount Kilimanjaro. Arusha is an important city in Tanzanian history, as it was the site of signing the declaration of independence in 1961. It has importance regionally as it is where the Arusha Accords were signed in 1993 by representatives of fighting factions of the Rwandan civil war. Also the Arusha Peace and Reconciliation Agreement for Burundi were signed in 2000. Again in 2015 the Arusha Agreement for South Sudan created the framework for the reunification of South Sudan’s ruling SPLM party. Tourism is one of the most dollar-earning economic activities in the region. Arusha is located on the northern safari circuit near some of the greatest parks and game reserves in Africa, including Serengeti National Park, Kilimanjaro National Park, Ngorongoro Conservation Area, Arusha National Park, Lake Manyara National Park, and Tarangire National Park. We really hope that you will enjoy your stay with us in Arusha and make the best of the opportunity in the surrounding areas. As usual, we have to thank the numerous sponsors who have assisted in different ways; the conference would not have been possible without their contributions. We trust that we will all benefit from the gathering through discussions, debates and networking both of a professional and academic nature.

Today, we can see the maturation happening around us on the African soil. Real estate markets are starting to show growth and higher levels of maturity. From the papers and presentations, data is starting to reflect a much-needed understanding of these markets. The theme of this conference is appropriately “Developing New Frontiers for the African Real Estate Sector” shows that we are on the dawn of new era on the continent.

The 19th AfRES Annual Conference xv This year we are a good proof that we are growing stronger and stronger. We had the highest number of submitted abstracts at 106 abstracts of which 86 will be presented. We had 49 papers for reviewing of which 15 were accepted and 6 non-reviewed papers. We appreciate the Scientific / Technical committee of the conference for their work in reviewing the submitted abstracts and papers. The feedback to the authors assisted greatly in finalizing them in the format presented in these proceedings. The papers printed in these proceedings were double-blind reviewed to ensure the highest standards and international comparability. The abstracts were reviewed, and guidance given to authors.

The East African AfRES chapter is grateful to those who assisted and contributed in bringing this conference together and making it happen. We are appreciative of the hours of work which some of our members dedicated to the process and Prof Aly Karam, the Chair of the Scientific Committee who had to forsake his leave to get the papers distributed, reviewed and compiled.

Dr. Felician Komu On behalf of the Organizing committee September 2019

xvi The 19th AfRES Annual Conference

UNDERWRITER REPUTATION, MARKET ADJUSTED INITIAL RETURNS AND ABNORMAL RETURNS: EVIDENCE FROM LISTED REITS ON THE JOHANNESBURG STOCK EXCHANGE

Oluwaseun Damilola Ajayi, Omokolade Akinsomi [email protected]

Abstract The paper examined the relationship between underwriter reputation and performance of secondary equity offerings (SEOs) of listed real estate investment trusts (REITs) on the Johannesburg Stock Exchange (JSE). Daily opening and closing price of 37 listed REITs over the last ten (10) years (2008 – 2018) were retrieved from the price section of the I-NET (BFA) McGreggor database. The market-adjusted initial day returns, cumulative abnormal returns were estimated using the event study methodology. Independent variables including the issuing price, SEO size, age of firm and leverage of the sample were controlled and regressed adopting the ordinary least squares (multivariate analysis) to estimate the impact of underwriter reputation on performance of listed REITs SEOs. The Carter-Manaster measure provided a significant measure in the estimation of initial returns. Highly reputed underwriters indicated an increase in performance of REITs (and vice-versa) that had issued SEOs within the study period. By implication, REITs who intend to issue SEOs in the nearest future can leverage on the insights provided in this paper by appointing prestigious investment banks for the purpose of underwriting.

2 The 19th AfRES Annual Conference AN EMERGING MORTGAGE MARKET IN AFRICA: THE CASE OF GHANA

Dr. Omokolade Akinsomi1 Dr. Wilfred K. Anim-Odame2, FGhIS, MRICS

Abstract Development of mortgage markets is essential for African countries not only for the housing needs of the high population growth but also to potentially address high unemployment rate in the continent. Mortgage data in Africa, specifically across sub-Saharan countries are scant and, in some instances, non-existent. This paper examines data on mortgage loan originations in Ghana. We examine 1,476 mortgage transactions in the country by a single loan provider from 2008 to 2016. Our preliminary results show that the average loan originated for the period is US$66,993 with an average loan to value ratio of 49% between 2013 and 2016. The national capital – Accra, which also doubles as the Greater Accra regional capital accounts for 72% of loan originations.

We find that there is a positive significant relationship with the loan origination and number of bedrooms and if a property is located in Accra. The results, however show a negative significant relationship between loan and detached properties in Accra. We further examine what property characteristics determine a higher loan to value ratio using a probit model. Our preliminary findings show a positive significant relationship between a higher loan to value ratio and the number of bedrooms and if the property is a detached. The results so far, also yield a positive but insignificant relationship between properties in Accra and loan to value ratios.

The initial findings give rare insights to an emerging mortgage market in Africa, which otherwise is considered as opaque.

Keywords: Mortgages, Ghana, Africa, Emerging Market.

1 Associate Professor, University of Witwatersrand, Johannesburg, South Africa; [email protected] 2 Senior Technical Advisor, National Development Planning Commission, Accra, Ghana; [email protected]; [email protected]

The 19th AfRES Annual Conference 3 ARE FOREIGN-BIASED REITS WORTHWHILE?

Omokolade Akinsomi1 Mabuse Moja2 1Associate Professor, University of Witwatersrand, Johannesburg, South Africa; [email protected] 2Executive Director, Setso Property Fund, Johannesburg, South Africa; [email protected].

Abstract International investment can be a very effective way to spread the risk of a property portfolio. Property markets are inherently locally driven, which would suggest that the diversification benefits to be reaped from foreign property holdings can be substantial (Eichholtz, Koedijk, & Schweitzer, 2001). From a South African perspective, this has driven a local listed property sector with limited foreign exposure as recently as 2009, to today deriving 37% of earnings from markets including Australia, United States of America, United Kingdom, Central and Eastern Europe and parts of Africa (Deutsche Bank , 2016).

This paper investigates how foreign biased REITs in South-Africa performs in relation to domestic-biased REITs. The results in our findings our particularly significant for investors, analysts in making informed decisions specifically when diversifying their portfolios.

Keywords: REITs, Portfolio Management, South-Africa, Emerging Market.

4 The 19th AfRES Annual Conference AN ASSESSMENT ON THE LEVEL OF COMPETENCY OF ESTATE AGENT’S EMOTIONAL INTELLIGENCE IN LAGOS PROPERTY MARKETING

AKINWAMIDE, David Oluwatofunmi1, 2*; BELLO, Victoria Amietsenwu2 1Department of Estate Management and Valuation, Auchi Polytechnic, Auchi, Nigeria 2Department of Estate Management, Federal University of Technology, Akure, Nigeria [email protected]

Abstract In real estate service, emotions underpin all client’s action in decision making. However, the understanding of client’s emotional needs require some degree of competencies to achieve customer’s satisfaction in property marketing. As a result, emotional intelligence competencies are essential in real estate agency to understand consumer’s behaviour in property market. This study therefore assess the level of competency of estate agent’s emotional intelligence in Lagos property marketing. Structured questionnaires were randomly administered on 236 registered estate firms while 205 (86%) questionnaires retrieved were found suitable for analysis. Data collected were analysed using descriptive statistics. Findings indicated that empathy, self-awareness and motivation ranked high among the competencies in emotional intelligence adopted by estate agents. However, it was observed that 70% of respondent with an average of 6 years of experience in real estate agency possess high level of emotional intelligence. The study recommends that estate agents should improve their level of competency in emotional intelligence to understand customer’s behaviour and emotional needs in decision making.

Keywords: Emotional Intelligence, Estate Agent, Emotion, Decision Making, Property Market, Lagos

The 19th AfRES Annual Conference 5 AFRICAN REAL ESTATE TRENDS AND FORECAST: CASE STUDY OF GHANA

Gad Asorwoe Akwensivie Office of the Administrator of Stool Lands, Accra Ministry of Lands and Natural Resources, Ghana Email: [email protected]

Practitioners in the built environment Surveyors, Valuers, Mortgage providers, Property developers and Brokers etc. need to understand and appreciate the fact that, real estate is constantly changing due changing tastes, advancement in technology, access to finance, and so on.

Practitioners are faced with the overwhelming task of keeping up with trends. It is challenging to identify the changes taking place but more challenging figuring out which trends are important for us as practitioners and those that are here to stay. It is important that practitioners are able to identify the changes with some degree of confidence to guide their strategic decision-making processes because practitioners who are able to get it right will be separated from the rest in the near future.

Findings from the research shows that, several things are certain in a few years from now. For example, there will be a surge in demand for condominiums, apartments and similar shared properties in many African cities. There will be a shift from private development for mortgage. The introduction of new legislations on the built environment will change many things. Mortgage rates will drop and solar will be in high demand. Online brands will rule the market and mass marketing by agents, surveyors and developers, investors will be in vogue. There will be specialization instead of generalization and services tailored to meet the demands of Generation Z. There will be a rise in short-term rentals and smaller living tiny apartments. Tax reform in the coming years will likely reduce ownership benefits and the hottest properties will be in the south, along the coast. Not only that, home price increases will slow and the oversupply theory will be debunked. There will be an office evolution and the capital cities including Accra will see mass exodus with the big game changer been driverless cars. Ultimately, the higher-end market will be well-served and margins will still be good for those types of projects. Building affordable housing at scale, in listed urban areas would be profitable from 2035.

6 The 19th AfRES Annual Conference This paper walks participants through the changes that are expected in the coming years with regards to the built environment. The paper certainly provides some meaningful insights that will help practitioners in Africa navigate their decisions into the future.

The 19th AfRES Annual Conference 7 MORAL HAZARD BEHAVIOUR AMONG PROPERTY MARKETS ACTORS: AN ANALYSIS OF ITS IMPACT ON REAL ESTATE PRICES IN KINONDONI, TANZANIA

Samwel Alananga, PhD [email protected] School of Earth Sciences, Real Estate Studies, Business and Informatics (SERBI) Ardhi University, Tanzania

Abstract By the year 2025, it is projected that over 80% of all Tanzanians will be living in urban areas where formal housing supply is severely constrained. The housing shortage partly attributed to rapid urbanisation which is estimated to be about 6% per annum. Similarly, the failed Government assisted land delivery systems have been at the core of expanding informal housing. Expanding informality signals a constrained real estate market where formal transactions are biased in favour of the few highly advantaged members of the society. These advantaged members of the urban fabric are not only able to iron out the constraints posed by moral hazards in transactions but can also redress the adverse consequences imposed by informal land and housing deals. Improving formal land title holdings and use in real estate transactions should, therefore, lead to lower transaction hazards which will ultimately attract housing investment in dilapidated inner city neighbourhoods.

Questionnaire data for 1514 respondents on property prices and land and housing transactions in Kinondoni municipality for the period prior to 2015 provided an input into the Analysis of Variance to derive the findings of this study.

Observations point to a significant market price distortion arising from the use of formal land title documents an indicator that informality parse is not the real source of a constrained real estate market, there are structural constraints in terms of composition and behaviour of actors of the real estate market that need a closer examination.

To encourage housing development in dilapidated inner-city settlements, Government induced regularisation programmes must be coupled with structural reforms that targets formal unionisation of informal real estate

8 The 19th AfRES Annual Conference agents in order to stabilise their lifetime earnings. By so doing, unexpected real estate price hikes may be eliminated in line with formal land and housing transactions leading to more housing investment and more stable real estate prices.

Key words: information asymmetry; moral hazards; property markets; real estate prices

The 19th AfRES Annual Conference 9 PUBLIC HOUSING MANAGEMENT IN GHANA: ORGANISATIONAL CHALLENGES

Samson Aziabah [email protected] University for Development Studies, Faculty of Planning and Real Estate, Department of Planning and Real Estate, Ghana

Abstract Public housing has been widely acknowledged for its tremendous contribution to easing housing shortage in many countries. Notwithstanding the shift towards neo-liberalization and the emphasis on private sector led housing production, still public housing remains relevant. In Ghana, the Government undertook a large scale sale of government built public housing in the 1980s in direct response to the neo-liberalization call. Most of the remaining stock were transferred to local/municipal authorities to own and manage.

The remaining stock continues to contribute greatly to Ghana’s development by promoting labour mobility and productivity in the public sector through security of housing for some civil servants. Unfortunately, the conditions of the stock have largely been described as poor. This situation has been attributed to an ineffective management and maintenance system, more technically described as organisational challenges. The purpose of the study is to identify the challenges with local authority management of public rental housing. The study interviewed policy makers at the national level, local authority managers and tenants. It found that, the organisation for management lacks adequate policy and legal guidance. Furthermore, inadequate skilled personnel, finance, poor coordination, are among key constraints militating against the development of an effective maintenance system for public housing. The paper presents potential directions for developing better management and maintenance system for public housing. These include roles for tenants, local government and private actors (contractors), and a review of rent collection arrangements.

Key words: public housing management, organisational challenges, maintenance, public rental housing, Ghana

10 The 19th AfRES Annual Conference STAKEHOLDERS’ PERSPECTIVES ON HOUSE PRICE DETERMINANTS IN GHANA

Kingsley Tetteh Baako, Wejendra Reddy, Woon-Weng Wong RMIT University, Melbourne, Australia Abstract Purpose: The importance of housing performance measures cannot be overemphasized, resulting in a considerable amount of research and practice on the topic, largely in developed countries. In most developing countries, house price index construction is sparse, at best, leaving decisions which hinge on housing performance data little corroboratory evidence. Thus, the purpose of this research is to ascertain the primary micro-level determinants of house prices in Ghana through a stakeholder survey. Methodology: Using a qualitative approach, data is collected through semi- structured interviews with 20 property practitioners including valuers, academics, property developers, mortgage providers, housing agents and housing economists. The interviews focused on house price determinants and their relationship with price, with special emphasis on the Ghanaian context, as well as proposals for the ideal manager of a house price index. Findings: This study confirms existing knowledge on the principle of progression and regression. In addition, the research uncovered interesting findings including the relevance of -and current confusion with- unexpired lease terms, and impacts of market dynamics such as physical heterogeneity of properties and hearsay. The study also reveals that for an index to have wide acceptability in Ghana, it needs to be created and managed through a collaborative effort between government and industry. Originality: Although evidence of quantitative studies relating to house price index does exist, there is no such qualitative study found in the literature that considers house price determinants and conceptualises these factors from leading industry expert point of view in the Ghanaian context. This study lends guidance to housing policy decisions at national and local levels and provides a much-needed source of data for further academic inquiry into housing dynamics in Ghana. It also has significant implications for the valuation of housing in Ghana. Keywords: House Price Determinants, Ghana, Residential Valuation, Automated Valuation, House Price Modelling

The 19th AfRES Annual Conference 11 EXAMINING THE VIABILITY OF SECONDARY MORTGAGE MARKETS (SMM) IN RAPIDLY DEVELOPING AFRICAN ECONOMIES: THE CASE OF RWANDA

Aha, Bismark, Asinyaka, M., and Umugwaneza, C. and Mugisha, R. Email: [email protected] Abstract Mortgage markets in developing Sub-Saharan African (SSA) economies evince recognised inefficiencies attributable to a plethora of problems notably, the high interest rates, short loan maturities and low LTVs. Consequently, mortgage finance accessibility in SSA is difficult and inadequate relative to the soaring demand for housing. In this paper, we consider the viability of a Secondary Mortgage Market (SMM) in Rwanda and its potential to ensure sustainable access to housing finance, taking cognizance of the economic and institutional transformations the country has witnessed over the last two decades. We do so by exploiting primary and secondary data, utilizing structured questionnaires and interviews to obtain information from commercial banks, the National Bank of Rwanda, Development Bank of Rwanda and the Capital Market Authority.

The findings reveal that the mortgage market in Rwanda is burgeoning rapidly. We observed, in the primary mortgage market, a high willingness on the part of banks to grant mortgage loans, albeit, they are constrained by lack of access to long-term funding and limited risk-bearing capacity. The macro-economic environment was evaluated with regard to the pre- requisites of a viable SMM and was found to be robust to support an SMM. Further, the Rwanda capital market is adequately prepared for Mortgage Backed Securities (MBS) with a well-founded regulation for asset-backed securities in place and high discipline in the market. The study reveals that the securities of many reputable companies on the Rwanda Stock Exchange (RSE) are currently over-subscribed suggesting a high potential demand for new, innovative securities. Finally, we observe that the legal and regulatory framework is strong enough to support an SMM. The mortgage law, foreclosure procedures and systematic land title registration, promise adequate title security to collateralised properties. In light of these observations, we submit that there is a reasonably high prospect that an SMM would be a success in Rwanda. Keywords: Housing, mortgage finance, secondary mortgage market, developing economies, Rwanda.

12 The 19th AfRES Annual Conference THE EFFECTS OF TRANSFER DUTY EXEMPTION ON HOUSING DEMAND IN THE THREE METROS IN GAUTENG PROVINCE, SOUTH AFRICA

Cheruiyot, Koech Gauteng City-Region Observatory, South Africa [email protected]

With housing forming a large part of households’ long-term wealth, the South African government, since January 1950 to date, have extended a rebate to house buyers – both individuals or natural persons and companies or other parties – to enable them buy houses of their choices. These rebate rates have changed over the years to accommodate the consumer price indices as embodied in the general cost of living and property market rates fluctuations. This paper uses spatial data on house prices from 1993 to 2010 (from Lightstone Pty Ltd) and other economic variables to test the effect of such historical rebates on housing demand in the three metropolitan municipalities (i.e. Johannesburg, Ekurhuleni, and Tshwane) in Gauteng province, South Africa.

Despite these metros presenting a dense, developed, bustling, and growing housing market in the country, none of the existing studies have focused on these metros, as one contiguous unit. The research employs a spatial panel data model implemented in R studio software to analyse the data. It is anticipated that the results will buttress the need to more effectively apply transfer duty rebates towards increasing housing demand, and investment in the long-term household wealth, South Africa.

The 19th AfRES Annual Conference 13 PERFORMANCE OF REITS IN EMERGING MARKETS: THE CASE OF NIGERIAN PROPERTY MARKET

Daniel Ibrahim Dabara1 Olusegun Adebayo Ogunba2 1Department of Estate Management, Federal Polytechnic Ede, Nigeria, [email protected] 2Department of Estate Management, Obafemi Awolowo University Ile-Ife, Nigeria, [email protected]

Abstract Purpose: The study assessed the return/risk performance of Real Estate Investment Trusts in emerging markets, using Nigeria as a case study with a view to providing information for investment decisions.

Design/Methodology/Approach: The study population consisted of all the three existing REIT companies in Nigeria. Secondary data on dividends and share prices of Real Estate Investment Trusts in Nigeria (N-REITs) were sourced from periodicals of the respective companies covering a time frame from 2007 to 2016. These were subsequently translated to the income, capital, total and risk-adjusted returns of N-REITs. The Kwiatkowski-Phillips- Schimidt-Shin (KPSS) and Philip-Perron (PP) Unit Root Analysis; the Auto- Regressive Integrated Moving Average (ARIMA) as well as the Granger Causality Tests were carried out on the data series used in the study.

Findings: The study revealed that the performance of Nigerian REIT companies in terms of income, capital, total and risk-adjusted returns had been low and even negative in some cases. The study found that below optimal performance of N-REITs was traced to the capital return component of N-REITs which had remained static and even negative in most of the investment period.

Practical Implication: Results of this study revealed the peculiar nature of Nigerian REITs; this information can be used by stakeholders in the real estate industry such as pension funds, asset managers, individual investors and insurance companies in making informed investment decisions.

Originality/Value: This study is one of the pioneering research works on Nigerian REITs which is a new investment vehicle in one of the African emerging markets. The study will add to the scanty research in this field as

14 The 19th AfRES Annual Conference well as equip both foreign and domestic investors with valuable information for investment decisions.

Keywords: Investment, performance, property, returns, risk, volatility.

The 19th AfRES Annual Conference 15 DRIVERS AND MARKETABILITY OF PERI-URBAN DEVELOPABLE SITES IN SOUTHWEST NIGERIA

Oluwatosin B. FATEYE1, Olaseni O. ADETOKUNBOH2 1Dept. of Estate Management, Obafemi Awolowo University, Ile-Ife, Nigeria [email protected], 2Dept. of Estate Management, University of Uyo, Uyo, Nigeria [email protected],

Abstract Despite the infrastructure-lag characterised with peri-urban especially in developing countries, the alarming rate of property development and investment by corporate developers in urban fringes in the recent time is worrisome. Thus, the study probed the drivers and marketing approaches of investment property in the peri-urban areas. The study used primary data and adopted questionnaire survey. Members of both REDAN and NIESV were sampled. The study employed cross-tabulation, mean weighted score (MWS), correlation analysis and analysis of variance (ANOVA) to analyse its data. The result of the cross-tabulation analysis showed that members of REDAN and NIESV have similar views towards high rate of property development and investment in the peripheral communities; drivers such as proximity to major cities, demand pull, land availability and affordable rental dwellings with high MWS were rated higher.

Strong positive correlation was noticed between economic outlook and affordable rental dwellings, proximity and demand pull. The study established high marketability potential of investment property in urban fringes; while aggressive marketing style was identified by respondents; skeletal property development and site cum service scheme were the primary marketing strategies adopted. The result of ANOVA showed that demand pull, land availability and population growth could significantly influence (p<.05) the rate of property development in the urban fringes. Conclusively, the study affirmed the high marketability potential of real estate property and the prominence of proximity to cities, demand pull, and land availability were identified as the major peri-urban market determinants. Thus, real estate investors and developers considering embarking on property investment in peri-urban environment should take note of these prominent factors for informed decision making.

16 The 19th AfRES Annual Conference RESOLVING THE HOMEOWNERSHIP QUAGMIRE OF LOW- INCOME HOUSEHOLDS THROUGH INCREMENTAL HOUSING DEVELOPMENT STRATEGY: PERSPECTIVES FROM ILE-IFE, NIGERIA

Job Taiwo GBADEGESIN1, Daramola Thompson OLAPADE2, Olutayo Isaac AYORINDE3, Robert Ereola SHIYANBOLA4, Bioye Tajudeen ALUKO5 Department of Estate Management, Obafemi Awolowo University, Ile-Ife [email protected] [email protected]

Abstract Apart from housing being a desirable basic necessity of man, it is also ingrained in the African culture that “a man is not a man until he has a house of his own”. Saying like this reinforced the importance the African society place on home ownership. Meanwhile considering the huge funding required for housing development, the dysfunctional mortgage system, and weak institutional framework, the low income households are inevitably left out in the homeownership race. In order to solve the homeownership problem, the low income households engage in self-help minimal housing construction which they extend and improve as resources become available and as need for better structure becomes a priority. Such strategy which is referred as incremental housing development strategy and mostly being use by low income household is bedevilled with many challenges since the development process takes a relative long period of time before completion. This study examine the process involve in incremental housing development strategy and its associated challenges. This is with a view of providing information that will enhance homeownership in Nigeria. A quantitative research design will be adopted to elicit information from households in Ile-Ife, Nigeria. The result will show the process of incremental housing development and the relative duration at the different construction stages. It will also show the challenges encountered adopting the strategy.

Keywords: housing development, self-help, housing finance, informality, homeownership

The 19th AfRES Annual Conference 17 HOUSING MORTGAGE FINANCING IN AFRICA 2010-2018

Egino Millanzi1,, Henry Myingo2 and Mats Wilhelmsson3 1PhD Student, Double Degree Ardhi University, Dar es Salaam and RIT, Sweden 2Researcher, Royal Institute of Technology, KTH, Stockholm, Sweden 3Professor, Royal Institute of Technology, KTH, Stockholm, Sweden

Abstract The importance of a well-functioning mortgage market cannot be underestimated when it comes to addressing the long-tern growth of demand for housing in Africa. Our objective is to examine the causal relationship between housing mortgage volume and macroeconomics factors as well as institutional characteristics. The data we are using is a panel data set consisting of around 30 countries across Africa over the period 2010-2018.

Our main contribution is that we are utilizing a data not only on mortgage depth, GDP, population growth, urbanization and construction investment as well as mortgage interest rate and mortgage term. We are also using information about deed registry, how many properties that have a deed, how long time it takes to register a property and the cost to do it. The data comes from Center for Affordable Housing in Africa. The estimation strategy we are using is a fixed or random effect model. Our results indicate that GDP per capita is the major macroeconomic factor explaining total mortgage debt. However, GDP per capita alone can only explain a small part of housing mortgage debt. Other important factors explaining the variation in mortgage debt are urbanization and deed registry. What policy implications can we draw from our results? Besides a stable long-term sustainable economic growth, there is need of a housing policy that specifically addressing the housing mortgage market. Here is a deed registry of highest importance. Keywords: Mortgage size, housing, macroeconomy, Africa

18 The 19th AfRES Annual Conference COMMERCIAL PROPERTY RENT DYNAMICS

Rachael Mirembe PhD Student, University of Cape Town, South Africa [email protected] Abstract The study examines the interaction of demand, supply and rent in commercial properties and what goes on in property markets beyond the neoclassical economics regarding rent. In order to understand the outcomes(rent determination) in the property markets better, the study looks at the institutional environment (Ball, Lizieri and Mac Gregor, 1998; D’Arcy and Keogh, 1998) and understands the structure of the property markets (Rothacher, 2013; Ke and Sieracki; 2015).

The following research objectives will be investigated to help arrive at how rent is determined in Uganda: - To understand what tenants consider before renting a commercial building in Kampala. To understand what factors determine the supply of office and retail space in Kampala. To examine how the Ugandan property market has evolved over the years since independence (1962) and where it is now in terms of level of maturity. To understand how the institutional environment of the Kampala property market looks like in terms of rent determination and to examine the relationship between rent determination and institutional environment of commercial buildings in Kampala?

The 19th AfRES Annual Conference 19 A SCHEMATIC ANALYSIS OF COMMERCIAL SPACE SUB- MARKETS COMPETITIVENESS IN DEVELOPING COUNTRIES: A CASE OF DAR ES SALAAM CITY

Vianey .J. Mushi1 & Frank I. Kanizio2 1Lecturer School of Earth Science, Real Estate, Business and Informatics (SERBI), Ardhi University, Dar es Salaam Tanzania., Email : [email protected] or [email protected] 2Frank Ishengoma Kanizzio Valuer/Real Estate Investment Analysts,. [email protected]

Abstract The Dar es Salaam’s commercial property market dynamics is not only the most vibrant market in the country, but also face a varied set of challenges that are complex and diverse. The various components comprising the city’s commercial space perform differently, in some cases influencing each other and in others exacerbating the success or failures of government policy. In most cases there is limited published data available on the profile of market activity, size and performance at the regional level. However, it is very difficult to find information on comparatively competitiveness of office submarkets within the city, and more importantly, there is relatively little data available on key aspects of how these submarkets perform and influence each other.

Drawing upon quantitative evidence, the current research explores trends in commercial property market size, activity, and performance on a segmented basis, highlighting submarkets’ competitiveness and how they influence each other and affect other property types in the city using a sample of 50 prime commercial properties selected randomly over 10 years period from 2008 to 2018. Overall, the DSM’s commercial property markets are interlinked and are affected with the general market shocks albeit with varying magnitudes. Within the same commercial node, even property types are affected in a linear manner. Further, commercial markets have shown a moderate and steady growth from 2008 to 2016, but a sharp decline in the recent years, with a fall in average property values (transaction prices) ranging from 5 to 7 percent every year. Nonetheless, properties with a high-class tenant mix show resilience to market shocks. The findings of this study are significant in explaining the nature of submarket competitiveness which is vital for developers; investment analysts and investors in strategic portfolio allocation and diversification

20 The 19th AfRES Annual Conference and risk management strategies. The government can also use these insights not only to identify the strengths of the one segment to support the growth of the other, but also options for maximizing performance.

Keywords: Real Estate, Markets, Performance, Linkages

The 19th AfRES Annual Conference 21 REGULATORY PLANNING AND AFFORDABLE HOUSING IN KIGALI CITY: POLICIES, CHALLENGES AND PROSPECTS

Fred Nkubito1, Andrew Baiden-Amissah2 [email protected], [email protected] (Corresponding Author) [email protected] Department of Estate Management and Valuation, University of Rwanda - College of Science and Technology, Kigali, Rwanda

Abstract The availability of enough housing for all is often stated as a priority for enhancing the social needs of a society. Studies from elsewhere have suggested a correlation between zoning strictness and inflating housing costs, which also leads to the exclusion of social classes in cities. However, in Africa, these linkages have not been adequately assessed. With zoning being at the heart of the current planning system in Rwanda, this research aims at examining the linkages between zoning planning and housing affordability, in an emerging urban setting like Kigali City. This study employed a mixed research methods approach to assess the effects of the master plan and zoning requirements on housing costs, and the ease of access to housing particularly for low-income households.

Results of this study reveal a total housing supply gap of 30,000 dwelling units, of which more than a half is meant to be affordable. While the zoning code requires for the use of imported materials which increases the costs of housing, more than 70% of Kigali City’s residents earn incomes, which disqualifies them from formal mortgage loans. Moreover, the euphoria to meet the master plan objectives encourages the conversion of prevalent informal settlements into high-end market neighborhoods. This study thus suggests for a relaxation in zoning regulations for certain income thresholds, re-defining of affordability to match the local context and the generation of housing affordability indexes to inform government’s urban housing strategies.

Keywords: Regulatory Planning, Affordable Housing, Urban Poor Households, Kigali City

22 The 19th AfRES Annual Conference WHY DO STARTUPS CHOOSE COWORKING IN DEVELOPING COUNTRIES? CASE STUDY OF NIGERIA

Tayo Odunsi & Ayo Ibaru, [email protected] Northcourt Real Estate, Nigeria

Abstract Globally, coworking has significantly grown with the turn of the decade. This growth has been significant in developing countries like Nigeria in part as a response to the nascent startup economy that needed inexpensive space, infrastructure and technical support on growing their businesses. Few were aware of the coworking concept in general and the idea struggled to gain traction in these early years.

Starting in 2016, Nigeria’s economy would go into a 5-quarter long recession which would heighten the need for companies to keep their expenses low. This meant a definite demand for more technology, fewer hands and inexpensive workspaces. Coworking service providers moved in to fill the need and have since grown from less than 10 in 2010 to well over 100 in 2019. By providing access to convenient working environments, respectable office addresses, strong infrastructure, a network of budding entrepreneurs and funding by venture capitalists, Coworking spaces are establishing themselves as the de-facto business community. Per square metre prices for standard office spaces remain out of reach to the average startup. But what are the reasons and features startups like most about coworking? We carry out surveys why startups choose coworking in developing countries, with a special focus on Nigeria.

The 19th AfRES Annual Conference 23 HOW REAL ESTATE INVESTMENT TRUSTS (REITS) MAKE PROPERTY INVESTMENT DECISIONS: A REVIEW OF THE LITERATURE

Itua Omokhomion1, Charles Egbu2, Herbert Robinson3 Email: [email protected] 1PhD Student Dept of Built Environment and Architecture, London South Bank University, London, United Kingdom

Real estate investment trusts (REITs) are companies that invest in an income- producing real estate. An essential requirement of REITs, unlike other listed companies, is that they distribute at least 90% of taxable income to shareholders. The acceptance and increase in the use of REITs as a means of investment have increased over time with REIT regimes in over 30 countries and a global market capitalisation of $1.10 trillion by the end of 2018. The attractiveness of REITs is linked to its ability to invest widely across various property sectors, providing investors with diversification, liquidity, transparency, regular income, and tax efficiency. However, even as REIT regimes continue to receive significant coverage, research on the investment decision-making process undertaken by REITs has mostly been drawn from the United States with limited research done to understand this concept in other REITs regimes.

Using a systematic review of existing literature, this paper aims to document how REITs make property investment decisions by identifying the various steps, stages or sequences adopted when REITs carry out investment decisions. Findings show that normative investment decision-making models guided by a rationalistic theory that assumes the investment decision making is highly structured and formalised are prevalent in the research on REITs property investment decision making. Also, there is a growing recognition that property investment decision making is far from rational with an appreciation of the role behavioural biases play in property investment decision making. The behavioural perspective has been recognised to present a more realistic view of a rationalist approach to investment decision making with investment decision making occurring in imperfect and sometimes chaotic markets. This is primarily observed in emerging REIT regimes where steps and processes taken to achieve a final decision deviate from a rationalist approach. The findings of this study suggest that more work is required to explore REITs investment decision- making steps and process in both developed and emerging regimes. Keywords: REIT, Investment Decision, Property Investment, Decision Models, Real Estate.

24 The 19th AfRES Annual Conference REAL ESTATE RETURN CYCLES AND THE CONTRIBUTIONS TO A MIXED ASSET PORTFOLIO

Glenn R. Mueller1 Andrew G. Mueller2 1Professor – University of Denver,USA,[email protected] 2Assistant Professor – University of Denver, USA, [email protected] . Abstract Real estate has cyclical returns in both public and direct/private investment vehicles. Using data over the past 4 decades representing both high and low interest rate and return cycles, we examine real estate’s contribution to a mixed asset portfolio.

Previous research has studied the inclusion of public real estate in a mixed asset portfolio of stocks and bonds or private real estate in a mixed asset portfolio and some studies have include both public and private/direct real estate in a mixed asset portfolio, but usually for short time periods (Maximum 15 years).

With 40 years of data now available in both of public REITs and direct real estate (NCREIF), we use the mean/variance Markowitz efficient frontier methodology, to analyze changing allocations during different cycles in the last 4 decades.

The 19th AfRES Annual Conference 25 THE ASSESSMENT OF THE STRUCTURE AND PERFORMANCE OF THE LISTED PROPERTY MARKETS IN BOTSWANA FOR INTRODUCTION OF REITS

1Loyd Sungirirai, Abba Sungirirai2 1Real Estate Lecturer, Department of Real Estate, Ba Isago University, Gaborone, Botswana; [email protected] 2Marketing Management Lecturer, Department of Entrepreneurship, Ba Isago University, Gaborone, Botswana, [email protected]

Abstract The objectives of this research are to examine the performance of the listed real estate assets in the investment market and assess the readiness of the Botswana real estate market for REITs. As the securitization of real estate expands, more and more securitised products are being introduced, in the developing economies. The most topical and current being REITs. The limitation nature of participating in securitised real estate is a major cause for concern which needs to be addressed once and for all. A quantitative methodology is used to analyse the performance of indirect real estate by picking the Variable Loan Stock Companies (VLSs) in Botswana Stock Exchange. The returns of the property listed companies are going to be used in order to determine whether the VLSs yield high or low returns.

An analysis of the listed property shows that the listed property (VLSs) have positive Sharpe ratio which is 3.506.The results suggest that the property Variable Loan Stock companies provide better returns given the level of risk associated with investing in the companies. The ostensible perception shown from the responses to the study is that stakeholders in the Botswana listed property market are in favour of the REIT legislation and that it is suitable and welcomed introduction. There is a notably group that are indifferent and don’t believe that the REIT legislation will lead to a more liquid and efficient property market.

26 The 19th AfRES Annual Conference The literature review generally supported the view that the REIT legislation where it has been introduced in many countries was to eliminate some of the problems of the listed property companies, by providing more stringent regulatory requirements and uplifting the property market to a level that is internationally competitive.

Keywords: listed property, performance, REITs, Variable Loan Stocks, Botswana, Property market.

The 19th AfRES Annual Conference 27

AN ANALYSIS IF THE DIFFERENT TYPES OF PROPERTY TAX IN BOTSWANA

Johnson Kampamba1, Milidzani Majingo2 and Yaone Blessings Molefhe3 Department of Architecture and Planning, University of Botswana [email protected]

Abstract Purpose: The aim of the study was to identify and understand how the property taxes are administered in Botswana. This was undertaken to appreciate how they contribute to the Gross Domestic Product (GDP) and the impact the have on revenue maximization.

Study Methodology: A questionnaire and interview guide were used to collect data from tax payers and employee where the respective taxes are administered. This was done using stratified random sampling technique for taxpayers. A sample of 137 taxpayers were randomly determined from a population of 70,000 tax payers at 90% confidence interval. Purposive sampling technique was used to collect data from employees who are in charge of administering the taxes.

Findings: It was established that the different types of property taxes administered in Botswana are Property rates, Value Added Tax Transfer duty, Capital Gains tax, tax on rental income, and capital transfer tax (Estate duty). The bases of the tax are determined using different approaches ranging from self-declaration to capital value. The study revealed that property tax administration in Botswana is poor as it is hindered by problems pertaining to lack of well-trained staff in taxing authorities as well as the low level of awareness of property taxes by tax payers. It was also noted that the amount of tax paid is high yet there are no direct benefits received for paying such taxes. Value Added Tax (VAT) contributes more to GDP than any other property tax at 0.76%.

Significance of Study: The study provided insights into the different types of property taxes and how they are assessed to the taxpayers.

Keywords: Property tax, Property rates, Value Added Tax Transfer duty, Capital Gains tax, tax on rental income, capital transfer tax, Botswana

30 The 19th AfRES Annual Conference EXAMINATION OF THE ROLE OF QUALITY MARKET RESEARCH IN COMMERCIAL REAL ESTATE INVESTMENT IN DEVELOPING COUNTRIES (CASE STUDY OF LAGOS, NIGERIA)

Nworah Joseph C. [email protected] PhD Student, University of Nigeria, Nsukka, Nigeria.

Abstract This study sought to evaluate the quality of market research conducted for commercial real estate investment in developing countries (case study of lagos Nigeria). The objectives of the research are to ascertain the level of application of market research in commercial real estate investment; determine the quality of market research where conducted; establish the factors inhibiting effective market research and to ascertain how market research affects the marketability and profitability of commercial real estate investments. It was hypothesized that there is no significant relationship between the quality of market research and real estate investment performance.

Pre-investment advisers/Estate Surveyors and Valuers were taken as the focus population of the study since they provide market research services in the course of undertaking investment appraisals for developers and real estate investors. The quality of market research was assessed by the extent to which they comply with set standards indicated in the literature and the result compared with empirical review of investment/development appraisal reports on twenty projects. From the study, 11.6% of the respondents indicated that the quality of market research conducted is below average, while a greater percentage (51.3%) indicated that the quality of market research conducted is good. However, the empirical review of investment/development reports prepared by investment advisers/Estate Surveyors and Valuers indicated that the quality of market research conducted is low.

The study also revealed that there is a weak but positive relationship between the quality of market research and real estate investment performance with a correlation coefficient of 0.240. the study

The 19th AfRES Annual Conference 31 recommended, amongst others, that a standard market research manual or standard pre-investment study manual stipulating the data content of market research should be provided by institutions/professionals in the built environment to ensure standardization and promotion of culture of quality in market research as well as avert loss of investors hard earned resources in our overall national interest.

Keywords: Commercial real estate, Market research, Real estate investment, Pre-investment studies, Developing countries.

32 The 19th AfRES Annual Conference DIRECT REAL ESTATE INVESTMENT GUIDELINES FOR INNER CITY URBAN REGENERATION: CASE OF JOHANNESBURG

Prisca Simbanegavi, Michael Kodinye, Thobeka Mbhele, and Thokozani Msimanga Contact Author: [email protected] University Of Witwatersrand, South Africa

Abstract Purpose of this paper Most countries have grappled with ‘urban decay’ as a problem especially in African cities. The paper aims to find a better approach to reversing this phenomenon so as to promote and safeguard future direct real estate investments into inner cities as they have proved to give yields much comparable to affluent areas.

Design/methodology/approach This paper used data collected from qualitative research design, 18 semi structured interviews carried out in 2018 and supplemented by document analysis. Thematic analysis brought out plausible strategic investment themes through which urban regeneration can be promoted in the decayed inner cities. The limitation of the study is that only the case of Johannesburg inner city was covered in the study

Findings The main finding is that investments in urban regeneration is fraught with stigma that to some extent is justifiable due to high corruption levels in the execution of such projects. However, returns on current inner-city investments are not too depressed compared to affluent neighbourhoods. The paper recommends that the best approach towards progressive urban regeneration is for developers to work with government and the communities that live within inner cities. This will stop the reoccurrence of urban decay. The paper put forward guidelines that can be adapted and applied to solicit further investments into the inner city.

Value of paper Direct real estate investment guidelines suggested in this paper are plausible in encouraging investors to participate more in urban regeneration. Keywords: Inner City renewal, investment preferences, urban decay

The 19th AfRES Annual Conference 33

LAND TENURE SYSTEMS AND AGRICULTURAL PRODUCTIVITY IN GOMBE NIGERIA

Daniel Ibrahim Dabara1 Omotoso Kabir Lawal2 Olusegun Joseph Omotehinshe3 Augustina Chiwuzie4 John Oyekunle Soladoye5 1Department of Estate Management, Federal Polytechnic Ede, Nigeria, [email protected] 2Department of Architectural Technology, Federal Polytechnic Ede, Nigeria [email protected], 3Department of Building Technology, Federal Polytechnic Ede, Nigeria, [email protected] 4Department of Estate Management Federal Polytechnic Ede, Nigeria, [email protected] 5Department of Estate Management, Federal Polytechnic Offa, Nigeria

Abstract The purpose of this study is to examine the existing land tenure systems in Gombe state Nigeria with a view to determining its impact on agricultural productivity in the study area. Land tenure system is concerned with man’s relationship with land, involving intervention in the prevailing pattern of land ownership, control and usage in order to change the structure of holdings, improve land productivity and broaden the distribution of benefits to all. Nigeria is an agrarian nation with over 56.8% of her working force engaged in farming. Agricultural development and productivity has the advantage of provision of more employment and a better base for farm financed welfare in the economy.

The targeted population for the study comprised of 7,832 households in purposively selected agrarian settlements cutting across the 3 senatorial districts in Gombe state Nigeria. The population was stratified into three zones along the senatorial districts and two locations were selected purposively from this stratification. From Gombe south, Tula and Billiri were selected; from Gombe North Dukku and Kwami were selected and from Gombe central Akko and Yamaltu Deba were selected. The sample size for the study comprised of 500 households in each of the study locations. Hence, 500 questionnaires were administered on the household heads of the 6 study locations making a total of 3,000 questionnaires (representing 38.3% of the targeted population). However only 2,223 (74.1%) questionnaires were correctly filled and returned for analysis. The random sampling technique was adopted in the questionnaire administration.

36 The 19th AfRES Annual Conference Descriptive statistical tools such as frequency counts, averages, weighted mean and percentages were used in analyzing the data obtained. The Relative Importance Index (RII) was used to identify and rank the variables. Inferential statistical tool such as multiple regressions were also used in analyzing the relationship between the criterion or dependent variable (land tenure systems) and the predictors or independent variables (agricultural productivity of the selected crops in the selected locations).

The study revealed that customary land tenure system is the predominant type of tenure system (60.1%) practiced in the study area. Similarly, agricultural productivity in the study area was shown to be impeded by land tenure insecurity (RII, 0.933963), political/bureaucratic bottlenecks in land rights acquisition for agricultural purposes (0.846154) and tenure rules such as stipulated in the Nigerian Land Use Act of 1978 (RII, 0.65596) among others. The study also showed a strong positive relationship of 0.809 between land tenure systems and agricultural productivity in the study area. The study concluded that for better agricultural productivity in the study area in particular and similar developing economies in general, farmers need to have secured land tenure as this encourages investments in the secured land which consequently improves agricultural productivity.

Keywords: Agrarian, land tenure, land reform, tenure security.

The 19th AfRES Annual Conference 37 LAND RIGHTS GOVERNANCE IN PRESENT DAY AFRICA AND IT'S EVOLUTION

Stephen Drani3 Email: [email protected]

Abstract Most of the Land in Africa is owned under the customary land tenure system with the various traditional leaders as custodians of these huge chunks of land on which subjects have and hold land rights.

As traditional leaders, it is our duty to see to it that the land rights of our subjects are fully attained in an equitable manner that would then spur on economic growth and development in the different parts of Africa whilst also ensuring environmental protection and sustainable and eco-friendly development. In this regard, we the traditional leaders in Africa stand together with our various heads of state in reaffirming the commitments made by the heads of state of the African Union in July 2009 to eradication of poverty and raise the living standards for all African people and in particular specific commitments under the declaration on land issues and challenges in Africa which calls for the use of Frameworks and guidelines on land policy in Africa.

To this end specifically in Adjumani District of Uganda, we have embarked on a huge drive towards land rights registration for customary land rights owners to ensure that they receive a certificate of customary ownership thus offering protection and enabling business with these certificates of customary ownership as security in any future financial transactions with monetary institutions. This will also minimise the potential negative impacts of large scale land acquisitions, land dispossession and environmental degradation whilst enabling us to archive equitable and sustainable agricultural development and economic transformation that will ensure water security, food security and protection of our forests and ecosystems.

However, during the course of making these much needed changes, we have encountered many legislative huddles in the design of current

3 HRH Drani Stephen Izakare is a Spokesperson for the Forum for African Traditional leaders Authority in Uganda

38 The 19th AfRES Annual Conference legislation which is mostly colonial by design and does not favour the African dream and also a policy issues that would bring the traditional institutions at loggerheads with the local government structures.

There is need to ensure that the activities of the traditional institutions are lawfully embedded in the national constitutions and that traditional leaders receive the ideological recalibration to lead for the African dream.

The 19th AfRES Annual Conference 39 LAND ADMINISTRATION AND MANAGEMENT UNDER THE DEVOLVED GOVERNMENT IN KENYA. CASE OF KIAMBU AND MACHAKOS COUNTY

Dr. Catherine W. Gateri1 and Evans Omagwa2 1Department of Construction and Real Estate, Kenyatta University. Corresponding Email: [email protected]. 2Ministry of Lands and Physical Planning, Kenya.

Since the period when Kenya was under colonial rule, land issues have remained emotive, contentious and an obstacle to social cohesion and economic growth. Kenya Vision 2030 therefore recommended the development of a national land policy that would provide an overarching framework for land administration in the country. In December 2009 the ninth Parliament approved Sessional Paper No. 3 of 2009 on National Land Policy. In 2013, the government formed a National Land Commission to act as the lead agency in land the management of public land which had perennially been abused through grabbing by successive regimes, to work with the Ministry of Lands, Housing and Urban Development (MLHUD) and county-level institutions including other relevant authorities. To further address land issues, the 2010 Constitution and the 2012 Land Acts produced an institutional restructuring that was designed to touch directly on land rights and land administration. This was aimed at separation of powers at the pinnacle of the national political system to extinguish the president's arbitrary authority to allocate land while placing oversight and regulatory authority in the hands of a non-partisan, transparent, and law-governed National Land Commission (NLC). However despite the noble intentions of the 2010 C0nstitution the land governance function has been dogged by many problems mainly misinterpretation of functions and conflicts between various arms of government. Using two case studies of Kiambu and Machakos County, this research looks at the interplay involved in land administration and management in the devolved system. The case underscores the extent to which use of the new laws was shaped by existing institutional players who sought to thwart their reformist thrust as well as by newly-empowered institutional actors who sought to harness their reformist potential.

Key Words: Land, Administration, Management, Devolved System.

40 The 19th AfRES Annual Conference CHALLENGES OF MAKING LAND AVAILABLE FOR LARGE- SCALE INVESTMENT IN COMMERCIAL AGRICULTURE IN TANZANIA: THE CASE OF MISSENYI DISTRICT

J.M. Lusugga Kironde Professor, Ardhi University, Tanzania [email protected] Abstract There has been an outcry that the trend to acquire large parcels of land in Africa for commercial investment purposes, especially in agriculture, is leading to unwanted results which include loss of various property rights by indigenous populations, land conflicts, environmental degradation, loss of biodiversity, and reduced food self-sufficiency. This particularly negatively affects vulnerable groups including pastoralists, hunters and gatherers, and women and children. On their part however, governments, including that of Tanzania, believe that there is a lot of unutilized or underutilized land to attract large-scale investors; the envisaged benefits including technological transfer, employment creation, rural infrastructure development, self sufficiency in food, export promotion, and so on. In order to support investment, Tanzania established the Tanzania Investment Centre (TIC) in 1997 and among its duties is: to identify investment sites, estates or land, for the purposes of investors and investment in general. To smoothen investment in land, the government has been making efforts to create a land bank for investors, but with little success, except in limited cases of creating Economic Processing Zones; since the earmarked land either belongs to villages, is reserved land, or is land being used as a common resource. Numerous, and sometimes deadly, conflicts over land in Tanzania, involving communities, communities and public authorities and communities against investors, point to a scarcity of land, vis á vis the growing population and available land becoming less and less in both quantity and quality. An innovative approach to use the land for equity in agricultural enterprises has also not made headway and the investor who tried that approach has recently wound up business. Contract farming, especially in the sugarcane and orchard industry has also come under criticism; although the approach by way of value chain addition has realized some positive results in the Southern Agricultural Corridor of Tanzania (SAGCOT) areas.

A study, supported by Sida, was carried out recently in the Missenyi District, North-western Tanzania, the objective of which was to evaluate the

The 19th AfRES Annual Conference 41 challenges of making large swathes of land available for investors especially in agriculture. The District was thought to have around 100,000 hectares suitable for large-scale investment, investment which, moreover, could be supported by the perennial river, Kagera, in terms of irrigation. A crucial conceptual question was whether the nuances of customary tenure such as rweya (common resources land for grazing, seasonal cultivation and harvesting of natural products) and bishanga (wetlands associated with water bodies), are taken into consideration when thinking of land as being undeveloped or marginal, and therefore available for investors.

The study was based on an extensive study of official and non-official documents at national, regional and district levels; interviews with officials, politicians and actual and potential investors; focused group discussions with villagers and local officials, fieldwork using a questionnaire administered to villagers, and participant observation in 3 villages with a potential for land availability. Aerial photographs were also relied upon to estimate existing land uses. A stakeholders’ workshop was held to deliberate a number of issues including the definition of an investor and the availability of land for investment.

The District, which borders the neighbouring countries of Uganda and Rwanda, has an area of 270,000 hectares, and a population (almost evenly divided between men and women) of 202,632 in 35,699 households. Administratively the District has 255 hamlets, 77 villages, 20 wards and 2 Divisions.

It was established that although there is a feeling nationally and regionally that this district has a lot of undeveloped land, facts point to a different direction. Of the 270,000 ha of the District, 90,000 ha is densely occupied by villages, 32,000 ha is a nature reserve, 20,000 ha is a large sugar plantation, which is surreptitiously expanding by an estimated 1500 ha pa; and 60,000 ha is a national ranch established in the 1960s. Due to land pressure, the latter has been, in part, allocated to villagers; and a larger part has been divided into ranching blocks and given to potential investors who have, instead of investing in livestock, turned to renting out the blocks to local and foreign migrant livestock keepers. Numerous conflicts, resulting into loss of life, have been recorded in recent years over ownership and use of this land.

42 The 19th AfRES Annual Conference The rest of the land is used as a common resource (rweya) or as wetlands (bishanga). District data however, does not refer to these nuances of customary tenure, and already there is serious encroachment on rweya land, leading to constrained space for livestock, and, therefore to conflicts between farmers and herders. The encroachment on wetlands, to mainly grow rice which has been introduced in the district by an influx of people from rice growing regions in the country, is a sure harbinger of future serious water shortage.

The District has recently experienced huge population immigration from other parts of the country and from neighbouring countries, lured by the apparently abundance of undeveloped land, which latter has been put to sugarcane growing in outgrower arrangements, rice growing and the growing of trees as an investment. Some of these incoming populations have been welcomed by village authorities. This has led to encroachment on wetlands, and the privitizing of common lands (rweya) resulting into conflicts which have witnessed loss of property and limb and life.

Land prices are relatively low, ranging from USD 100 to USD 200 an acre, and buyers have included individuals, corporate bodies, religious organizations and NGOs. There is displacement of the rural population, especially the youth. Those who sell their land migrate to urban areas, and turn to trade and commerce, including operating motorcycle public transport.

The shrinking of rweya land is also contributed to by growing urbanization which has seen small trade centers turning into townships, and townships turning into towns, eating into agricultural and communal land.

The District is under pressure to set aside land for investors in both agriculture and industries. Seven separate areas of land parcels, with a total of 2228 acres (2013 ha), ranging from 20 to 1988 acres have been identified. None of these however, is earmarked for agriculture. The lots were identified for use as follows: 1 for an International Agricultural Produce market; 2 for Export Processing Zones (EPZ); and 4 for industrial establishments. This land, though, is neither surveyed, not acquired by way of paying compensation. In other words, it is not in public hands.

The conclusion from the study is that there is no land for large-scale investors in the District, though small-scale ones (utilizing 100 ha or less)

The 19th AfRES Annual Conference 43 can be accommodated; and these could be locals-turned-investors, who can negotiate with village authorities for arrangements to put land to efficient production. It was possible to get thousands of acres of land for large-scale investors in the past, as the population of both people and livestock was low. This is no longer possible without seriously reducing communal land, wetlands or conservation land, and this is possibly the case throughout the country. It is therefore futile to think in terms of creating a land bank, a quest which has remained elusive for the past 20 years at national level, with at least three authorities: the Ministry for Lands, the Tanzania Investment Centre and the Ministry for Local Government, tossing the ball between themselves, as to who is responsible for having a land bank for investors in place. A new approach needs to be embraced.

Given pressure on land, there are demands that land that was allocated to large investors in the past, such as Kagera Sugar be reduced, though the investor has a title to land and is utilizing it well. There are also demands that investors who were allocated ranch land, and are not performing, should have their allocation revoked and land given to serious investors, or villagers; although there are major hurdles to implement this feat.

A major recommendation is that, rather than think in terms of a land bank, and of investors from afar, there is need to strengthen individual and communal tenure rights in the villages, and to encourage the working of land markets, including land rentals. Renting of land for short periods is taking place in some villages although at a relatively small scale. This calls for comprehensive village land use planning and titling, since only 4 out of 77 villages have village land use plans and only 600 Certificates for a Customary right of Occupancy have been given out.

Enabling land markets could see existing land lots being utilized more efficiently, with small and medium sized investors adopting modern farming methods, including utilizing disease and bad-weather resistant seeds, leading to higher productivity and to less pressure for lateral expansion into common and environmentally sensitive land.

44 The 19th AfRES Annual Conference LAND DISPOSSESSIONS AND WATER APPROPRIATIONS: POLITICAL ECOLOGY OF LAND AND WATER

Grabs in Ghana 1 2 3 4 E.D. Kuusaana ; E.A. Adams ; B.B Campion and A. Ahmed

[email protected] 1. Department of Real Estate and Land Management, University for Development Studies, UDS-Wa, Ghana 2. The Global Studies Institute, Department of Geosciences, Georgia State University 3. Faculty of Renewable Natural Resources, KNUST-Kumasi, Ghana 4. Trier University, Germany

Abstract Recent land grabs in Sub-Saharan Africa are influenced by not only land availability but also access to water resources beyond seasonal rains. However, much of literature decouples land grabs from water resource appropriations, treating the two as separate phenomena. This paper examines the complex interplay of land grabs and water appropriations in large-scale plantation agriculture in Ghana. Using mixed methods (actor interviews, focus groups, and smallholder farmer surveys), three case studies, and theoretical insights from political ecology and the hydro- social cycle, it explores the local conditions, actor interests, motivations and power relations; decision making; and institutional lapses that enable water appropriations to go in tandem with land grabs.

The results show that although land and water grabs were intricately intertwined, negotiations rarely addressed water use rights. Investors were motivated by the notion of abundant, unused water, and they carefully negotiated access to water, including offering social benefits to communities in exchange for unrestrictive water use. Traditional leaders were mostly oblivious to national legislation and institutional arrangements for land and water use and sometimes unknowingly sanctioned unlimited water appropriations by investors. Farmers were more concerned about land dispossessions than water appropriations, and their concerns on investor water use centred more on water quality decline from agrochemicals, not water-rights abuse. The paper ultimately bridges the land and water grabs literature by exposing often- overlooked forms of water appropriations enabled by land grabs and highlighting potential

The 19th AfRES Annual Conference 45 hydro-social ramifications of water grabs from climate-induced drought in the savannah belt of Ghana.

Keywords: land grabs, water grabs, water rights, political ecology, Ghana

46 The 19th AfRES Annual Conference THE URBAN LAND NEXUS: CHALLENGES AND OPPORTUNITIES OF REGULARISING INFORMAL SETTLEMENTS: THE CASE STUDIES OF DAR ES SALAAM AND MWANZA IN TANZANIA

Alphonce G. Kyessi1, Fredrick B. Magina2, Wilbard J. Kombe31 Email: [email protected] 1 Associate Research Professor, Institute of Human Settlements Studies, Ardhi University, Dar es Salaam 2 Lecturer, Department of Urban and Regional Planning, School of Spatial Planning and Social Sciences, Ardhi University, Dar es Salaam. 13Professor, Institute of Human Settlements Studies, Ardhi University, Dar es Salaam

Abstract Informal or unplanned settlements in Tanzania accommodate more than 70% of the urban population. Using qualitative data from case studies from the two cities, this paper explores why and how the regularisation process was carried out and the land use planning, land values and tenure issues that emerged after regularisation. Findings indicate that the regularisation process has generated several opportunities that have accrued including issuance of residential licenses and title deeds, increased land value and security of tenure. However, there are also challenges undermining the regularisation programme.

Among the challenges that require policy action include over-emphasis on protection of private rights at the cost of undermining public interests on land, lack of harmonized cost of regularisation, prolonged delays in completing the process of regularisation, generalization of regularisation regardless of contextual factors and most importantly slow uptake of the title deeds. The study concludes that land regularisation remains an important tool to enhance livable cities and protect long term public and private interests in land development. However, a number of policy actions are required. These include the need to emphasize and protect public interests in regularization, harmonization of costs by providing indicative costs of regularisation based on plot sizes and public awareness creation on the importance of title deeds beyond tenure security.

Key words: Informal settlements, regularisation, tenure security, Tanzania

The 19th AfRES Annual Conference 47 TRANSFORMING COMPULSORY PURCHASE AND COMPENSATION INSTITUTIONS IN TANZANIA

Martin Mpandikizi PhD Student, Double Degree Program, Ardhi University Tanzania and Royal Institute of Technology Swdern [email protected]

Abstract Conventional institutions governing compulsory purchase and compensation are probably the main cause of objections to land acquisition exercises. These were made, not from a contracting process (Libecap, 1989); rather they were and are still an imposition from higher levels of government. Institutions are the framework within which human interaction takes place (North, 1990). This study looks from different angles, actual losses that pastoral and agro-pastoral communities suffer as a result of compulsory land acquisition with a view to identifying institutional deficiencies, if any, which might be a source of proliferation of objections as regards compulsory land acquisitions. Existing institutional arrangements are rigid and tailored in such a way that compensation paid to the affected person in rural settings can never be full.

Land legislation has identified items that out to be compensated for during compulsory purchase (Ndjovu, 2003), and any deviation from them might turn out to be an offense punishable by the law because even minor departures can be interpreted as corruption. Hands of the valuers are therefore tied and they are forced to act on the basis of business-as-usual, so to say.

The area of focus is the acquisition of pastoral lands for designation and/or expansion of reserve areas. The issue is, pastoral and agro pastoral communities are rarely adequately compensated when their land is acquired or rights to land are interfered with, especially communal rights. Therefore, the principle that compensation must be full, fair and prompt leaves a lot to be desired as far as Tanzania is concerned. The fullness being advocated for could only be true, if and only if, all losses suffered were compensated for.

48 The 19th AfRES Annual Conference FADING CUSTOMARY PRACTICES IN AFRICA – OPPORTUNITY FOR ENHANCING ACCESS TO LAND FOR WOMEN IN TANZANIA

Agnes Mwasumbi, PhD Lecturer at Ardhi University, Tanzania, Coordinator of the NELGA- Eastern African Node.

Abstract Debates on women rights to land in the Sub-Saharan Africa have focused on affirmative actions needed against norms and traditions that have discriminated women rights in land ownership. Studies in Tanzania indicate radical reforms made in land and mortgage laws that have guaranteed women’s access to land and benefits reaped therefrom. In practice, however, these rights have not been fully realized mostly in rural areas where traditions and customs are overtly discriminatory. Inheritance laws and customs and in some cases religion, discriminate women with widows being thrown out of their spouse land immediately upon demise of their husbands. Daughters are denied right to inherit family land and married women are discriminated from share benefits from their land in case of sale or compensation incidences. Although it is established that women are more active in rural land uses than men dominating between 60 and 70% of agricultural uses, mostly for production of food, only 20% of women owned land in their names in 2015.

Tanzania is a signatory to the international conventions on human rights such as the Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW), the Maputo Protocol and the 2014 Mulabo Declaration. Nevertheless, women’s rights to land have persistently been denied in rural areas. The key principal challenges that land administration faces in the Sub-Saharan Africa are not in the laws nor policies but in the complexity of access rights to land between men and women in the context of cultural and religious beliefs and enforcement of the laws and policies established.

The paper draws lessons from an investigation on the unfolding realities in men-women relations resulting from fast urbanizing Tanzania, characterized with inter-tribal marriages that diffuse customs, traditions, religion and the growing affluences amongst women. The key questions

The 19th AfRES Annual Conference 49 that paper seeks to raise and seek explanation is whether women land rights would be more secured with dilation of traditions and customs or their total rejection. It also seeks to evaluate experiences from countries that uphold traditional chieftainship like Ghana with a view of exploring potential transformations that are necessary in enforcing perceived women rights.

The paper urges authorities to develop an understanding of traditions and customs in their areas which are discriminatory to women’s land rights. These customs are those to do with land allocation and use, succession of family land and inheritance. It is posited that understanding such customs is not an easy task.

50 The 19th AfRES Annual Conference LAND ACQUISITION, COMPENSATION AND RESETTLEMENT IN KENYA: EMERGING CHALLENGES

Luke M. Obala, PhD [email protected] Department of Real Estate and Construction Management University of Nairobi Abstract Kenya like many countries in the region is implementing several large infrastructure and agricultural related projects. Yet the country has limited public land and thus must acquire the same from private owners for the implementation of the projects. Interestingly, most the projects are donor funded – and as such, the donors and external funders seek adoption of processes and procedures a lien to the Kenyan practice in land acquisition. At the same local agencies involved in project implementation find the processes of land compensation especially valuation as lacking in transparency and are non-responsive to human rights dictates. Besides, the country has in the recent past witnessed serious controversies over valuation figures for Land acquisition further raising pointing possible under deals – conflict of interest and corruption. This is further complicated by the fact that existing laws seem to contradict each other. Data obtained from discussions at the Training workshop on Preparation of Resettlement Action Plans in June, 2019 explains the challenges of land acquisition, compensation and resettlement in Kenya. The data highlights the gaps between practice and law on the one hand and on the other between local and so called best practice. This paper will thus draw a parallel between global practice fronted by international development agencies such as the World Bank, International Monetary Fund and African Development Bank among others. In the process the paper, will further delve in the area of capacity building and skills gap in land acquisition and resettlement in the country and region. In addition, will highlight the development of the laws related to compulsory land acquisition, thus highlight the gaps. In the end, the paper will draw conclusion on the link between existing laws, local and global valuation practice especially with respect to compulsory land purchase and/or acquisition.

Key words: Kenya, Land, Acquisition, Valuation and Compensation

The 19th AfRES Annual Conference 51 INTERGENERATIONAL COMPENSATION OF INDIGENOUS LAND-OWNING FAMILY AS A STRATEGY TO CURB CHALLENGES OF INADEQUATE COMPENSATION IN LAND ACQUISITION PROCESS: PERSPECTIVES FROM LAGOS, NIGERIA

Olawale OJIKUTU1, Daramola Thompson OLAPADE*2 and Bioye Tajudeen ALUKO2 1 Bureau of Lands, Ikeja, Lagos 2 Department of Estate Management, Obafemi Awolowo University, Ile-Ife *Corresponding Author: [email protected] Abstract Land in the traditional African society is owned in collectivism and does belong to individuals but the entire family which comprises the living, the reverend souls of the ancestors and the generations yet unborn. Meanwhile when land are acquired compulsorily by government or through the market by private firms, only few family members enjoys the compensation proceed. The under-aged family members and the yet unborn generations are usually left out from the compensation proceed from the family heritage (land). This has resulted in protracted litigations to reclaim lost heritage by the then under-aged family members and the “yet unborn” generation. It has also resulted into violence land conflicts and the principal cause of the omo onile phenomenon.

This paper examines the prospect of using intergenerational compensation as a strategy for compensation in land acquisition process. Utilising a qualitative approach, the paper examines the view of heads of fifteen (15) selected indigenous land holding families in Lagos and key informants in the Lands Bureau of Lagos State on the concept of intergenerational compensation. The findings of the study will provide information on the willingness of both the indigenous land holding families and government officials to accept the alternative compensation strategy. It will also provide information capable of resolving the problems in land acquisition from indigenous land owning families and offers an alternative policy direction for land acquisition in Nigeria.

Keywords: land acquisition, compensation, land delivery institutions, land conflict, omo onile

52 The 19th AfRES Annual Conference EMERGING ISSUES CONCERNING COMPULSORY LAND ACQUISITION IN KENYA- LAND GOVERNANCE OR POLITICS?

Washington H. A. Olima Email:[email protected] Department of Real Estate & Construction Management, University of Nairobi, Kenya,

Abstract Land is the most important natural resource in Kenya. It is highly emotive and valued as its importance hinges greatly on socio-economic as well as political considerations.

As a developing country. Kenya requires fast space quality infrastructure development. Over the last decade, the Government of Kenya has substantially increased its focus towards infrastructure development in order to achieve economic growth and transformation. These developments require land which are in private hands, hence forcing the government to undertake compulsory land acquisition for the intended “public purpose". In Kenya legal instruments namely Kenya Constitution 2010 and Land Act of 2012 exist for the purposes of expropriation of land.

However, land acquisition has always been a delicate issue and is increasingly becoming more complex today despite the existence of the National Land Commission which has got express and constitutional mandate to undertake compulsory land acquisitions on behalf of government agencies. The Kenya populace continue to be intrigued by the emerging issues surrounding the process of land expropriation including disagreements over amounts due for compensation, inappropriate compensation of landowners, political interference and numerous litigations that ultimately result into delayed implementation of infrastructural development. This raises the question- Are the emerging issues concerning land acquisition in Kenya hinge on land governance framework or politics?

Focusing on selected development project in Kenya, this paper will briefly trace the origin of land acquisition practice, highlights the current emerging

The 19th AfRES Annual Conference 53 issues, and possible impact on impl ementation process of infrastructure projects.

Keywords: Compulsory, land, acquisition, governance,

54 The 19th AfRES Annual Conference CHALLENGING INSTITUTIONAL FRAMEWORKS IN LAND ADMINISTRATION: MANY INSTITUTIONS, BUT LESS PROPERTY RIGHTS

Turimubumwe Prosper [email protected] PhD student (Land Policy and Governance), Bahir Dar University, Institute of Land administration Abstract Land administration as one of the mechanisms of availing property rights to owners cannot be achieved unless there is a well-functioning and coordinated institutional framework. Institutions are there to provide legal framework, technical, human and financial support to make land and other land related properties administration work in success. The number and nature of these institutional frameworks may or may not matter, but achieved property rights to individuals or group of property owners are important. This paper will document on the existing institutional framework dealing with land and other land related properties rights; and find out the existing situation of property rights in Burundi.

Methodologically, this paper will apply a mixed research method design to capture qualitative and quantitative data with exploratory case study approaches. A desk review of different government reports, academic and professional papers and books will be consulted. Also, structured and semi- structured interview tools will be used to collect primary data on property rights situation in Burundi. Therefore, it is envisaged that 120 respondents will participate in this paper formed by officials in land departments, local leaders, investors in land and individual property owners to find out the existing property rights situation. Nonprobability with snowball sampling method will be applied to identify these 120 respondents (40 for semi-structured interview and 80 for structure interview).

It is planned that descriptive analysis and inferential statistics will be used in data analysis by applying SPSS software. Critical examination of respondents’ personal perceptions about property rights will be qualitatively analysed and some direct quotations freshly recorded from the field provided. Findings will be presented in text form, tables and charts, well numbered and titled. Finally, the paper will provide some recommendations and areas of further research will be highlighted.

Keywords: Land administration, Institutional framework, property rights, Burundi

The 19th AfRES Annual Conference 55 CUSTOMARY LAND TENURE RULES IN TRANSITION: IMPLICATION TO WOMEN RIGHTS IN MATRILINEAL SOCIETIES IN TANZANIA

Jenesta Urassa Contact: [email protected] PhD Student, Double Degree Program, Ardhi University Tanzania and Royal Institute of Technology Swdern Abstract Customary land tenure is the landholding system which is guided by customs and traditions of indigenous communities. Customary laws are unwritten, but draw their legitimacy from customary laws varying from one society to another. In rural areas of Tanzania, 80% of the population depend on customary tenure. Women constitutes a large number of resource users. In the country most of societies (80%) operates under the patrilineal system and few (20%) under the matrilineal system particularly the Eastern ethnic groups (Zaramo, Luguru, Kaguru and Ngulu) and Southern Eastern tribes particularly Makonde, Yao, Makua, Mwera, Machinga and Matumbi. The matrilineal system is a clan based social organization system that traces descent through the female line where individuals belong to the same descent group as their mothers. Under customary land tenure, women hold lower position, they have anly use rights and lack control or decision making. Women in matrilineal society have more tenure rights because they get communal rights in the name of their matriarchy.

Customary land tenure has evolved since colonialism. In reviving the traditional tenure system, major interventions such as Arusha Declaration, Ujamaa village programme and sector reforms in 1990’s have been adopted by the post-colonial government. The major changes which are taking place in the country such as increase population, urbanization, integration in monetary economy and HIV/AIDS has implication to customary land tenure. The Waluguru of Morogoro rural district were studied in 2017 and 2018 through mix method approach. The study found changes in relation to customary land tenure rules including ownership, control, transfer and land use patterns. Along these processes of changes, women were found to lose their tenure rights. The findings of this study call of government intervention to protect women’s land rights in the current customary land tenure system.

Key words: Customary, Matrilineal, Waluguru, Tanzania

56 The 19th AfRES Annual Conference

EMERGING ISSUES OF CORRUPTION IN CONSTRUCTION PROJECTS AND FACILITY DEVELOPMENT IN NIGERIA – AN EMPIRICAL APPROACH

Adindu, C. C; bYusuf, S. O; cDiugwu, I. A; dMusa, A. M Corresponding Author: [email protected]. a,b,c,dDepartment of Project Management Technology, Federal University of Technology Minna, Niger State, Nigeria.

Abstract Corruption is a major problem that ravages many construction and facility development projects in Africa. In Nigeria, this social menace has seriously crept into the activities of the construction industry and is currently affecting the quality of project performance negatively. Some of the effects of corruption in project and facility management include but not limited to project delay, project abandonment, poor service delivery, unprecedented high cost of project execution, reduction in quantity and quality of infrastructural facilities, wastage of tax payer’s money, poor image of the industry among several others. This paper identifies the sources of corruption, likelihood of their occurrence in contract activities, construction contract methods and contractor selection modes more prone to corruption, and their severity of impact on project performance. The study also suggests ways to curb the current preponderance of corruption in construction project and facility management in Nigeria. The methodology of study involved descriptive survey and the research design was by a structured questionnaire administered to a study population involving construction industry client organizations, consultants and contractors. The study revealed that corruption characterize many activities of the Nigerian construction industry. The study concludes that contract bribery and project fund embezzlement were most prevalent and also impacted most severely on construction project performance in Nigeria. The study recommends institutionalizing the culture of transparency, good practice, ethical conduct and accountability at all phases of construction project and facility management in Nigeria.

Keywords: Construction, Corruption, Facilities, Management, Projects, Nigeria

58 The 19th AfRES Annual Conference FACTORS INFLUENCING THE CHOICE OF AUTOMATING SYSTEMS USED IN HIGH-RISE BUILDINGS IN LAGOS, NIGERIA

Cyril Ayodele Ajayi1 and Orayinka Stephen Awosode2 [email protected] & [email protected], Department of Estate Management, Obafemi Awolowo University, Ile-Ife, Nigeria

Abstract This study examined factors influencing the choice of automating systems in high-rise buildings in Lagos, Nigeria with a view to providing information that could enhance facility management practice. The study utilized primary data, which were collected via questionnaire administered on facility managers. Total enumeration of the identified 53 resident facility managers of high-rise buildings was carried out. Information collected included types of automating system used by facility managers, time of acquisition of automating systems used among others. Descriptive and inferential statistics such as frequency tables, mean ranking and factor analysis were used to analyse the result.

Findings revealed that Building Automating System (BAS), Building Maintenance System (BMS), Building Information Modeling (BIM) Computer Aided Facility Management (CAFM) and Computer Maintenance and Management System (CMMS) were commonly used by facility managers. However, CAFM is the most popular and most used automating system with 19.8 48.7% responses respectively. The choice of automating systems used by facility managers was significantly influenced by cost of acquisition, technical capability of personnel, organization strategy, availability of the system, organization need and ease of use with relative importance (RII) of 0.81, 0.78, 0.77, 0.75, 0.75, and 0.72 respectively, while the need to protect buildings against failure was considered as the most significant factor influencing the adoption of automation in the management of facilities in high-rise buildings with RII of 0.85.More so, principal factors of (nature and management styles of the organization, diffusion of information technology into facility management, nature and level of sophistication of the building and type of software used by facility managers) accounted for 31.1, 29.9, 24.6 and 8.7% of variance, respectively.

The 19th AfRES Annual Conference 59 The study concluded that cost of acquiring automating system is the most influencing factor when considering the choice of automation, while the need to protect buildings against failure was considered as the most significant factor influencing the adoption of automation.

Keywords: automation, automating system, facility management, high-rise buildings, resident facility managers.

60 The 19th AfRES Annual Conference PROMPT RESPONSE OF SERVICE PROVIDERS IN COMMERCIAL OFFICE BUILDINGS IN TANZANIA: IMPEDIMENTS AND MOTIVATIONS

Evodius Henerico School of Real Earth Sciences, Real Estate Studies, Business and Informatics (SERBI) Ardhi University, Tanzania [email protected]

Investment in real estate has been growing from time to time in the developing countries like Tanzania radiating from both capital and business cities like Dar es Salaam, Nairobi, Kampala and Kigali among others from Eastern Africa. Such development is accompanied by new invention in the building design, appearance, materials and services. Citing building services like mechanical, electrical and plumbing services (MEP) which includes elevation services are very complex. This calls for standard maintenance both regular and had hoc which in returns has necessitated the reliable service provision. The service provision to most of these services has experienced the blame of being late, ineffective and inefficient. To whom is the blame, whether the service provider, property management or owner is a dilemma to consumers and payers like tenants.

The study aimed at identifying the key impediments to prompt response in service provision and possible ways to motivate service providers towards prompt response in view of both property managers and service providers.

A total of 28 respondents were reached composing 10 service providers and 18 property managers in commercial properties in Dar es Salaam. Relative Importance Index (RII) and thematic analysis were used for analysis.

The results show that complains from occupiers are sometimes genuine whereas in other cases, they result from unawareness of maintenance and repairing procedures. Unavailability of spare parts locally for some systems, delayed payments and lack of strong technical team are among the key reasons for such late response. The presence of professional property management, early and easy payments arrangements to service providers added to the influence of the type of building ownership has emerged as key factors influencing the prompt responses.

The 19th AfRES Annual Conference 61 THE PROCUREMENT PRACTICES FOR REAL ESTATE SERVICES BY PUBLIC INSTITUTIONS: EMERGING ISSUES IN THE AFRICAN CONTINENT

Catherine Kariuki1, Nicky Nzioki2 UNIVERSITY OF NAIROBI [email protected]

Real Estate is an important resource in the delivery of public services and needs to be well managed. To enhance the quality of services provided public institutions are recently looking to the private sector and to technology to provide certain real estate services. This is in the hope of delivering better quality service and reducing costs. The paper will capture emerging issues in the African context through an exploratory study.

Outsourcing strategies have been adapted by many public institutions the world over. The main reasons for such decisions have been stated as the poor quality of services provided by in-house staff and the high cost of such a service. The advantages and disadvantages of outsourcing has been debated in many scholarly journals. Public procurement is regulated by legislation, in Kenya by the Public Procurement and Asset Disposal Act of 2015 and internationally by the United Nations Commission on International Trade UNCITRAL Model Law on Public Procurement. This is because public procurement must be transacted with other considerations in mind, other than the economy. These include accountability, non- discrimination and respect for international obligations. To improve the procurement process, institutions are also adapting e-procurement and green procurement.

The paper is exploratory and will look at best practices that exist and compare with the practices in a number of public institutions. It has been identified that public institutions procurement process is governed by a legal framework and the study will find out if the institutions adhere to this legal framework, in an effort to give value to their consumers and the suppliers. It will investigate the impact of the various laws, local and international.

Methodology: Data will be collected through the use of questionnaires and interviews. The questionnaires will be distributed to both users, the procurement departments and the suppliers.

62 The 19th AfRES Annual Conference The recommendations will be that these institutions will need to adhere to standards set through legislation. If need be that the existing legal framework and policies should be reviewed. This is to incorporate emerging issues in the African continent. It is also recommended that training may be considered for improved procurement services.

Key words: Procurement, public institutions, e-procurement, green procurement, training, legal framework

The 19th AfRES Annual Conference 63 FACTORS AFFECTING IMPLEMENTATION OF BUILDING INFORMATION MODELLING (BIM) FOR FACILITY MANAGEMENT (FM): PERSPECTIVES FROM LAGOS, NIGERIA

Daramola Thompson Olapade1, Funmilayo Moyinola Araloyin, and Bioye Tajudeen Aluko Department of Estate Management, Obafemi Awolowo University, Ile-Ife, Nigeria Email: [email protected]

Abstract Purpose – Against the background of low adoption of building information modelling (BIM) for facility management (FM), this paper aims to examine the factors affecting the implementation of building information modelling (BIM) for facility management (FM) among FM companies in Lagos, Nigeria. This was with a view of providing information that will enhance the adoption of BIM in FM practice.

Design/methodology/approach – Primary data were sourced through self- administered questionnaire on the 37 FM companies that are corporate members of International Facility Management Association in Lagos, Nigeria. Relative significance index were used for data analysis.

Findings – A total of 15 factors were identified as affecting the implementation of BIM for FM. Low level of awareness of BIM was ranked as the most significant factors with RSI of 0.93. The next three factors were lack of BIM education in higher institution (), lack of trained personnel in BIM (0.89), and low request for BIM by clients (0.82) while the least ranked factor was lack of enforcement of BIM by government (0.59).

Practical implications – The paper’s results will enable stakeholders to address the challenges of adopting BIM for FM in Lagos, Nigeria and similar developing countries thereby enhancing the application of BIM for FM.

Originality/value – The paper is a pioneer research on the awareness and utilisation of BIM for facilities management from the perspective of an emerging property market like Nigeria.

Keywords: Property, 6D modelling, Facilities, FM industry, BIM adoption

64 The 19th AfRES Annual Conference

REAL ESTATE EDUCATION IN INDIA – JOURNEY SO FAR AND THE ROADMAP AHEAD

*Dr. Ritika Bhatia Assistant Professor, RICS SBE Amity University, Noida [email protected] ** Reema Bali, Assistant Professor, RICS SBE Amity University, Noida.

Abstract There has always been a need of education in the area of Built Environment in India keeping in mind the unorganised manner in which the sector functions. However pioneering efforts have been made this direction with the setting up of the School of Built Environment by RICS in collaboration with Amity University. This school was established keeping in mind the ever growing demand for professionals in the built environment and the organisation of the sector which was the need of the hour. (Berry, 2007)

This paper describes the development of the detailed curriculum (Finch, 2003) in the program structure. (Worzala, 2004 ) At present the work force is primarily experience based and not professionally trained for the job. The school makes an attempt to bridge this gap with the help of executive education (Emerging Leaders Program).

The paper attempts to bring out the connection between academia and industry. The students passing out of the portals of this institution are not only professionally trained for their respective jobs but are also well versed with the quintessential need of ethics and standards required for this sector. It is at this juncture that our professional graduates become eligible for membership of RICS. (Schulte, 2001)

Keywords: Education, Curriculum, Program Structure, Professional Body, Built Environment.

66 The 19th AfRES Annual Conference BLOCKCHAIN AND ITS EFFECT IN THE REAL ESTATE INDUSTRY

Peter Lewis1 Jevans Otieno2 1Graduate Student, Real Estate University of Nairobi Kenya, [email protected] 2Graduate Student, Real Estate Jomo Kenyata University of Agriculture and Technology, Nairobi Kenya, [email protected]

Abstract Among the most prominent industries that have adopted the blockchain technology are real estate, insurance, loans, copyright, and the legal sector. This paper seeks to provide an industry overview for the real estate industry, including a brief introduction on the employment and potential for blockchain within the sector and a detailed list of those projects that are already being implemented. It examines how Blockchain smart contracts are revolutionizing the Real Estate sector through rental agreement, rental payment, buying real estate and open houses which is the access to property automized with a smart contract between seller and prospect.

Real estate sector has proven to have a potential in blockchain adoption. It provides for immense opportunities for new frontiers in the industry, due to the limitations and vulnerabilities that surrounds the outdated industry system especially from the use of smart contracts. While professionals in the industry are fully aware that blockchain is the future, progress has nonetheless been slow. There are still a number of obstacles impeding the widespread adoption of blockchain and smart contracts in real estate.

First, there is a reluctance by the third parties who have profited from the old and familiar model of real estate. These include agents, brokers and among others. Second is the issue of accessibility for all those involved. While blockchain and smart contracts bring efficiency, transparency, and security, the adoption of this technology by businesses has until now required hiring specialists with knowledge of a particular blockchain language.

The 19th AfRES Annual Conference 67 EVALUATION OF THE BACHELOR OF REAL ESTATE BUSINESS MANAGEMENT OF MAKERERE UNIVERSITY: A STAKEHOLDERS ANALYSIS

Rachael Mirembe PhD Student University of Cape Town [email protected]

Makerere University has endeavoured to equip graduates of the real estate programme with business knowledge and skills in real estate that meets the minimum requirements for employers in the related fields of real estate business since 2007. However, employers in several fields of real estate are complaining about the quality of the students. Therefore the study sought out to identify the subject courses that are relevant on the Bachelors of Real Estate Business Management of Makerere University and the skills and knowledge that the employers are looking out for in the real estate graduates using the stakeholder’s theory.

A mixed method approach was adopted for this study. Questionnaires were administered to the third year students and all former students that have graduated on the real estate programme since 2011 up to date (2019).This was to understand the relevance of the real estate curricula that they have undertaken and its usefulness out in the field and the gaps that exist so that improvements can be made. The researchers are now going to carry out interviews with stakeholders in the industry to understand the skills and knowledge that employers require of real estate graduates.

68 The 19th AfRES Annual Conference ETHICAL DILEMMAS ON REAL ESTATE CODE OF CONDUCT TO REAL ESTATE PRACTITIONERS IN DAR ES SALAAM

Lucky Mrema [email protected] School of Earth Sciences, Real Estate Studies, Business and Informatics (SERBI) Ardhi University, Tanzania

Abstract Being an enormous amount of money injected and a maximum expected return, the real estate business is largely controlled by real estate agents involved in marketing, negotiating and leasing properties. However, professional real estate managers are currently facing potential competing interests due to tighter competition between real estate agents, which prompts them to challenge their core value and obligations as real estate managers questioning between satisfying their customer needs or self- gratification.

This paper envisaged to unveil the ethical dilemma underlying the practices of real estate professionals. In order to achieve this widespread objective the paper adopted an extensive review of literature and conducted a survey to some areas in Dar es Salaam Such as Mlalakua. This paper presents a study of ethical dilemmas faced by real estate professionals in observing real estate code of conduct while meeting clients’ interests.

The study discovered, inter alia, that major ethical dilemmas facing realtors in Dar es Salaam include: failure to identify inadequacies in a property, but even when these inadequacies are identified most practitioners decide not to disclose, they resort to accepting overpriced listings as they are paid a percentage of the rent collected, provision of misleading rental information just to secure a tenant, and advising on leasing time and listing price.

With ethical culture being a benchmark for the essence of realtors, the study revealed that, if the code of conduct is willingly adhered to by real estate practitioners, the performance of each realtor will be increased and their ground for liability reduced. In order to deal with the dilemma, the paper recommended that all real estate practitioners must adhere to pre- determined code of conduct and ethical requirements which are already in place. The ethical benchmarks laid down by professional bodies such as Tanzania Institution of Valuers and Estate Agents (TIVEA).

The 19th AfRES Annual Conference 69 ASSESSMENT OF SUSTAINABLE REAL ESTATE TRAINING TRENDS IN THE EASTERN AFRICAN REGION

Nicky Nzioki1 Catherine Kariuki2 1Senior Lecturer Department of Real Estate and Construction Management University of Nairobi Nairobi Kenya Email: [email protected] 2Lecturer Department of Real Estate and Construction Management University of Nairobi Nairobi Kenya Email: [email protected]

Abstract Since 2000 training in real estate in the Eastern African Region has undergone significant changes with institutions of higher learning embarking on review of their existing curriculum to reflect the emerging trends and challenges in real estate investment. This paper will review the various efforts undertaken in Eastern African Institutions of Higher learning and Universities offering professional degree programmes and courses in sustainable real estate training.

This assessment will be guided by examining the global world trends in trainings in real estate courses and especially the focus of enhancing real estate knowledge and professional practice standards. The paper will highlight the professional standards promoted by various international real estate professional institutions in European, American and Canadian, British and commonwealth countries. The paper will also focus on the examination of the linkages between the sustainable training in real estate at higher institutions of learning and the concurrent desire to uphold professional standards in various real state practices and how the eastern African regional institutions can adopt the new trends in real estate training and capacity building for real estate investment. In conclusion this paper will show that embracing global real estate valuation standards and international benchmarking of sustainable training in real estate will significantly enhance the real estate investment potential in the economies of most of the East African countries

Keywords: Sustainable real estate training, real estate investment, professional standards, benchmarking, capacity building

70 The 19th AfRES Annual Conference

A CRITICAL REVIEW OF PROPERTY VALUATION FOR EXPROPRIATION IN ZIMBABWE Partson Paradza¹; Joseph Yacim² and Benita Zulch ³ 1Department of Construction Economics, Faculty of Engineering, Built Environment and Construction Economics, University of Pretoria, South Africa

Abstract Purpose: This paper aimed at contributing to the growing academic debate on property valuation for expropriation.

Approach/Design: The paper was based on document analysis or archival research approach. Statutes which formed the legal framework that guide property valuation for expropriation in Zimbabwe, was critically reviewed relative to World bank and Food and Agriculture Organisation guidelines, to unravel concordance and or conflicts among laws, so that limitations in the Zimbabwean laws could be remediated.

Results/Findings: This study established that the existing property valuation for expropriation in Zimbabwe followed the recommendations of World Bank and FAO. However, there are notable differences especially on estimation of replacement cost value, where depreciation is deducted contrary to World Bank and FAO specifications.

Practical Limitation: Though there is no empirical evidence, the study assumed that guidelines provided by World Bank and FAO can be considered as international best practice on property valuation for expropriation in Zimbabwe. Practical Implication: Results of this study is useful to the Zimbabwean Government as it was geared towards bringing a lasting solution to the unresolved decade long land compensation dispute.

Originality/Value of Work: Though many studies were done on property valuation for expropriation in many countries, none of the existing literature assessed legal provisions guiding property valuation for expropriation in Zimbabwe. This study seeks to bridge this gap and contribute to existing international debate on compulsory acquisition and compensation.

Keywords: Benchmarking, compulsory acquisition, fair compensation, expropriation policy, indemnity, legal framework.

72 The 19th AfRES Annual Conference VALUATION OF HERITAGE ASSETS: IMPLICATIONS FOR SOUTH AFRICA

Mashilo Pitjeng [email protected] MSc Student- Development of valuation methodology University of the Witwatersrand, South Africa

Abstract There is a growing recognition of the value, importance and impact of assets held for cultural, environmental or historical significance (heritage assets) on the financial statements of organizations and that the disclosure for financial reporting requires valuation information on the heritage assets. Currently in the absence of local standards, valuation practitioners (Valuers) in South Africa apply variety of methods and differing standards to determine the value of heritage assets. This opens a potential for a risk of an incomplete picture of the financial standing of an organisation. The purposes of this research is to argue that the current approaches and methods used in South Africa to value heritage assets are inherently flawed as a result subjectively and inconsistently apply the theory of value.

This research comparatively examines methods used in the valuation of heritage assets conducted in terms of the guidelines by the Royal Institute of Chartered Surveyors (RICS), Generally Recognized Accounting Practice - Heritage Assets (GRAP 103), International Valuation Standards - Valuation of Historic Property (IVS) and the International Financial Reporting Standards (IFRS) for the valuation of two cases of heritage assets. This is in order to assess reasonability of the methods and assumptions used in determining the asset values.

By researching the methods used for the valuation of heritage assets, emerging ideas became evident and the findings indicate certain specific characteristics impact directly on the determination of value and such characteristics can evidently be used in South Africa for the development of valuation standards for heritage asset.

The 19th AfRES Annual Conference 73 DETERMINATION OF RESIDENTIAL PROPERTY VALUE IN FLOOD RISK AREA

Siti Hafsah Zulkarnain1, 3Maki Tsujimura2, 1Muhamad Ali Yuzir3, 4Muhammad Najib Razali4, 4Zakri Tarmidi5 1Malaysia-Japan International Institute of Technology (MJIIT) Universiti Teknologi Malaysia (UTM) Email: [email protected] / [email protected] 2Centre of Studies of Estate Management, Faculty of Architecture, Planning and Surveying Universiti Teknologi MARA, Malaysia, Email: [email protected] 3Faculty of Life and Environmental Sciences, University of Tsukuba Japan Email: [email protected] 4Faculty of Built Environment and Surveying, University Teknologi Malaysia (UTM) Skudai, Johor Bahru, Malaysia, Email: [email protected] / [email protected]

Abstracts The arts and science in determining residential property value has evolved due to the changing in external factors such as economy, environmental and social. This research aims at developing a valuation model to determine the residential property value by taking into account the economic attributes that could effect the value for residential property in flood risk areas.

The case study covers all residential housing scheme at Langat River Basin area which has been considered at the highest flood risk area in Malaysia. The development of valuation model consists of the economic attributes such as flood, structural, locational and environmental attributes involved in residential property valuation in relations with flooding.

The Delphi Method used to identify the most significant attributes or criteria to obtain from high reliable consensus from experts using a questionnaire. This sought to discover the procedure of selection of experts, criteria of selection, development of questionnaire, analysis and results. The finding reveals that the Economic Valuation Models response to floods for a residential property using the linear regression and integrated with Eviews software.

Keywords: Floods, Malaysia, Residential, Risk, Valuation Model, Value

74 The 19th AfRES Annual Conference BIG DATA ACCESSIBILITY MEASURES AND URBAN LAND VALUATION

Steven C. Bourassa1 Martin Hoesli2 Louis Merlin3 John Renne4 1School of Urban and Regional Planning, Florida Atlantic University, USA, [email protected] (contact author), 2Geneva School of Economics and Management and Swiss Finance Institute, University of Geneva, Switzerland, [email protected]; School of Business, University of Aberdeen, UK; and Kedge Business School, France, 3School of Urban and Regional Planning, Florida Atlantic University, USA, [email protected], 4School of Urban and Regional Planning, Florida Atlantic University, USA, [email protected]

Abstract Big data applications are attracting increasing interest on the part of urban researchers. One such application is the use of accessibility indexes based on travel data aggregated from personal devices, such as cell phones, in hedonic price models. This paper evaluates the benefits of using big data employment accessibility indexes in the context of urban property valuation. The study compares big data indexes with traditional measures of accessibility based on straight-line distances to key locations and indexes derived from regional travel demand models used by local transportation planning agencies. Controls for geographic submarkets is also used as a means for measuring the value of location. Using residential property transactions from the Miami, Florida, metropolitan area, the study concludes that the traditional straight-line distances and especially the geographic submarkets perform better than the big data and travel demand model measures.

Keywords: Big data, travel demand models, accessibility indexes, hedonic models, property valuation

The 19th AfRES Annual Conference 75 ANALYSES OF FARMLAND COMPENSATION VALUATION METHODS IN GHANA

Danso Abena Tweneboah Ghana Institution of Surveyors [email protected]

Subjectivity in compensation values calls for a standardised approach to ensure that the expropriated are not worse off status quo ante. The main aim of the research is to investigate and compare the effectiveness of the cost and investment methods for farmlands compulsorily acquired by the government or an acquiring authority. Structured questionnaires were administered to valuers who have been involved in the valuation of farmlands.

The findings revealed that the cost method, which is the statutory mandated method of valuation to use for compulsory acquisition, generally leads to under – assessment to beneficiary land owners and farmers (interest holders). Although the method is comparatively simple to use, the possible future accruals and benefits of the crops on the land are seemingly ignored in value determination. This method may not be the best for fair and adequate estimation for farmlands values. Some valuers are of the opinion that the investment method has its own inherent setbacks, ranging from the lack of consistent data to its perceived “complicated’ nature.

The research concludes that the investment method takes into consideration many more variables in addition to the land value per se than the cost method. Valuation is described as an ‘art and sceince’ that depends on the competency and diligence of the valuer. It is recommended that, if the subjectivity of valuation values is minimized, then valuers must be encouraged to update their competency through continuing professional development.

Keywords: Valuation, Farmlands, Compensation, Ghana.

76 The 19th AfRES Annual Conference EMPIRICAL CONCEPTUALISATION OF RESIDENTIAL RENTAL VALUES IN GHANA – UNDERSTANDING LOCATION AND NEIGHBOURHOOD EFFECTS

Emmanuel Kofi GAVU Faculty of Spatial Planning, TU Dortmund University, Dortmund, Germany and Department of Land Economy, KNUST, Kumasi, Ghana Email: [email protected] Abstract Purpose – Based on empirical data, the purpose of this paper is to model the residential rental market in Ghana in order to examine the effects of location and neighbourhood attributes on rental values.

Design/ Methodology/ Approach – To situate the research in its proper context, an overview of the residential rental market dynamics are provided. Empirical testing of submarkets are performed based on a priori delineations. Based on hedonic modelling results, the effects of location and neighbourhood attributes on rental values are analysed.

Findings – The data gives credence tot the fact that in Ghana’s residential rental housing market, structural attributes of properties have the greatest effect on rental value, than location and neighbourhood attributes.

Research limitations/ implications – Provides a macro overview into the determinants of rental value based on empirical data and offers property investors a better understanding of the rental housing to ensure profit maximisation.

Practical implications – The research provides property investors an overview of useful insights to maximise returns on their investments. This is achieved by providing an understanding of price movements based on submarket dynamics. More so the assumption of urban economic models that rental values decrease with increasing distance from the Central Business District (CBD) is tested.

Originality/ value – This research is one of the first attempts to quantify the effects of location and neighbourhood attributes in Ghana’s residential rental housing market.

Keywords: Empirical; Rental Value; Housing Market; Location; Neighbourhood; Ghana

The 19th AfRES Annual Conference 77 IVS ADOPTION: WHAT DOES IT MEAN?: AN EXAMPLE FROM THE NETHERLANDS

Prof. Em. Aart Hordijk PhD [email protected]

Abstract The International Valuation Standards Council IVSC is a not-for-profit organization that acts as the global standard setter for the valuation profession, serving the public interest. The IVSC is unique in the role it plays as a valuation standard setter. It is not a valuation trade body. The IVSC is a leader in the mission to raise standards of international valuation practice and is overseen by an independent board of global leaders. Its core objectives are to:

1. Develop high quality International Valuation Standards IVS which ensure consistency, transparency and confidence in valuations throughout the world and 2. Encourage the adoption of IVS, along with valuation professionalism provided by Valuation Professional Organization VPO’s throughout the world

The IVSC facilitates collaboration and cooperation among its member organizations, who are valuation service providers, financial services businesses, regulators, international bodies and academic institutions. The IVSC consists of more than 130 member organizations from around the world and is supported by numerous sponsors who are leaders in the valuation profession.

At the IVSC meeting 2018 the Netherlands Register for Certified Valuers NRVT NL shared its experience about the Adoption of the IVS in the Netherlands (NL) with the IVSC Membership and Standards Recognition Board MSRB as well as with the Valuation Advisory Forum VAF. NRVT NL has been asked by the Chairman of the VAF to produce a document which could be shared with other IVSC (potential) members. The paper discusses Netherlands Register for Certified Valuers, How it started, where does it stand, the organization structure, compliance with international standards, continuing audit system and finally adoption of IVS as a multi-stage process.

78 The 19th AfRES Annual Conference A CRITICAL INVESTIGATION OF RESIDENTIAL VALUATIONS PRACTICES IN NAMIBIA: A CASE STUDY OF WINDHOEK

Frieda M Kaluwa Namibia University of Science and Technology (NUST), Windhoek [email protected]

The increase in globalization of businesses and foreign markets has led to the introduction of International Standards in every business sector including the valuation profession. Consequently, the cross-border investments in the financial markets has further fueled the need for universal accepted standards in reporting property values. International Valuations Standards (IVS) are standards that governs the valuation practice worldwide. The overall purpose of global standards is to engender confidence and public trust in the valuation process by creating a framework for the delivery of credible valuation opinions by suitably trained valuation professionals acting in an ethical manner.

A standardised global practise simplifies investors’ decision-making on international investments. International standards, however, need to be aligned with local valuation regulations that regulate the valuation profe ssional practices at country level consistent with International norms. Given the importance of International Standards to the valuation profession, this research investigates a) how current practices of residential property valuation in Namibia adhere to International Valuation Standards on professional and performance standards centred on competence, knowledge, ethics, conduct and objectivity and b) Explore the consistency in valuation opinions reported by all valuers in the market place underpinned by consistent application of recognised valuation approaches. The preliminary results from empirical data from desk and field surveys indicate that, local valuation practices seem not to be aligned with international valuation standards.

The main reasons seem to be the absence of local valuation regulations and the dormant Valuers’ Council to enforce global standards at local level. Hence, the credibility of valuation opinions and integrity of all valuers in Namibia seems to be challenged. The findings of the study are important to all stakeholders in the Namibian property market in order to identify risks involved in the misalignment of local and international valuation

The 19th AfRES Annual Conference 79 practices in a market that is expected to adhere to international reporting standards.

Key words: Valuation Standards, Standardization, Harmonization

80 The 19th AfRES Annual Conference A VALUATION APPROACH IN HOUSING BOOM AND BUST CYCLES

Donald C. Keenan1, Taewon Kim2, Daniel C. Lee3 1Université de Cergy Pontoise, Cergy, France 2California State University, Los Angeles, CA, USA , 3California State University, Los Angeles, CA, USA

Abstract In the housing market, there is a pattern of gradual price rises and noticeably more sudden price drops. This is because in an up market, the market comparisons approach forces home loan underwriters to be reluctant to approve a bigger loan than what the contemporary market comparisons would indicate. In a down market, on the other hand, underwriters do not face any such restriction and hence prices can drop to the level fully reflecting the declining market condition. The traditional extrapolation typically used in determining the “time” value adjustments need to be used more cautiously.

The 19th AfRES Annual Conference 81 REVISION OF THE INSTITUTION OF SURVEYORS OF KENYA (ISK) VALUATION STANDARDS ‘THE BLUE BOOK’

Raphael Kieti, PhD Department of Real Estate and Construction Management, University of Nairobi, Kenya [email protected]

Abstract Delivery of quality and competent professional valuation services that meets the needs of government, financiers and the investing public has been at the center of valuation discourse in Kenya over the last two decades. While professional competence among practicing Valuers can be achieved through rigorous education, training and research, valuation standards play a critical role in ensuring a high degree of accuracy and hence quality in valuation practice. Valuation standards, over and above, providing standard definitions, procedures and bases of valuation, sets guidelines in valuation practice. The overall objective of standards is to protect the integrity of the valuation profession, protect the public and consumers of valuation services and generally to ensure high quality valuation services from all those practicing as Valuers.

The first attempt to provide valuation standards in Kenya was through the development of the Valuers and Estate Management Surveyors’ handbook commonly referred to as the ‘Blue Book’ which was a creation of the special taskforce incorporated in mid-1999 by the Valuers and Estate Management Surveyors (VEMS) Chapter of the Institution of Surveyors of Kenya (ISK). In 2018, ISK noted that the current valuation standards in Kenya (incorporated in the ISK Blue Book) have not been updated since then. Consequently, much has changed in the market and requires an update of the ISK Blue Book to ensure relevance. Furthermore, consumers of valuation services, especially the Financial Institutions continue to use obsolete valuation terminologies and standards and many times are not aware of existence of valuation standards; and some use standards borrowed from foreign professional bodies when issuing valuation instructions locally. The ISK through the VEMS chapter has made previous attempt to revise and update the valuation standards contained in the Blue Book.

The aim of this paper is to highlight reasons that have propelled the need for revision of the ISK Valuation standards, document attempts made so far

82 The 19th AfRES Annual Conference by ISK to revise and update valuation standards, challenges experienced , as well as the methodology employed in the development of new revised valuation standards for Kenya.

Key words: Valuation standards, Valuation accuracy, ISK Blue Book standards, VEMS chapter of ISK, Kenya.

The 19th AfRES Annual Conference 83 ANALYSIS OF REAL ESTATE VALUE DETERMINANTS – THE CASE OF VALUATION PRACTICE IN TANZANIA

Felician Komu, Phd (Real Estate) Lead Consultant, Majengo Estates Developers Ltd, Tanzania Email: [email protected]

Abstract The dawn of global trade has had remarkable influence on the way professionals across boarders relate with one another. Sharing information is no longer a problem as between nations and cities. The need for transparency and consistence in global dealings cannot be overemphasized. Real estate valuations have become focal to trade and investment that form significant bases for measuring economic performance. While in the mature economies, valuations have become an important basis for constructing house and property price index, in the less developed countries, valuations have tended to lack credibility, reliability and even clarity for several reasons. Against this background, a study was undertaken to review valuation practice in Tanzania to determine the extent to which real estate value-influencing factors were being accounted for in valuation. A total of 316 questionnaire were administered to measure the lack of reliability and precision of value.

The study confirmed the overtly reliance on cost method of valuation to arrive at real estate values for all purposes of valuation. This was despite of the fact that over 10,000 valuations are executed every year (URT, 2017) which suggests wealth of comparable data. It was evident, the increasing penetration of digital technologies and enhanced data management have had limited bearing on the adoption of dynamism that has characterized valuation methods and analytics elsewhere in assessing value affecting factors. Consequently, contrary to the old holding of Peto (1997), the choice of valuation method has not depended on the use, interest nor the purpose for which it is required.

Based on selected valuation cases, the paper urges for use of existing market price information and past approved valuations towards estimating real estate values.

Keywords: Valuation Methods, Reliability, Value Determinants Accuracy

84 The 19th AfRES Annual Conference COMPULSORY LAND ACQUSITION AND COMPENSATION IN BOTSWANA: THE CASE OF PITSANE-TLHARESELEELE ROAD PROJECT

Lekgori, N. 1, Paradza, P. and Chirisa I 1PhD Student, University of Pretoria, South Africa Email: [email protected] Abstract Purpose: There is a general consensus from previous researches that major challenges caused by compulsory acquisition internationally include lack of compensation or where compensation is offered, it is either inadequate or delayed. The purpose of this study therefore was to contribute to the existing academic debate in land acquisition and compensation by establishing if there is consistency in compulsory acquisition and expropriation policy and practice in Botswana.

Approach/Design: A case study approach was adopted and Pitsane- Tlhareseleele road project was chosen. A total of twenty-two (22) displaced people and eight (8) Planning Officers, four (4) from Rolong Land Board and four (4) from Good Hope Council were interviewed. Cording of interview results was done manually. Interpretation and analysis of data was made easier by the use of SPSS to present the data.

Results/Findings: Results of this study established policy-practice gaps in the calculation of compensation in Botswana. The statutory and policy frameworks provide for a consensus based compensation approach but the displaced people ‘lamented’ that the valuation method which was used by compensation authority was not transparent.

Practical Limitation: The major limitation of this study is that it was based on a single case study with a limited number of affected people.

Practical Implication: Results of this study can help to inform policy and practice on compulsory land acquisition in Botswana. It can also contribute to the existing academic debate on compulsory acquisition of land and compensation.

Originality/Value of Work: This study is one of the few works which contributes to the existing debate on compulsory land acquisition in Botswana.

Keywords: Compulsory acquisition, public use, property valuation, fair compensation, consistency, policy.

The 19th AfRES Annual Conference 85 VALUATION OF UN REGISTERED COMMUNITY LAND IN KENYA – ADDRESSING THE FUNDAMENTALS

Mwenda K. Makathimo, PhD Mount Kenya University, Nairobi Kenya Email: [email protected]

The subject of valuation of unregistered interests in land is increasingly attracting the attention of Valuers and Land Managers globally. The realization that value of property is not necessarily created by formal registration and that the legitimacy and increasingly the legality of property rights is not conferred by registration has made inquiry into the approaches for valuation of such property critical. Property rights are considered a key element of human rights and persons are not to be deprived of their property rights arbitrarily either by the state or other parties. In cases where private property is required for public purposes or in public interest then the owners / holders of the rights must be compensated in a just and prompt manner. It is therefore important that the value of unregistered property is assessed in ways that are credible, objective and just in the interest of supporting voluntary or involuntary transactions.

In Kenya Community land ownership is recognized Constitutionally and has equal status with private and public land ownership. Non registration of community land rights does not make them illegal or illegitimate. The Community Land Act of 2016 and Community Land Regulations 2018 were enacted by parliament to provide a framework for registration and management of Community Land. Despite the passing of these laws and regulations over sixty percent of land in Kenya is still unregistered and falls in the category of Community Land. Public and private investments continue to take place over unregistered community land.

The questions as to how the subject of valuation is ascertained; where and how the information on transactions; proprietorship and other relevant aspects is gathered, analyzed and used to derive valuation amounts. The methods employed and their appropriateness and the challenges encountered is the subject of this paper.

86 The 19th AfRES Annual Conference AN INVESTIGATION INTO THE LEVEL OF DATA SHARING EFFICIENCY ON THE ZAMBIAN RESIDENTIAL PROPERTY MARKET: CASE STUDY OF LUSAKA

Christopher Mulenga - University of Lusaka, Zambia [email protected]

Abstract The residential property market in Zambia is characterised by lack of readily available property market data resulting in market values that do not reflect all market information. This paper proposes an empirical case study approach based on best practice from both developed and developing countries to assess how this information can be incorporated into easily accessible data sharing mechanisms among the buyers, sellers, estate agents and valuation surveyors. The evidence gathered from other countries show that a closer correlation exists between information sharing and property values because better-informed individuals have been securing better deals. Both individual and corporate consumers in the residential property market base their decisions to buy or sell on the valuation surveyors assessed values as well as market advice from estate agents.

However, in the absence of a properly framed data sharing mechanism anchored on strong legislative and institutional framework, real estate values can deviate from the actual either downwards or upwards. We test this hypothesis using unique data on residential real estate markets in Lusaka. Lack of data sharing contributes to distortions in residential property values. This finding substantiates the importance of deviations from the actual residential values due to lack of data sharing among the main players in the residential property market. In order to effectively address the shortcomings identified, it is suggested that information sharing among the main players in the residential property market be explored through the revision of existing policies and institutions.

Keywords: Real estate, property market, property value, efficiency

The 19th AfRES Annual Conference 87 THE IMPACT OF SHORT-TERM LISTING PLATFORMS ON RENTAL HOUSING MARKETS (BIG DATA) ALONG BAGAMOYO ROAD, DAR ES SALAAM, TANZANIA

Judith Mwanri [email protected] MSc Student, School of Earth Sciences, Real Estate Studies, Business and Informatics (SERBI) Ardhi University, Tanzania

Dar-es-Salaam, like many other cities in sub-Saharan Africa, is witnessing a rapid increase of investment in the rental housing property. One of the major challenges affecting the market is oversupply of rental housing, minimal transparency and long payment terms dictated by landlords. Despite the challenges, the city has become a prominent place of business, work and leisure. Big data platforms like Trulia, Craigslist, Zillow, Airbnb, Zoopla and Booking are dominating the market and making it easier for customers to find house for rent on short or long-term basis hence affecting the way residential space is traded.

The purpose of the study was to explore how short term online platforms have influenced the rental housing market in Dar es Salaam, along Bagamoyo Road. Specific objectives for the study were to determine whether STLs are driving rental prices higher, examine how they were enhancing short term rental services and explore the impact of big data on decision making by renters.

The study employed a qualitative research approach in solving the research problem where tools used for primary data collection were in-depth interviews with property managers and landlords, focus group discussions with local real estate agents, spatial data collection and social media monitoring for Facebook, Instagram and WhatsApp. The tools used for secondary data collection were government statistics from NBS and BoT, popular websites such as ZoomTanzania, DirectoryTanzania and Kupatana; and property market research reports from Knight Frank.

With great consistency, results on the impact of STLs on the rental housing markets strongly suggested that availability of big data is driving the prices higher and eliminating human real estate agency services; the observation prevails highly during peak tourism season (April-October) and as a result

88 The 19th AfRES Annual Conference rendering the hospitality industry vulnerable. The study further reveals that a number of long term rental housings were being converted to short term rentals by either accepting short term booking payments or furnishing them. It was discovered that there is a growing tendency towards sharing rental residential homes (co-living) as a result of the need to save money and share utility bills. In a bid to improve decision making by renters, it was observed that STLs were influencing rational decisions on reliable rental houses that were available in the market. Further observations were that STLs were augmenting a market that was once fragmented by providing a platform of information and transaction for renters and management of their leases for renters and landlords where all these activities were done separately before.

The study recommended that effective measures should be taken by both public and private sectors to improve market transparency and efficient grounds for the operation of STLs - limit overpricing and control their effect on the hospitality business. Furthermore, it was recommended that the central and local government set policies and laws on co-living or sharing rental housing in order to reduce crimes. Again, the government is encouraged to tap on these platforms and collect taxes from the rental houses listed with them, implementation of which is possible with the use of TTMS operated by TCRA.

The 19th AfRES Annual Conference 89 DEPRECIATION MODELLING IN THE USE OF DEPRECIATED REPLACEMENT COST FOR THE VALUATION OF PLANT AND MACHINERY

Ogunba, Olusegun1 Ogunniyi, Kehinde2 [email protected] Department Of Estate Management, Obafemi Awolowo University, Ile-Ife

Abstract Perhaps the most challenging aspect of depreciated replacement cost valuation is that depreciation models popularly used in depreciated replacement cost valuation (straight line depreciation estimated percentage depreciation etc.) are premised on assumptions which do not accurately model the pattern that physical deterioration of plant and machinery follow over useful life. Moreover, the influence of various factors such as intensity of use, power outages, level of maintenance, and design among others on pattern of physical deterioration are not adequately included in depreciation modelling. The aim of the study was accordingly to accurately model depreciation in the use of depreciated replacement cost for the valuation of plant and machinery with a view to providing information that would enhance depreciated replacement cost valuation practice. The study sampled operators of plants and machinery in fourteen manufacturing firms, (two manufacturing firms each from seven manufacturing industries) to obtain data addressing the study’s aim. Data were analyzed using means, weighted means, linear regression, multiple linear regression and multiple log-log regression. It was found that the useful life of machinery fell between ten to fifteen years while the useful life of machinery fell between nineteen to twenty- two years. The pattern of depreciation was found to be initially flat in early years before assuming a convex upsweep pattern for both plant and machinery. The log-log beta coefficient results showed that increases in age, usage, power outage and fluctuation increased the level of physical deterioration of while increases in maintenance, operator’s years of experience and availability of spare parts reduced the level of physical deterioration.

90 The 19th AfRES Annual Conference The study recommended the use of models formulated in this study to valuers for accurate estimation of physical deterioration in replacement of popular models.

Keywords: Depreciation modelling, plant and machinery valuation

The 19th AfRES Annual Conference 91 APPLICATION OF DISRUPTIVE TECHNOLOGIES IN REAL ESTATE PRACTICE IN NIGERIA; CONSTRAINTS AND OPPORTUNITIES

Utchay A. Okorji Email: [email protected] Department of Estate Management, Rivers State University, Nigeria

Abstract Disruptive technologies have changed the way businesses across the globe are conducted, it revolutionizes the world and presents challenges for traditional business norm. Though lagging, real estate is not left out as it presents a challenge to rethink the way stakeholders collect, distribute and use data related to the industry in various markets.

The disruption of real estate practice globally with technological advancements is redefining the future of real estate. Whilst advanced countries are already embracing the practice possibly due to the existing infrastructure and technologies, the practice in Nigeria and in Africa is expected to embrace this trend as well. New structures and platforms should drive this evolution and change existing practice norms. It therefore presents new challenges for professionals in Africa. X-raying this trend, this study highlights the technological advancements in real estate practice from advanced economies and compares the readiness of the African environment to the application of these new technologies in local markets.

The study then reviews the Nigeria real estate market and the infrastructure enabling the application of disruptive technologies with the aim to show a comparative status of the advanced market and the emerging market in the use and application of disruptive technologies. The study concludes by establishing the extent of technological advancement in real estate practice in Nigeria, the opportunities, limitations and the way forward for application of disruptive technologies in real estate practice in Nigeria.

Keywords: Real estate, Disruptive technologies, Advanced market, Emerging markets.

92 The 19th AfRES Annual Conference AN EVALUATION OF THE CONCEPT OF ADEQUATE COMPENSATION IN COMPULSORY ACQUISITION PRACTICE IN NIGERIA

Utchay A. Okorji [email protected] Department of Estate Management, Rivers State University, Nigeria

Abstract Compulsory acquisition and compensation in Nigeria is a topical issue fraught with legal and subjective definitions as to the concept of adequate compensation. Compensation is paid by the acquiring authority for the loss suffered by an owner when property is compulsorily acquired for public interest.

The thorny issue is whether or not the compensation paid is adequate as what constitutes adequate compensation is seen from different lenses. The prevalent position however is that, often the compensation paid by the acquiring authority for compulsory acquisition is considered not adequate. In Nigeria, this debate and agitation ongoing with several litigations on the issue.

The aim of this study is to evaluate the concept of adequate compensation by conducting an analysis of case law from the High Courts of Rivers State of Nigeria, an analysis of various applicable legislations and the different perspectives held by stakeholders such as professionals involved in compulsory acquisition and compensation and those in the public sector responsible for compulsory acquisition and compensation. The study sets a frame within which the concept of adequate compensation will be better understood and approached in practice.

Keywords: Compulsory acquisition, Adequate compensation, Acquiring authority

The 19th AfRES Annual Conference 93 CONTENDING ISSUES OF YP DUAL RATE IN LEASEHOLD VALUATION: THE NEED FOR RESOLUTION

*Olusegun O. Olanrele1,2, Rosli Said1, Anuar Alias1 and Tomisi O. Adegunle2 1Department of Estate Management, Faculty of Built Environment, University of Malaya, Kuala Lumpur, Malaysia 2Department of Estate Management and Valuation, Moshood Abiola Polytechnic, Abeokuta, Ogun State, Nigeria E-mail: *[email protected], [email protected], [email protected] [email protected]

Abstract Purpose: This paper re-examined the Years Purchase (YP) formulae for leasehold valuation in relation to the established believe of an annual sinking fund (ASF) provision to recoup leasehold capital and also appraise the need for continuity of the use of YP dual rate in valuation practice.

Design/Methodology/Approach- The study adopted a critical review of the developments in the application of the income approach to property valuation.

Finding: The study found non relevance of the dual rate YP in the 21st century valuation practice. A misapplication of ASF to the appropriate YP is also suspected.

Practical implications: In the search for new paths for the real estate sector, the study supports discontinuation of the YP dual rate in valuation and the ASF application to YP of a leasehold, revealed in the appropriate formulae (1-PV)/(i+ASF) be sustained only for the purpose of training valuation students for a deep understanding of developments in income valuation.

Originality/Value: The study is conceived out of arguments in valuation teaching of the appropriate application of YP dual rate. Textbooks application suggest ASF is being applied to perpetuity YP as against the leasehold YP and often lead to confusion. This paper therefore leads the path to remove the confusion and misconception in leasehold valuation using YP dual rate.

94 The 19th AfRES Annual Conference A CRITICAL REVIEW OF PROPERTY VALUATION FOR EXPROPRIATION IN ZIMBABWE

Partson Paradza¹; Joseph Yacim² and Benita Zulch ³ 1Department of Construction Economics, Faculty of Engineering, Built Environment and Construction Economics, University of Pretoria, South Africa

Abstract Purpose: This paper aimed at contributing to the growing academic debate on property valuation for expropriation.

Approach/Design: The paper was based on document analysis or archival research approach. Statutes which formed the legal framework that guide property valuation for expropriation in Zimbabwe, was critically reviewed relative to World bank and Food and Agriculture Organisation guidelines, to unravel concordance and or conflicts among laws, so that limitations in the Zimbabwean laws could be remediated. Results/Findings: This study established that the existing property valuation for expropriation in Zimbabwe followed the recommendations of World Bank and FAO. However, there are notable differences especially on estimation of replacement cost value, where depreciation is deducted contrary to World Bank and FAO specifications.

Practical Limitation: Though there is no empirical evidence, the study assumed that guidelines provided by World Bank and FAO can be considered as international best practice on property valuation for expropriation in Zimbabwe. Practical Implication: Results of this study is useful to the Zimbabwean Government as it was geared towards bringing a lasting solution to the unresolved decade long land compensation dispute. Originality/Value of Work: Though many studies were done on property valuation for expropriation in many countries, none of the existing literature assessed legal provisions guiding property valuation for expropriation in Zimbabwe. This study seeks to bridge this gap and contribute to existing international debate on compulsory acquisition and compensation.

Keywords: Benchmarking, compulsory acquisition, fair compensation, expropriation policy, indemnity, legal framework.

The 19th AfRES Annual Conference 95 VALUATION OF HERITAGE ASSETS: IMPLICATIONS FOR SOUTH AFRICA

Mashilo Pitjeng [email protected] MSc Student- Development of valuation methodology University of the Witwatersrand, South Africa

Abstract There is a growing recognition of the value, importance and impact of assets held for cultural, environmental or historical significance (heritage assets) on the financial statements of organizations and that the disclosure for financial reporting requires valuation information on the heritage assets. Currently in the absence of local standards, valuation practitioners (Valuers) in South Africa apply variety of methods and differing standards to determine the value of heritage assets. This opens a potential for a risk of an incomplete picture of the financial standing of an organisation. The purposes of this research is to argue that the current approaches and methods used in South Africa to value heritage assets are inherently flawed as a result subjectively and inconsistently apply the theory of value.

This research comparatively examines methods used in the valuation of heritage assets conducted in terms of the guidelines by the Royal Institute of Chartered Surveyors (RICS), Generally Recognized Accounting Practice - Heritage Assets (GRAP 103), International Valuation Standards - Valuation of Historic Property (IVS) and the International Financial Reporting Standards (IFRS) for the valuation of two cases of heritage assets. This is in order to assess reasonability of the methods and assumptions used in determining the asset values.

By researching the methods used for the valuation of heritage assets, emerging ideas became evident and the findings indicate certain specific characteristics impact directly on the determination of value and such characteristics can evidently be used in South Africa for the development of valuation standards for heritage asset.

96 The 19th AfRES Annual Conference DETERMINATION OF RESIDENTIAL PROPERTY VALUE IN FLOOD RISK AREA

Siti Hafsah Zulkarnain1, 3Maki Tsujimura2, 1Muhamad Ali Yuzir3, 4Muhammad Najib Razali4, 4Zakri Tarmidi5 1Malaysia-Japan International Institute of Technology (MJIIT) Universiti Teknologi Malaysia (UTM) Email: [email protected] / [email protected] 2Centre of Studies of Estate Management, Faculty of Architecture, Planning and Surveying Universiti Teknologi MARA, Malaysia, Email: [email protected] 3Faculty of Life and Environmental Sciences, University of Tsukuba Japan Email: [email protected] 4Faculty of Built Environment and Surveying, Universiti Teknologi Malaysia (UTM) Skudai, Johor Bahru, Malaysia, Email: [email protected] / [email protected]

Abstracts The arts and science in determining residential property value has evolved due to the changing in external factors such as economy, environmental and social. This research aims at developing a valuation model to determine the residential property value by taking into account the economic attributes that could effect the value for residential property in flood risk areas.

The case study covers all residential housing scheme at Langat River Basin area which has been considered at the highest flood risk area in Malaysia. The development of valuation model consists of the economic attributes such as flood, structural, locational and environmental attributes involved in residential property valuation in relations with flooding.

The Delphi Method used to identify the most significant attributes or criteria to obtain from high reliable consensus from experts using a questionnaire. This sought to discover the procedure of selection of experts, criteria of selection, development of questionnaire, analysis and results. The finding reveals that the Economic Valuation Models response to floods for a residential property using the linear regression and integrated with Eviews software.

Keywords: Floods, Malaysia, Residential, Risk, Valuation Model, Value

The 19th AfRES Annual Conference 97

SUSTAINABLE REAL ESTATE MUST BE HOLISTIC TO EQUATE SUSTAINABILITY.

Kwame Addae-Dapaah Bartlett School of Planning, University College London [email protected]

Abstract Climate warming and environmental concern have put almost every human activity, including real estate, in the spotlight. Although sustainable real estate, premised on the main eco-labels of sustainability as proxied by green buildings, has come a long way over the past decade, there are serious concerns about equating green buildings, and therefore sustainable real estate, to sustainability as enshrined in the Bruntland Commission’s definition of sustainability. This paper uses real life sustainable real estate developments to investigate their sustainability on the basis of the triple bottom line – ecological, social and economic. The paper argues that although sustainable real estate has made, and is making encouraging progress, there is a long way to go to achieve sustainability especially on the social and ecological fronts. Given that sustainability is a human survival imperative that is closely intertwined with ecological sustainability, the so- called sustainable real estate developments give a cause for concern. The results of the study could be useful to policy makers, real estate developers and investors and humanity as a whole.

Keywords: Sustainable real estate, sustainability, ecological consumption, human well-being, economic sustainability, holistic.

100 The 19th AfRES Annual Conference TOWARDS DE-POLITICIZATION OF URBAN REGENERATION AND CHANGING URBAN GOVERNANCE IN AFRICA: A FRAMEWORK FOR ANALYZING REDEVELOPMENT OF MUNICIPAL MARKETPLACE INFRASTRUCTURE

Lewis Abedi Asante Department of Geography, Humboldt-Universitat zu Berlin, Berlin, Germany Department of Estate Management, Kumasi Technical University, Kumasi, Ghana

Abstract This paper proposes an analytical framework for making sense of the process of regenerating municipal marketplace infrastructure and its associated urban governance dynamics. The framework does not just dwell on the concepts of urban regeneration, urban governance and clientelism but also shows that the three are integrated and nuanced dimensions of state-led urban development projects in most parts of Africa. This framework is a synthesis of a series of qualitative studies that sought to analyze the urban governance dynamics at each phase of the regeneration of two market infrastructure projects in Kumasi and Cape Coast in Ghana. I argue that the regeneration of municipal marketplace infrastructure involves phases such as scoping, planning, financing, relocation and allocation. These phases are shaped by internal and external drivers. The internal drivers manifest through clientelist practices and neoliberal policies of the state and through the activist practices and local economic interests of non-state actors while the external drivers derive from the consequences of globalization and development funding by agencies purported to be supportive of economic and social advancement of African countries. At each stage of the urban regeneration process, specific urban governance dynamics emerge, which reflect the politicized nature of existing practices of urban governance and the desire of non-state actors for changing forms of urban governance. This paper suggests that changing forms of urban governance in Africa would require a de-politicization of the urban regeneration process in order to achieve sustainable livelihood and inclusive urban governance.

Keywords: Urban regeneration, Municipal market infrastructure, Urban governance, Analytical framework, Africa

The 19th AfRES Annual Conference 101 SUSTAINABLE ACCOMMODATION INVESTMENT IN SUB- SAHARAN AFRICA: THE CASE STUDY OF THE SOUTHERN CIRCUIT NATURE TOURISM IN TANZANIA

Eward Athanas [email protected]

Abstract Tanzania is one of the leading tourist destinations in Africa. Most of the country tourism is based on nature attractions. About 40% of the country has been set aside for wildlife conversation and promotions of nature-based tourism. The southern circuit is largest nature protected in Tanzania, its size (82,000Km2) is two times the size of Switzerland (Switzerland size is 41,285 km2). Sustainable Accommodation Investment is one of the most effective ways by which developing economies can captures and tap income from tourism industry. In some countries like Australia accommodation and Tourism industry and contributes around $2.9 billion to the tourism gross value employs 18% of all tourism employees annually. The overall aim of this research was to investigate the potential of ecotourism in Sub-Saharan countries for achieving sustainable economic development and looked at sustainable accommodation investment at Ruaha National Park (RUNAPA). This was achieved by focusing on the case study of the Southern Circuit Nature tourism in Tanzania and in particular at Ruaha National Park (RUNAPA).

Forecast shows that over the next 6 years around 1366 bed per night will be required to meet the expected tourism demand by 2023 and around $2.3 billion new investment will be required to develop those facilities to meet the expected demand. This being the case, the issue of maintaining attractiveness (nature) is highly required. Response from tourist on nature responded strongly by 64.3%, and safety and security strongly agreed 64.1%, while on overall infrastructure quality respondents were Neutral by 32.1%. This shows how potential ecotourism and in particular protecting nature and it is good sign for government to support the southern circuit since the availability of nature tourism in abundant surpass those of the northern circuit by far in terms of size (82,000Km2) and availability of flora & fauna.

Keys words: Nature based tourism, wildlife, national park, tourism, eco- tourism investment, sustainable accommodation investment, Hospitality investment.

102 The 19th AfRES Annual Conference LAND-BASED FINANCING OF URBAN DEVELOPMENT AND INFRASTRUCTURE PROVISION IN GHANA CITIES: POLICY AND PRAXIS

Samuel B. Biitir Department of Real Estate and Land Management, University for Development Studies Email: [email protected]

Abstract Rapid urbanization and economic development in recent times have influenced the development of cities. The combined effect of these factors have led to unplanned and uncoordinated spatial expansion leading to increased demand for urban infrastructure and services especially in Sub- Saharan Africa. Yet the necessary financial resources and competencies for local infrastructure production simply do not exist to meet this challenge. This situation has received attention from many international bodies such as United Nation, UN-Habitat and the World Bank. The United Nation’s Sustainable Development Goals, SDGs 11 has emphasized the importance of building inclusive, safe, and resilient sustainable and communities. The implementation strategy for the SDG 11 - the New Urban Agenda document, recognizes the importance of mobilizing additional revenues from innovative sources such leverage land values to finance urban infrastructure. In its resolution #37, it seeks to promote best practice of capturing land value increases from urban development process and infrastructure investment to finance urban infrastructure.

The study examines how innovative land-based financing tools – development charges, betterment levies and property rates have been conceptualized in Ghanaian cities. It assesses the legislative and institutional frameworks of land-based financing as well as the implementation challenges of current instruments. It uses case studies of three municipalities in the Greater Accra Metropolitan Area (GAMA to investigate the application of land-based financing instruments and the challenges of its successful application. Interviews will be conducted with engineers, physical planning and budget officers of the three municipalities as well as the Ministry of Local Government and Rural Development.

The 19th AfRES Annual Conference 103 FINDING BIRNIN ZANA: IN PURSUIT OF AN AFRICAN SMART CITY

Luke Boyle University of Cape Town, South Africa [email protected]

The rising complexities of cities necessitates more efficient and effective management of urban systems. This comes at a time when there is a growing awareness of the capabilities of information and communication technologies (ICTs) in enhancing public service delivery and the performance of urban governance. As a result, there has been a recent global proliferation of data- driven and tech-related tools to steward more active and responsive problem- solving capabilities of cities. This has prompted a number of African nations to start experimenting with the idea of developing a ‘digital’ or ‘smart’ city.

The City of Cape Town is currently embarking on an ambitious and exciting journey to become Africa’s first truly ‘digital city’. With its early adoption of key technological interventions and its growing reputation as a global tech hub, Cape Town is increasingly being regarded as a pioneering city driving smart and digital urbanism in Africa.

Globally, there is little consensus on the conceptualisation of ‘smart’ and ‘digital’ cities and the differences between the two. This is particularly the case in Africa where there have been very few attempts to clearly define how this concept ought to be conceived in a context that is characterised by rapid urbanisation, informality, growing poverty and inequality and high levels of unemployment. Defining such an agenda is critical to developing clear urban strategies.

This study aims to help define these strategies through an examination of Cape Town’s smart city strategy. Through a series of semi-structured interviews and a review of policy documents, the research aims to highlight the key characteristics of Cape Town’s digital city strategy, and in turn, identify the vital opportunities and challenges that the city is likely to face on its digital journey. In identifying the above, the paper also aims to contribute to the dearth of literature centred around defining how these concepts are understood and implemented in an African context with the hope of building the beginnings of a foundation to develop an Afro-centric conceptualisation for smart urbanism.

104 The 19th AfRES Annual Conference PUBLIC SUBSIDIES FOR GREEN BUILDINGS: EMPIRICAL OUTCOMES FROM AUSTRALIA’S NATURAL EXPERIMENT

Jeremy Gabe School of Business, University of San Diego [email protected]

Abstract Governments are using mandatory disclosure and public grants to promote the production and consumption of impure public goods, such as eco- labeled buildings, that provide both public and private benefits. Between 2008 and 2011, the federal government in Australia implemented both policies in the commercial real estate sector. Using this natural experiment as a case study, an empirical model is used to describe the association between measured greenhouse gas emission mitigation and three strategies: (a) participation in repetitive greenhouse gas emission audits, (b) receipt of public subsidies for investment in energy- efficient building technology, and (c) purely private environmental management strategies. Repetitive audit participation has the strongest association with measured greenhouse gas mitigation while public subsidies have the weakest association. This research also affirms that firms receiving subsidies tend to be institutional investors that use subsidies as additional (free) leverage, likely making investments that would have been made otherwise; this observation provides a potential explanation for the marginal effect of the subsidy conclude with advice for emerging markets interested in implementing energy-efficient building practices.

JEL Codes: H23, H44, Q54, Q58, R33

Keywords: commercial real estate; eco-labels; energy efficiency; green markets; greenhouse gas mitigation; impure public goods; private provision of public goods

The 19th AfRES Annual Conference 105 THE USE OF NON-DESTRUCTIVE TECHNOLOGIES FOR THE DETECTION OF UNDERGROUND UTILITIES Louis Germishuys and Chris Cloete

Department of Construction Economics, University of Pretoria Email: [email protected]

Abstract Purpose of paper Unintended damage to subsurface utilities during excavation is a major cause of disruption in electricity supply, telecommunication, water supply and other essential public services. Utility strikes are also a leading cause of hazardous liquid and natural gas accidents. Globally, services being struck cost billions of dollars each year. The purpose of this paper is to provide an overview of available non-destructive technologies (NDT’s) for subsurface utility detection.

Methodology The background, limitations and advantages of available NDT’s were investigated. In typical NDT’s, energy is transmitted into the ground and the reflected energy from subsurface utilities is recorded. Processing of the recorded information produces data about the distribution of physical properties associated with the underground objects. Leading NDT’s for utility detection includes: Ground Penetrating Radar (GPR), Electromagnetic (EM) Methods, Low Frequency Electromagnetic Fields, Magnetic Methods, Acoustic Emission Methods and Infrared Thermography.

Findings Available NDT’s can locate underground services and can therefore diminish unintended utility strikes. However, these technologies can be unreliable, and the accuracy of the applicable NDT should be determined, while considering the relevant site circumstances. GPR is considered the most sophisticated NDT for utility detection. Applying GPR and EM methods in combination is the most effective solution for most underground survey conditions.

Value of paper Locational data for underground services is often unavailable or inaccurate. Existing utilities are frequently damaged during construction excavations, causing project delays and unplanned expenses for all parties involved. The

106 The 19th AfRES Annual Conference use of NDT’s can reduce the risk of damage caused to existing services and avoid substantial costs and time delays. However, the limitations of these NDT’s should be borne in mind.

Keywords: Underground Utility Detection, Non-destructive Technology, Ground Penetrating Radar.

The 19th AfRES Annual Conference 107 THE IMPACT OF CHINESE CONSTRUCTION COMPANIES ON AFRICA’S PROPERTY MARKET

Catherine Kariuki1 Nicky Nzioki2 1Lecturer Department of Real Estate and Construction Management University of Nairobi Nairobi Kenya Email: [email protected] 2Senior Lecturer Department of Real Estate and Construction Management University of Nairobi Nairobi Kenya Email: [email protected]

Rumours abound about China’s loan programme in Africa. Where, why, and how are Chinese banks financing African development? Are African countries risking a new debt crisis?

It has been said that Chinese grip on the Kenyan infrastructure project is a concern for both local contractors and the African Development Bank (AfBD). The bank stating that Chinese dominance in government projects could undermine Kenya’s economic growth since majority of funds invested in projects are not spent in the country. Some of the reasons for this dominance include the fact that Chinese firms hold a technical and financial edge over local contractors.

The purpose of this paper is to investigate the impact of the Chinese Construction Companies on Africa’s property market with a view to provide data that would inform both the public and private sector industry.

Data to answer the paper’s initial questions will be presented from AfBD evaluation reports and other western institutions who have become concerned over the significant political and economic roles China is playing in the African continent. A significant source will include a review of current database of Chinese loans to Africa.

Factors identified as the main reasons for choosing construction companies from China from literature range from access to cheap finance and that Chinese firms have superior technical knowledge and better work ethic. As a result of this skilled workmanship, they are able to execute projects faster and on time. Though the Chinese companies were initially interested in large public infrastructure projects, there is now evidence that some are venturing into construction of institutional buildings and private homes in Kenya.

108 The 19th AfRES Annual Conference The paper serves to provide information on the impact of foreign contractors (specifically the Chinese) on the real property market. This leads to the question of the need to reduce the cost of money for the construction companies and an increased focus on the education of contractors, artisans and related skills, both at the polytechnics and at Universities.

Keywords: The property market, construction companies, construction finance, planning approvals, technical knowledge, education

The 19th AfRES Annual Conference 109 THE REAL ESTATE DEVELOPMENT DILEMMA IN URBAN AREAS FOR DEVELOPING NATIONS

Augustine Juma Katiambo1, Nicky Nzioki2, 1Consultant- Valuation, Property Management and Planning, Nairobi, Kenya [email protected] 2Senior Lecture, Department of RECM, University of Nairobi

The real estate development, just like other business or professional decision, there are instances where the participants ought to choose between alternatives. Occasionally, the choice are likely to be sound whereby a right answer is clearly distinct from a wrong once. However there are circumstances where available choices for the property developers are difficult to make leaving one in a real estate development dilemma. This is a situation where no matter which alternative is selected, there is likely to be a subordinate one or more to the choices made. In real estate development within the developing nations, there comes a time where all the options presented may be all right or all wrong.

There are a number of land use management challenges within urban area arising from weak enforcement and non-compliance in property development and housing deficit for low and middle class population. This has allowed the private investment and urban growth of high-rise residential and commercial developments. There is also deterioration in the urban environments characterized by flooding; loss of trees and green spaces, with the green fields and vegetation being transformed into brownfields. The overall objective of real estate development is to add value to existing property. The property developer aims to increase the property value in order to earn returns, however the decisions have to be made for optimal returns. This is achieved by either increasing the size of the property or varying the users. Therefore this paper shall explore several sources of dilemmas within the property development. It will also interrogate the dilemma arising from the real estate development within sustainable urban environment. It will also interrogate the dilemma in land administration and management through the demand-led approach and infrastructure-led approach of real estate development. Lastly the paper also discusses the ethical dilemmas in real estate development and practices. This paper shall provide knowledge to the real estate developers on the expected risks while investing in the real estate within the developing

110 The 19th AfRES Annual Conference countries. It shall also expound on ethical issues in the real estate development.

Keyward: Dilemma, Greenfields, Brownfields, Demand-led, Infrastructure- led, Sustainable urban environment, Ethics and Morality.

The 19th AfRES Annual Conference 111 URBAN SPRAWL AND INNER CITY CONGESTION: NATURE AND EXTENT OF CITY EXPANSION IN GHANA

Kosoe1, E.A.; Kuusaana2, E.D. & Ninminga-Beka3, R [email protected] 1Department of Environment and Resource Studies, University for Development Studies, Wa, Ghana 2 Department of Real Estate and Land Management, University for Development Studies, Wa, Ghana 3Land Use and Spatial Planning Authority, Regional Office, Wa, Ghana

Abstract The process of urban change does not only occur on the outskirts of the city but also in the inner cities in the form of infilling and alterations to existing housing. However, arguments and discussions on urban sprawl have concentrated on an expansion along the periphery of the city with less emphasis on expansion within the inner city, which results in the development of slums. An observed trend in most cities of Ghana is the concentration and development within the city centres.

Using the Wa Municipality as case study, this study seeks to explore the nature and extent of urban sprawl within city centres in Ghana; and also examines the dynamics of inner city developments. A stratified sample of residential areas and a systematic sampling of households were employed for the selection of respondents and data was collected using questionnaire survey and key informant interviews. This study seeks to contribute to the existing knowledge on urbanisation and urban change dynamics, but particularly on how urban policies and local level by-laws can enhance control of the nature and extent of urban change.

Keywords: urban sprawl; inner cities; city expansion; urbanisation; urban change; Ghana

112 The 19th AfRES Annual Conference PRE-TENDER COST ESTIMATES AND ITS EFFECT ON REAL ESTATE INVESTMENT DECISION MAKING IN DAR ES SALAAM TANZANIA

Justine Mselle [email protected] School of Earth Sciences, Real Estate Studies, Business and Informatics (SERBI) Ardhi University, Tanzania

Abstract Project cost estimates goes through several stages before the final pre- tender cost estimate is arrived at. The pre-tender cost estimates is usually used as the basis for client’s budget when the client is proposing a specific real estate investment. However, the literature shows that most pre-tender cost estimates are undertaken without reliable information thus posing a risk for over or under-estimating when compared to the tender price submitted by bidders in the bidding process. This observation may frustrate the project and ultimately the client’s investment decisions. Despite the use of pre-tender cost estimate as client’s budget ceiling during tendering, researches have revealed that there has been significant variability between pre-tender cost estimates and received tender prices which can make pre- tender cost estimates less reliable in subsequent decisions.

Client may therefore be forced to re-tender the project after revising the design, suspended the project indefinitely or rejected it outright. Based on questionnaire surveys on 240 construction professionals (QS, Architects, Engineers and Project Managers) this study analyses client’s reaction in response to pre-tender cost variability towards making the ultimate decision on proposed real estate investment project. Using descriptive statistics and contingency coefficient tests, the study established that client’s decisions to proceeds with proposed investment is highly determined by factors external to the environment onto which the project is conceived. Professionals pre-tender cost variability therefore is limitedly accorded adequate consideration by real estate investors. Pre-tender cost estimate or its variability does not deter initiation of real estate development projects rather could be responsible for a great bunch of failed building construction projects notable in the city of Dar es Salaam.

The 19th AfRES Annual Conference 113 GREEN REAL ESTATE DEVELOPMENT IN TANZANIA: CHALLENGES, OPPORTUNITIES AND THE NEED

Leonard Emmanuel Mwassa4 [email protected] MSc Student, School of Earth Sciences, Real Estate Studies, Business and Informatics (SERBI) Ardhi University, Tanzania

Abstract The study presents on the aspect of environmental sustainability in real estate developments. Like many others, real estate sector is subject to disruptions from green developments. According to Sustainable Development Goal No. 11 of the 2030 Development Agenda, 2015, development of green, sustainable cities is one of the ways to protect planet earth against environmental degradation. Therefore, this paper envisages unveiling challenges, opportunities, and the need for green real estate development in Tanzania.

Literature was extensively reviewed to facilitate gathering, analyzing, and drawing extrapolations on collected data. The case of Ardhi University was investigated to support the study.

The findings revealed that green real estate development in Tanzania is hindered by high initial capital outlay, lack of enough research on benefits of green real estates, hindering regulations, project financing difficulties, and luke-warmness of some building and real estate professionals. It was also revealed that green real estate development provides opportunities for development and growth of solar manufacturing/installation industry, development of integrated design services, building automation, on-site water treatment, and development of sectional construction and prefabrication. On the other hand, it was revealed that, financial, environmental, and social importance of green real estate include; reduction in capital expenditure, lowering operating and building maintenance expenses, diminished risks and liability, reduced environmental impacts, healthier working/living environment that enhances productivity, and nurturing of social connectedness.

4 MSc. Real Estate Candidate, Ardhi University

114 The 19th AfRES Annual Conference It has generally been recommended and concluded that, more research on financial and other benefits of green real estate development to be conducted, remains inevitable to enhance the sector’s new promising developments.

Keywords: Sustainable Development, Green Real Estate, Green Real Estate Development

The 19th AfRES Annual Conference 115 A CALL TO UNLEASH POTENTIALS OF HAZARDOUS LAND IN DAR ES SALAAM: A CASE OF JANGWANI AND MSIMBAZI RIVER VALLEY Meckson Lorden Nzogela

[email protected] School of Earth Sciences, Real Estate Studies, Business and Informatics (SERBI) Ardhi University, Tanzania

The study explains prospects of unleashing potentials of hazardous land in cities. Land is finite in supply and therefore every category of land must be properly utilized. The study was conducted at Jangwani and Msimbazi Valley in Dar es Salaam City with the aim of proposing the best ways of utilizing hazardous land and benefits that can be derived from them instead of being left idle. The proposition of the researcher emanates from the fact that the case study areas are seasonally flooded and that can be put into suitable uses in dry season.

The study adopted a qualitative research design whereby in-depth interviews were conducted to Ilala and Kinondoni Municipals officials, NEMC officials, local leaders, urban planning and botanical experts, engineers, land scape architects and quantity surveyors. Focus group discussion was done with selected residents of Jangwani and Msimbazi Valley. Examination of other similar successful projects around the globe was done and the researcher went to the site and took photos. Pattern matching, thematic analysis and logic models were the strategies employed in analyzing qualitative data. The findings were presented in figures, tables and photos.

The findings revealed that Jangwani and Msimbazi valley can be used for City park, urban agriculture, public parking facilities or urban forest. Diversification channel should be dug, establishment of flood plains, soil treatment and sanitation control must be done prior the proposed uses. Also, it was revealed that the government would benefit from increased revenues from parking fees, flood control, tourism attraction, reduction of expenditures incurred during floods and the project would contribute to aesthetic value of the City.

It is recommended that participatory approach should be used in implementing the project whereby the government, community and responsible authorities would cooperate to offer both financial and material support to accomplish the project.

116 The 19th AfRES Annual Conference THE COSTS AND BENEFITS-IN-USE OF ENVIRONMENTALLY SUSTAINABLE BUILDINGS IN NIGERIA

Ogunba, Olusegun Adebayo1 Gbadegesin Job Taiwo2Oyedele, Joseph3 Department of Estate Management, Obafemi Awolowo University, Ile-Ife [email protected]

Abstract Despite the worldwide acclamation for sustainable building, only three sustainable (green) buildings have been developed in Nigeria. This is ostensibly because many potential developers are unaware of whether the benefits-in-use of such developments outweigh the costs-in-use. The study investigated costs and benefits of sustainable relative to conventional buildings in Lagos, Nigeria with a view to providing information that could potentially enhance development of such buildings. The method was to administer questionnaire on architects, developers, quantity surveyors and valuers involved with the green buildings presently developed in Lagos in order to determine green features used; monetize the costs and benefits of incorporating these green features; and compare costs and benefits of green buildings relative to conventional buildings by means of Net Present Value analysis. The study found a variety of green features in use in green buildings in the study area including among others, solar panels, venting skylights, whole building ventilation systems and so on. The analysis of the present value of costs-in-use showed that the additional installation and annual running costs of including these green features increased building costs substantially over non-green building. The analysis also showed that with both green buildings and non-green building, costs in use exceeded benefits in use. However, the gap between costs and benefits of green buildings was much higher than the gap between costs and benefits of non-green buildings. The study concluded that as at the time of this study, the costs of green building still outweigh benefits, largely because of the exchange rate of the naira to the dollar. It was nevertheless suggested that this should not be a discouragement to potential future green development because there continues to be a worldwide decreasing trend in cost of green features. Keywords: Sustainable Green building, costs, benefits

The 19th AfRES Annual Conference 117 THE IMPACT OF GREEN LABEL ON SUSTAINABLE COMMERCIAL OFFICE DEVELOPMENT IN AN EMERGING MARKET-LAGOS

Austin Otegbulu [email protected]

Abstract Commercial office developments are generally recognised as the workplace for service sector employees and the centres for greater proportion of economic activities in cities. The dominant perception in literature is that higher rental premium is the driving force or motivation for green agenda participation including embarking on office development with green certificates and label. Lagos is an emerging market with a reasonable number of office buildings with green features and very few with green label(certification). In the light of the above background, this study is aimed at investigating the impact of green label on rent premiums of office developments in the study area.

The study is based on both quantitative and qualitative investigation on the motive for preference for both labelled and non labelled green building. It investigates differential in the rent premium in both classes of green buildings. Data was obtained from developers, property managers and occupiers with leasing decision power. Findings from the study are considered useful for real estate developers particularly the commercial office development submarket.

Keywords: Green label, Green office development, Lagos, Rent premium, Sustainability.

118 The 19th AfRES Annual Conference TOWARDS DEVELOPING A CONSTRUCTION CERTIFICATION SCHEME FOR GHANA

Esther N. Terkper, MSc Kenneth Appiah Donkor-Hyiaman, PhD [email protected]

Abstract Most Ghanaian construction workers have low levels of education, often below Junior High School or its equivalent5. The skills of workers, especially artisans are also limited. The informal apprenticeship system, which churns out most of these tradesmen, is not well designed to deliver the quality of skills needed in the construction industry. There is no compulsion on firms and contractors to undertake continual development of the skills of their employees. Indeed, for some types of works, contractors have had to recruit from neighbouring Togo because of a lack of local expertise. Where this is not possible, it has partly led to the poor performance on projects in areas such cost, quality and productivity. This attitude has negative ramifications for the quality of construction works.

The lack of a quality assurance mechanism, reputation-based regulatory system and certification has contributed to opportunistic behaviours among tradesmen to the detriment of clients. Consequently, there is a low level of professionalism in the construction industry especially among the freelance tradesmen and small and medium scale firms. Similar problems with the electricians led to the development of a regulation and certification of the trade, just recently. Therefore, as part of the Construction Industry Development Programme, there is the need to develop a human capital development strategy and a mentorship scheme for the construction sector, which is expected to lead to the certification of construction workers and fill in the skills gaps.

Objectives The principal aim of this project is to promote professionalism and accountability in industry by developing and advocating the adoption of a system of certification, mentorship and a code of ethics for construction

5 Fugar and Salam, 2007; Adjei, 2009; Oduro-Owusu, 2010

The 19th AfRES Annual Conference 119 workers. Its specific objectives are as follows:

1. Conduct a review of the relevant literature on construction certification across countries including Ghana; 2. Review international examples of construction certification policies and schemes; 3. Develop construction certification scheme for the construction industry in Ghana.

Literature Review The literature review focused on understanding the current situation of the construction sector concerning construction skills and construction certification systems of skills.

Two types of materials were used in order to ensure the reliability and validity of the data sources employed to gather the necessary information to carry out the research and compose the literature review. The first one consists of research papers published in recognised and high quality academic journals and the second one involves the compilation of government reports and publications developed by the construction industry. The search has been carried out using keywords in databases such as Google Scholar, Scopus and Science Direct. The keywords used to look for the required information were related to construction certification systems of skills and construction skills.

Unfortunately, this search has made it clear that there is a poor variety of available articles, which deal with the concerns previously exposed in the research objectives. The same thing happens with the Certification Systems of skills. There is a wide gap about the development and organisation of these systems.

Conclusion This paper, therefore, would help bridge the gap in the development and organisation of certification systems of skills, in order to provide quality artisans, supervisors and other workers in Ghana’s construction sector, as Ghana aims to achieve the SDGs.

120 The 19th AfRES Annual Conference ADOPTION OF SUSTAINABLE DEVELOPMENT GOAL NO.11 AS SOLUTION TO HOUSING AFFORDABILITY IN TANZANIA

Boniface Yumba [email protected] MSc Student, School of Earth Sciences, Real Estate Studies, Business and Informatics (SERBI) Ardhi University, Tanzania

Abstract Tanzania is one among countries that experience rapid urbanization in the world with estimated growth rate of 5.4% per annum. Its urban population experience among other things, shortage of adequate, safe and affordable housing and basic services and development of slums. In responding to this problem, on 25th September 2015, United Nations member countries of which Tanzania is a member signed an agreed on the 2030 Agenda for sustainable Development aimed at transforming World from the challenges that it faces. Seventeen development agenda were agreed and adopted for implementation by 2030 of which among is agenda No.11 the Sustainable Cities and Communities. Under this agenda a series of targets have been outlined to indicate how sustainable cities should look like to ultimately overcome shortage of adequate, safe and affordable housing and basic services and development of slums.

This paper intends to analyses as to what extent is Tanzania prepared in implementing the sustainable development goal No.11 targeting access for all to adequate, safe and affordable housing and basic services and eradication of slums. Principal strategy of the study was on evaluation of housing finance projects of 2010 in Tanzania relating to the affordability of houses constructed. The discussion centered on the 1,000 units of housing project for National Housing Corporation, 815 units of housing projects for the Tanzania Building Agency to be built at bunju area in Dar es salaam and 481 units of Watumishi Housing projects in Dar es Salaam. Challenges with regards to the achievement of the goal and recommending ways to overcome challenges to reduce risk of failure in implementing of the goal by 2030 have been provided.

Keywords: Sustainable Development Goal, Sustainable Cities, housing affordability

The 19th AfRES Annual Conference 121 THE UNDERRATED CONTRIBUTION OF THE INFORMAL REAL ESTATE AGENCY SECTOR IN ATTAINING THE SUSTAINABLE DEVELOPMENT GOALS; CASE OF DAR ES SALAAM

Emmanuel Christopher Njavike MSc. Real Estate Candidate, Ardhi University Contacts +255 763 322 501, Email; [email protected]

Abstract African cities are growing at an exponential rate, becoming cultural, socio- economic and political epicenters, attracting people, capital and investment, while also experiencing pressing issues such as urban sprawl, increasing land prices, housing shortages and more (African Development Bank, 2018; Pauleit et al. 2015).

In the attempt to develop the universally accepted vision, the sustainable development goals set out a single normative guidelines for all cities, sometimes disregarding the unique features that mark the particularity of each context. A major purpose of this paper will be, to challenge the universal understanding of informal areas. Access to information is proposed as variables to indicate or address questions of urban inequality. The study intends to adopt Empirical and grounded research. The practical significance of the research is to foster change in the perception of informal real estate agency, which plays a significant role in shaping the real estate agency practice in the city.

Keywords; Informality, Agency, Information

122 The 19th AfRES Annual Conference

CONFLITS FONCIERS DANS L’OUEST IVOIRIEN: LE CAS DE LA RÉGION DE LA RÉGION DE LA NAWA

Par Dédou Zozo Alain Enseignant-chercheur, UFR Criminologie, Université Felix Houphouët-Boigny, Abidjan Email: [email protected]

Résumé L’objectif de l’étude est d’analyser les conflits fonciers dans le centre-ouest de la Côte d’Ivoire. L’étude s’est déroulée dans la région de la Nawa, notamment dans les départements de Soubré, Buyo, Méaguy et Gueyo, une zone à forte concentration d’immigrés qui interagissent avec les autochtones. L’on a utilisé la technique d’échantillonnage à choix raisonné, qui consiste à faire le choix des sujets présentant des caractéristiques typiques. Les résultats attendus seront organisés autour de trois (3) axes fondamentaux : les manifestations, les facteurs explicatifs et les conséquences des conflits fonciers dans la région de la Nawa. Concernant les manifestations, il s’agira de mettre en lumière les indices des conflits fonciers. Les facteurs explicatifs nous permettront d’expliquer lesdits conflits. Le troisième axe permettra de dégager les inconvénients de ces conflits.

Mots clés : Conflits fonciers – Lois – Violences – Criminalité – Cohésion sociale

124 The 19th AfRES Annual Conference PROGRAMMES DE CONSTRUCTION DE LOGEMENTS SOCIAUX ET RÉACTION SOCIALE DANS LE DISTRICT D’ABIDJAN

Par DẺDOU Zozo Alain1 [email protected] , KOUAKOU Konan Isidore2 [email protected] 1Enseignant-chercheur- UFR Criminologie 2Assistants, UFR Criminologie Université Félix Houphouët-Boigny Abidjan/Côte d’Ivoire

Résumé : Cette étude a pour objectif d’analyser les opinions, attitudes et comportements de la population en rapport avec les programmes de construction de logements sociaux dans le district d’Abidjan entamé au lendemain de la crise post-électorale. Une enquête axée sur des observations et des entretiens semi-directifs menés auprès d’un échantillon empirique de 205 personnes, constitué essentiellement de souscripteurs et de promoteurs immobiliers permettra de recueillir des discours, des témoignages, des faits et gestes avant de procéder à leur analyse. Les résultats attendus seront structurés autour de deux points essentiels: D’une part, les agences immobilières agrées et leurs programmes de construction de logements sociaux et la réaction de la population abidjanaise de l’autre. Dans le premier cas, les agences immobilières et leurs programmes de construction seront mis en exergue. Dans le second, nous analyserons la réaction sociale muée en opinions, attitudes et comportements de la population abidjanaise en rapport avec les programmes de construction de logements sociaux.

Mots clés: Programmes de construction – logements sociaux – opinions – attitudes – comportements.

The 19th AfRES Annual Conference 125 LA PERSISTANCE DE L’ARTISANAT MINIER CLANDESTIN EN CÔTE D’IVOIRE: LES CONDITIONS D’ÉMERGENCE ET LE PROCESSUS

D’institutionnalisation comme facteurs explicatifs KOUAME Aimé Richard Doctorant, Institut d’Ethno-sociologie, Université Félix Houphouet Boigny Mail : [email protected]

Résumé La question de l’exploitation artisanale illégale des mines d’or est une préoccupation pour l’Etat de Côte de d’Ivoire. Pour résoudre ce phénomène, des mesures allant de la sensibilisation à la création des brigades de répression ont été prise. En dépit de ces actions menées, cette pratique demeure. Ce texte se propose d’analyser de manière globale les facteurs explicatifs de la persistance de l’artisanat minier illégal en milieu rural ivoirien à partir d’une étude de cas : celui de la sous-préfecture de Hiré ; une zone où la pratique de l’artisanat minier clandestin se développe de manière asymétrique à celle de l’exploitation légale.

L’étude est essentiellement qualitative. Pour la collecte des données, les entretiens ont été réalisés auprès de différents groupes d’acteurs qui participent au système de production dans la mine artisanale : 03 chefs de mines, 03 propriétaires terriens, 20 ouvriers, 03 représentants de l’administration locale (la mairie), 05 membres de la chefferie villageoise. Les résultats de l’étude montre que la persistance de l’artisanat minier est le fait d’une innovation sociale qui à émergée territorialement en s’instituant tout en aboutissant à une transformation sociale.

Mots clés: persistance, artisanat minier, pratique illégale, innovation sociale, Côte d’Ivoire

126 The 19th AfRES Annual Conference

ORGANISATIONAL CHALLENGES OF LOCAL AUTHORITY MANAGED PUBLIC HOUSING. A GHANAIAN EXPERIENCE

Samson Aziabah Department of Real Estate and Land Management, Faculty of Planning and Land Management, University for Development Studies, Ghana.

Abstract Public housing has been widely acknowledged for its tremendous contribution to addressing housing deficit in many countries. Notwithstanding the shift towards neo-liberalism and the emphasis on private sector led housing production, public housing still remains relevant. In Ghana, the Government undertook a large scale sale of government built public housing in the 1980s in direct response to the neo-liberal call. The remaining stock which were transferred to local authorities (LAs) to own and manage continue to contribute to labour mobility and productivity by offering secure housing for some civil servants. Unfortunately, the conditions of the houses have largely been described as poor due to ineffective management and maintenance; more technically described as organisational challenges. The purpose of this study was to identify the challenges LAs face in the management of public housing. The study interviewed policy makers at the national level, local authority officers and tenants. It found that, there is inadequate policy and regulatory framework for housing management. Furthermore, poor organisational structure and coordination, inadequate skilled personnel, and inadequate finance are among key challenges of public housing management. The paper suggests a concentration of housing management activities at the local level, developing a clear structure and defined roles for actors, and tenant participation as potential directions for solutions to these challenges. Key words: public housing, housing management, local authorities, organisational challenges, Ghana

1. Introduction Housing is undoubtedly one of the most important necessities of life; and according to the United Nations everyone is entitled to, as of right in a decent form. Unfortunately, the world continues to grapple with issues of quality and quantity requirements of housing for an increasing global population. While much effort is directed at increasing the housing stock, it is arguably more imperative to keep the existing housing in habitable conditions. In that regard, maintenance becomes an important component

128 The 19th AfRES Annual Conference in the discourse about global housing need. Indeed maintenance is so important that the United Nations has stated that building houses alone does not bring about the desired change, unless good housing management concepts and effective practices are established to promote community development, social improvement, proper maintenance and upkeep of estates and financial arrangements for repaying loans and collecting and carrying charges (UN, 1969; In van Wyk, 2006). Unfortunately, the housing discourse especially in many developing countries has largely focused on provision (e.g. Ademiluyi, 2010; Dube, 2013; Ngomba, 2014); and quality, or satisfaction with existing quality (Ibem & Amole, 2013; Ukoha & Beamish, 1997; Yakubu et al, 2014); not much attention has been paid to maintenance. Sadly, where maintenance has been discussed (e.g. Cobbinah, 2010; Oladapo, 2006), the focus has largely been to echo visible evidences of poor maintenance, with little attention to the underlying courses. Concerns about poor maintenance are particularly rife in both private and public rental housing in developing countries (See Asabere, 2007; Cadstedt, 2010; Komu, 2010; Obeng-Odoom, 2011a). Poor maintenance, or the lack of it accounted largely for the decision of most governments to sell-off public housing units at subsidised prices to largely sitting occupants in the hope that they will maintain them (UN-HABITAT, 2003).

In Ghana, most public housing was sold out to sitting tenants for similar reasons like poor maintenance and refusal of occupants to pay rents (Asabere, 2007). The remaining stock were transferred to local authorities to manage and maintain. However, it would seem that even though the government recognised its failure to maintain, significant steps have not been taken to avert the same fate befalling the new managers, local authorities.

1.1 The state of local authority managed public housing The expectation has been that the new managers will do better to maintain and improve the conditions in public housing. However, the accounts of occupants and reports of authors show that conditions continue to deteriorate due to poor or lack of maintenance. Obeng-Odoom and Amedzro (2011) report of poor maintenance in public housing and attribute the situation to poor maintenance attitude, lack of estate management expertise, low rents and unwillingness to pay rents. Other authors (e.g. Arku, 2006; Asabere, 2007; Asiedu and Arku, 2009; Obeng-Odoom, 2011b;

The 19th AfRES Annual Conference 129 Tipple, 1999; Tufuor, 2004; UN-HABITAT, 2011) have highlighted poor management. Beneficiaries have also decried the deplorable conditions in public housing (eg. Benson, 2014). The easy way out, sell-off the houses, has proven unsuccessful in solving the problem of poor conditions. For instance, Konadu-Agyemang (2001) reports that a survey of housing conditions by the Town Planning Department in 1989 concluded that 82% of houses (rental and owner occupied) needed to be demolished because they were not fit for human habitation. More recently, Obeng-Odoom (2011a) and Osumanu, et al (2016) have reported of poor conditions in private rental housing. Unfortunately, much of the research simply highlight poor maintenance and do not delve into the underlying causes of non-maintenance. This paper contributes to fill this gap by examining the organisation for managing public housing by local authorities.

This paper examines the challenges to the organisation for management by local authorities that have contributed to poor maintenance in public housing. It posits that well organised management may lead to improved maintenance and better conditions in public housing. A deeper understanding of the organisation for housing management by local authorities is imperative for good reason. First, nearly all local authorities manage public housing, therefore, there is a potential for solutions to have greater impact on the larger housing sector. Second, public housing conditions have not really improved following the sale and transfer. Third, since the 1980s, government has not embarked on large scale construction of public rental housing6 (Kwofie et al, 2011). It is noted that central government or local authorities continue to construct houses albeit on a small scale as duty posts for civil and public servants. By identifying the organisational challenges, local authorities/municipalities can better organise to manage public houses. Fourth, public housing presents a convenient starting point for discourse and practical efforts to maintain and improve housing conditions in the country and real estate in general. The paper answers the questions, how is public housing by local authorities currently organised? How can the organisation of public housing be analysed? And, what challenges confront the organisation and practice of housing management by local authorities in Ghana? The next section, discusses the development of public rental housing in Ghana. Section 3

6 The John Kufuor government (2000-2008) started some affordable housing projects which have not been completed. The John Mills (2008-2012) and John Mahama (2012-2016) governments have completed some housing projects for sale not rental.

130 The 19th AfRES Annual Conference presents the framework used to analyse public housing management, while the methods is presented in section 4. The findings and discussions are presented in section 5. Section 6 presents a summary of the key organisational challenges and directions for solution. The conclusion to the paper is presented in section 7.

2. Public rental housing development in Ghana Rental housing in Ghana became popular after independence in 1957, and has become important in meeting especially urban housing needs. It accounts for over 51% of housing need in Ghana. According to the Ghana Statistical Service (GSS, 2013), the rental housing tenure increased to 31% in the 2010 population census over the 2000 figure of 22.1%; the most increases occurring in urban centres. Rental housing is significant because renters do not need to own the house (Obeng-Odoom, 2011a). It allows for smaller units to be rented which is cheaper than purchasing a house. In Ghana it is typical to rent rooms in multifamily-occupied compound houses (GSS, 2014; Luginaah et al, 2010; Tipple, 1988; UN-HABITAT, 2011) which is convenient and suitable for poor and low-income households. Also, renting tends to bridge the gap between homelessness and home ownership. The rental sector may be categorised into public and private, and formal and informal (Arku, 2009).

Public rental housing is provided by the state or state agencies for largely civil servants. These houses are found across the country in relatively smaller quantities. Large quantities are found in the main cities of Accra, Kumasi, Takoradi and Tamale. The house types vary from medium-rise walk- up apartments, detached or semi-detached single or two bedroom units, to row-houses and 3 or more bedroom bungalows. Most public houses tend to be located in prime areas and relatively better serviced with roads, piped water, and sanitation and sewerage systems among others. Because of the limited quantity, public houses are mostly occupied by senior civil servants and a few junior officers.

According to Arku (2006), public housing provision began under the British colonial government following interventions to resettle victims of the bubonic plague in 1924, and the earthquake that affected parts of Accra in 1939 (see also Tipple & Korboe, 1998). It was also in response to agitations of lack of decent housing by returnee veterans of World War II. The Department of Social Welfare and Housing (DSWH), established in 1946

The 19th AfRES Annual Conference 131 constructed public housing in the major towns of Accra, Kumasi and Takoradi for veterans, civil and public servants and colonial administrators (Arku, 2009). Whereas these interventions were reactive in nature, there was a more structured approach to public housing provision for the population after Ghana became a republic in 1951. The first government led by Kwame Nkrumah made provision for housing development in its 1959- 1964 and 1964-1970 plans. The Tema Development Corporation (TDC) (1952) and State Housing Corporation (SHC) (1955) were the main agencies that provided housing respectively for the industrial town of Tema and the rest of the country. Other programmes such as the Low-Cost Housing Programme, and the affordable housing scheme by the Social Security and National Insurance Trust (SSNIT) were introduced to provide housing.

It is important to note that even though public housing programmes were normally conceived for low-income households, they actually served mainly government employees or employees of state agencies (Arku, 2009; Asabere, 2007). Perhaps, the government saw public housing as an incentive to mitigate the conditions of workers whose incomes were said to be low. The government also tended to use public housing to intervene in population distribution and to promote labour mobility, by planning housing in towns where employment opportunities were planned (Tipple & Korboe, 1998). Thus, public rental housing became a vehicle for facilitating the transfer of public or civil servants such as nurses, teachers and security personnel across the country. Furthermore, by targeting government employees, it also seeks to promote productivity in the public sector (Gilmour, 2009; Ibem et al, 2011; Olayiwola et al, 2005; Tipple & Korboe, 1998). However, in the 1980s there was a change in government’s perception of how to address the increasing housing need of the population, this affected public housing.

2.1 Change in perception of housing development and impact on public housing In the 1980s, amid growing financial difficulties and the need to be financially responsible (UN-HABITAT, 2003), government decided to withdraw from public housing provision as it was imprudent. This decision was spurred by failure of housing programmes occasioned by conditions such as low rent levels of public rental housing and refusal of some tenants to pay rents; these made it nearly impossible to expand the schemes or even maintain the existing stock (Arku, 2006, 2009; Asabere, 2007; UN-

132 The 19th AfRES Annual Conference HABITAT, 2003). In addition, the World Bank, IMF and the US Agency for International Development (USAID) heavily discredited public housing and propagated the notion that the public sector by nature was incapable of being an efficient landlord (Harris & Arku, 2006; UN-HABITAT, 2003). Instead, they argued, the state should play the role of an enabler for the private sector to lead housing development.

In lieu of its new role as enabler, the challenges with management, and the deteriorated conditions, government decided to sell off its public rental housing stock. However, due to public resistance, it could not sell off all of the stock. Thus, public housing declined from about 10% of total housing in 1982 (Kwofie et al., 2011) to about 3% of the total rental housing stock. A large part of the remaining stock was transferred to local authorities to manage. However, that part of the stock provided by quasi-public institutions such as the Volta River Authority (VRA), Ghana Railway Authority, Takoradi Harbour Project and Social Security and National Insurance Trust (SSNIT) for employees were not affected. Given that the motivation for the sale was partly due to poor conditions, this paper focuses on that part of public housing managed by local authorities.

3. Conceptual framework for housing management In general, housing management refers to the process of organising, planning, directing and controlling, and executing activities to achieve desired results of good housing conditions. It involves value creation, making choices and design of organizations and management style to reflect the task within the housing sector (Magretta 2002, in Anheier, 2005). The UN has made an emphatic statement about the importance of housing management and maintenance (supra). This statement also gives indication of what should constitute housing management. According to Murie and Rowlands (2006) housing management should include allocation procedures, management of void properties, repairs and maintenance, support for tenants, dealing with unacceptable behaviour, and rent collection and arrears recovery. Priemus, et al (1999) categorise these activities into three: technical, social and financial. (see also Boelhouwer, 1999; Tsenkova, 2009). These housing management activities must be performed within an organisational framework that ensures effectiveness and efficiency. The question then is, how do we know the right organisational framework to achieve effectiveness and efficiency. Fortunately, we can find an answer in the 7S framework developed by

The 19th AfRES Annual Conference 133 Waterman Jr. et al (1980). This 7S framework has been acclaimed as a good tool for combining the necessary elements to build a strong organisation. Indeed, Peters (2011) quotes a former McKinsey and Co. managing director, Rajat Gupta at saying the following about the 7S framework:

“The science of management continues to develop…I have always found that the 7S framework offers a sound approach to combing all of the essential factors that sustain strong organisations…the 7S framework remains one of the enduring elements of diligent, focused business management”.

The 7S framework has been adapted (figure 1) by Gruis, et al (2009) and used to analyse management of privatised housing in Europe, Australia and China. The framework is premised on the fact that effectiveness results from the interaction of several multiple and interconnected elements, including: policy, legislation, organisational structure, human resources, finance, culture and housing quality (the latter being an element and also the product of the rest). All the elements must be considered in equal measure to achieve holistic change. The lines connect each element to the rest to emphasize this interconnectedness. This adapted framework of Gruis et al (2009) was used to investigate the organisation for management in the case study local authorities.

3.1 The elements

Policy/strategy Policy also referred to as strategy describes the way of carrying out housing management. It refers to the plans formulated in response to or in anticipation of changes in the external environment –customers or competitors (Waterman Jr. et al., 1980). It sets the direction and objectives for housing management. For instance, direction on how local authorities position themselves to respond to the demands of housing management.

Legal framework The legal framework refers to legislation and procedures that regulate housing management practice and landlord-tenant relations. They define what tenants and managers can and cannot do. For example, who is eligible for public housing, what are the rights and responsibilities of tenants and landlords, how to finance management and maintenance.

134 The 19th AfRES Annual Conference Organisational structure Organisational structure describes the institutional setup, formal and/or informal division of tasks, responsibilities, and the coordination of these tasks in housing management. This structure must detail both vertical and horizontal relationships and decision-making in the organisation. In housing management, structure should provide clarity to ask questions such as: Who decides on management policy? Who carries out day-to-day management?

Figure 1: Organisational framework for housing management Source: Gruis et al. (2009)

Finance structure This element describes the financial resources available, strategies and measures in place to raise funds to finance housing management and maintenance. It underscores the importance of regular reliable and

The 19th AfRES Annual Conference 135 adequate funds to manage, maintain and possibly expand the housing stock. The main sources of funds include fees and charges, rents, and borrowing. This element therefore relates to the mechanisms such as rent policy (determination, collection and dealing with arrears), procedures for raising funds externally (borrowing) and spending financial resources.

Human resource The element of human resources describes the required and available manpower, knowledge, and skills to perform the tasks and activities of management. Technical expertise, that is, formal training is required for repairs and maintenance, financing, and coordinating management activities (Waterman Jr. et al., 1980). It examines the availability of qualified estate officers, artisans such as plumbers, electricians, and carpenters, including morale and motivation for human resource.

Organisational culture Culture describes the values, standards, attitudes, and aspirations, which are often unwritten, that guide behaviours of people and organisations involved in housing management. For example, are households aware of their management responsibilities? How do they respond to these responsibilities? How is the relationship and responsiveness of staff to tenants and housing issues? It includes broad notions of future direction that must be infused in the behaviour of staff and the organisation (Waterman Jr. et al., 1980). Clapham et al. (2000) have stated that “organisations may listen to what managers say, but they believe what managers do” (p. 22). Therefore organisational culture can greatly impede strategic possibilities and affect performance outcomes.

Housing quality/form This element describes the current form and quality of existing housing and the need or possibilities for improvement. The physical quality in terms of materials of construction, and repair and maintenance, as well as functional quality are important to maintain the value of the house. Do the houses need major repairs and renovations? Whereas housing quality describes the existing form of housing, it is also the product of the combination of all the other elements in the framework. For instance, the enforcement of building regulations and maintenance standards impact directly on housing quality or form.

136 The 19th AfRES Annual Conference The 7S based framework allows for a comprehensive examination of the organisation of housing management. Therefore, it is useful in identifying organisational challenges. This framework is used to describe and analyse the organisation for housing management by local authorities in Ghana.

4. Methods The study was conducted in four local authorities in three regions namely Upper East – Kassena-Nankana municipal, Bolgatanga municipal; Upper West – Wa municipal; and Northern region –Tamale metropolis (See figure 2). These local authorities were conveniently selected based on time, proximity and access to information. The study was exploratory in nature, therefore, it adopted qualitative methods. Hennink, Hutter, and Bailey (2011) have said that qualitative research involves the use of methods such as in-depth interviews, focus group discussions, observation, content analysis, visual methods and life histories or biographies. Semi-structured interviews and observation (notes taking and pictures), and purposive and convenient sampling techniques were used in this study.

Three groups of respondents were interviewed; at the national level officers in the ministry of Water Resources, Works and Housing (MWRWH); regional level – officers responsible for housing; at the LA level – officers responsible for housing, and tenants. The officers interviewed at the Housing ministry were a deputy director responsible for housing, and an estate officer responsible for managing the houses under the ministry. At the regional level, a deputy director at the Regional coordinating Council (RCC) responsible for housing was interviewed in both Upper East and Upper West regions, whiles the regional estate officer was interviewed in the Northern region. For municipalities or metropolis that double as regional capital, the regional officers exercised responsibility for the housing at the municipality. Therefore, municipal officers were not interviewed. At the district level, the officers interviewed were the co-ordinating director and an administrative assistant responsible for housing in the Kassena-Nankana municipality. All these officers were purposively selected and interview guides were used for the interviews.

Still at the local level, a total of 40 tenants (10 from each LA) were interviewed. In each of the local authorities, there are at least three housing estates. The study conveniently selected and interviewed at least five tenants in two conveniently selected housing estates. In Wa municipal, the

The 19th AfRES Annual Conference 137 estates were Dobele and Degu; in Kassena-Nankana municipal, the estates are located in Nogsenia and Sabora. In Bolgatanga, the estates are located in Tanzui and Bukere, while in Tamale Metropolis the estates are located in Sakasaka and Kukuo. The study relied on a small sample of tenants because the responses were adequate and exhaustive to present a general overview of tenants’ perception. Furthermore, the study deemed the sample of tenants adequate to gain in-depth knowledge of housing challenges through detailed interviews, (Miles et al, 2014; Miles & Huberman, 1994). Tenants were conveniently selected and interviewed using a questionnaire consisting of both closed and open-ended questions.

Figure 2: Map showing regions and municipalities studied

5. Findings and discussion For the purposes of analysis, the elements of the 7S based framework can be categorised into governance related elements and operational management related elements for housing. The governance elements include: Policy/strategy, legal framework, and finance; whereas

138 The 19th AfRES Annual Conference organisational structure, human resource, finance, culture and housing quality are management related. This distinction is purely for the purposes of discussion as the issues cut across both categories in practice.

5.1 Governance of public housing

Policy/strategy for housing management A housing policy gives overall direction and focus for effective housing management. The study found that there is no specific government policy for public housing. However, it found that one of the objectives of the national housing policy launched in 2015 – “to encourage housing improvement of the existing stock, through promoting neighbourhood level maintenance and establishing incentives for effective maintenance”, may be extended to include public housing. On the subject of specific programmes to promote public housing management and maintenance, the study found the Civil Service Administrative Instructions 1999, to be the closest to a policy for public housing. Chapter 8 of the instructions, under Staff Welfare Parts I–III, deals with accommodation of civil servants. It provides general guidance on allocation, tenant responsibility, rent payment among others for government housing.

Unfortunately, these guidelines, have either not been adequately communicated to local authorities, and so they are unaware of them, or they are aware of them but are simply not applying them to manage public housing. For instance, responding to whether there is a policy on housing management, a LA officer said, “We don't have a well-documented policy. But we have what I will describe as guidelines that help us to manage these units. These guidelines involve; applying to a bungalow allocation committee, and anytime there is a vacancy they meet to look at the applications…” (Housing officer, Navrongo, 2015). Another officer said, “Yes, we have policy guidelines…” (Deputy director, RCC, Wa, 2015). Further probing revealed that he was referring to the Civil Service Administrative Instructions, albeit unknowingly. An officer at the ministry said “there is no separate policy for public housing. All past governments have been working on the housing policy started since 2005. Fortunately. cabinet has approved it and it will be launched later this year [2015], That can take care of public housing” (Deputy Director –policy, housing ministry, 2015). Some officers may not be aware because the Administrative Instructions appear to be dated already, and may not have been widely circulated.

The 19th AfRES Annual Conference 139 An examination of the Administrative Instructions show that it is fairly adequate in addressing management and maintenance. What has not been satisfactorily addressed is how to finance the maintenance by local authorities (this point is further discussed later). In the current situation, it is difficult to say that the absence of policy has negatively affected housing management. What seem obvious is that LAs are not applying these guidelines to manage the housing stock. It is also important review these guidelines to make housing management and maintenance more sustainable.

Legal framework for housing management Like policy, there is no legislation in the strict sense for housing management. Here again, LA officers said there are guidelines. The officer in Kassena-Nankana said: “…the guidelines include a committee to make allocations based on seniority of applicants and their circumstances at the time of applying” (Housing officer, Navrongo, 2015). Interestingly, the guidelines in reference can be found in the Administrative Instructions of the Civil Service, 1999. Still on the question of regulations, and about finance in particular, an officer said: the problem is that when you are allocated a bungalow it is expected that a percentage of your salary is deducted into a special account but these deductions are done at the headquarters in Accra, the money does not come to the RCC so that we could use the money to maintain the facility, the money goes to the central government.” (deputy director, RCC, Wa, 2015). The estate officer at the ministry also stated “We have regulations that we follow to allocate and manage these houses. But the problems is applying them. I think we only try to go by the allocation part” (Housing officer, MWRWH, 2015). Conceivably, the Rent Act 1963, Act 220 addresses landlord-tenant relations, and therefore may be applied in housing management and maintenance.

Even though there is no specific regulation with respect to public housing management, it appears the guidelines and laws are able to serve the purpose, albeit unsatisfactorily. The deficit, however is that they barely address issues of financing which is important to be regulated for sustainability. Again, there is the challenge of applying existing regulations.

140 The 19th AfRES Annual Conference Organisational structure for housing management The organisational structure for housing management by LAs consist of a vertical relationship involving a central government agency (the Controller and Accountant General’s Department (CAGD)), LAs (districts/municipalities) and tenants; and a horizontal relationship at the district level involving the District Administration (through allocation committee) and Works department (figure 3). Asked if LAs have any relationship with central government in regards to the houses, an officer said:

“yes, we have few cases of people who pay rent to central government. Because the rents are deducted at source, we don’t get it…such arrangement existed before the public housing units were transferred to the assembly [municipality]” (Housing officer, Navrongo, 2015).

An officer explains that the allocation committee is responsible for managing the houses. However, an administrative assistant who is a member of the committee handles day-to-day operations. “… the policy guideline is that you apply to the RCC… So when you apply like that, a committee is set to review the applications and then make recommendations for management decisions. I handle the day-to-day issues.” (Deputy director, RCC, Wa, 2015). There are no specific requirements for the constitution of the allocation committee. The evidence show that it would normally include a representative from the human resource department of the municipality, municipal engineer, Works officer, and an assistant director. The Works department is responsible for carrying out repair and maintenance, and offering technical advice to the allocation committee.

The current organisational structure has implications for effective housing management and maintenance. This may not be a problem for effective housing management if the activities are coordinated. Unfortunately, this is not the case. For example, after collecting rents through direct debits of tenants’ salaries, the CAGD fails to transfer same to local authorities. Instead, it is paid into the consolidated fund. Consequently, local authorities lack funds for management and maintenance of the housing stock.

The 19th AfRES Annual Conference 141

Figure 3: Current structure and relationships among actors in public housing management in Ghana

Finance structure for housing management The study found that rent is the main source of finance available to local authorities for managing public housing. For a long time, rent have been set by central government at a flat rate of 10% of a tenant’s gross salary. This means that the amount of rent is automatically reviewed anytime salaries are increased. An officer at the ministry said, “Yes, central government sets the rent. It is a flat percentage, 10% of the person’s gross salary per month…It is deducted at source and controller and Accountant General’s Department [CAGD] sends the money into the consolidated fund” (Estate officer, Housing ministry, 2015). “[T]he rent is 10% of basic salary which is deducted by the CAGD” (Assistant director, RCC, Bolgatanga, 2015). Unfortunately, the rent deducted by central government is not in turn transferred to local authorities for management and maintenance. See comment of LA officer supra. Other officers said:

142 The 19th AfRES Annual Conference “No, we do not receive funds for maintenance. It used to be the public works department (PWD) that would receive the money and who were in charge of maintaining the units but that has ceased.” (Assistant director, RCC, Bolgatanga, 2015). “…it is expected that a percentage of your salary is deducted into a special account but these deductions are done at the headquarters in Accra [the capital], the money does not come to the RCC so that we could use it to maintain the facilities, the money goes to the central government.” (Deputy director, RCC, Wa, 2015).

There are concerns with the current finance structure (rent determination and mode of collection) and its ability to promote effective management and maintenance. First, the rents are not economic and they are said to be unfair. An estate officer explained:

“We are not paying economic rent … but “If we have to pay economic rent, it will be difficult for staff because of the low level of incomes. I will suggest the rent is reviewed periodically…If both a senior staff and junior staff occupy similar dwellings with similar services, the senior officer will be paying more than the junior officer because his salary is higher, and this is unfair.” (Estate officer, Housing Ministry, 2015).

The rents are not economic because, as explained by Tipple (1999) public housing aims to support civil servants whose salaries are considered to be low. In this spirit, it may be argued that the current arrangement where high earning tenants pay more for similar housing is “socialist” and therefore fair. After all, because of the inadequacy of public housing, there are many more civil servants who are paying economic rents in private housing. Comparing private and public housing, an officer said:

“Well, this is cheaper, one you have privacy, and second, where you are, there is everything. For instance, in the private houses, people rent single rooms for 50 cedis, so two rooms is 100 cedis. In the public house, you may have two rooms, hall kitchen and bath and toilet to yourself. But in a private rented house you have to share some of the facilities such as toilet and bath and kitchen.” (Estate officer, RCC, Tamale, 2015).

The 19th AfRES Annual Conference 143 The suggestion by some of the officers that rents should take account of the quality of the houses may be considered. Some local authorities are able to determine their own rents through the fee-fixing resolution of the assembly for houses whose occupants do not pay rent to central government (for example, Kassena-Nankana and Wa municipalities). An officer explained that this approach to determining rents takes account of the quality of the houses. The second concern, rents not being transferred to local authorities has already been adequately explained.

The consequence of this finance structure is that no adequate finance is available to maintain the houses, as explained by an estate officer when asked about the lack of maintenance: “Funds are not released. It is a problem of lack of funds…the money does not come to PWD or Works and Housing...” (Estate officer, Housing ministry, 2015).

5.2 Management of public housing Human resource for management and maintenance The human resource structure of LAs management may be grouped into technical –responsible for repairs and maintenance, and management – responsible mainly for allocations and tenant relations. The technical personnel are in the Works department or the Public Works department, respectively at the District or Regional level. The works department is an in- house unit responsible for maintaining publicly owned buildings. Thus, it has a host of skilled artisans including carpenters, masons, plumbers and electricians who are supposed to carry out repairs and maintenance. “They [Works department] are a blend of people with different expertise that is, estate officers, surveyors, draughtsmen and so on. So they advise us on the management of the public houses” (deputy director, Wa, 2015). The management personnel consist of the allocation committee, which includes the Administrative assistant responsible for day-to day operations, including dealing with tenants. Asked about the adequacy of staff to carry out maintenance, some officers said that they were inadequate.

“[t]hey are not always adequate and even the capacities of the staff. They are not many and then, they also lack capacity so they still have some deficiencies in terms of staff, the department almost fizzled out but it is now that they are given small resources, the works unit are now being integrated” (deputy director, RCC, Wa, 2015). “…we are not

144 The 19th AfRES Annual Conference employing, so people are retiring and they are not being replaced…instead of replacing him with somebody who has the skills and competence to do the work, they bring in somebody new who doesn’t know anything about estate management. I have it here...” (Estate officer, Housing Ministry, 2015).

In addition to the above, the evidence show that LAs do not have estate officers, even though the Administrative Regulations 1999 of the Civil Service require each Public Works department (PWD) or Works department to have an estate officer. Even though Obeng-Odoom (2011b) found that there is a general lack of professional estate/housing managers. The human resource problems may be more of low recruitment than unavailability of expertise. It is also noted that there is no staff directly related to public housing management. Could it be because there is barely any finance role to perform at the LA authority level? Or the district finance department plays that role? It remains to be seen.

Organisational culture for housing management The study assessed organisational culture by examining managers’ attitude towards the houses and tenants, which is manifest in for example maintenance activities performed, frequency of inspection of houses to identify problems, responses to tenants’ complaints, existence and enforcement of minimum standards of maintenance. Asked whether there exist any minimum standard of repair that both tenants and managers to comply with, all the officers said no. An officer said:

“We don’t have standards. We don’t do any maintenance because they should have been sending us funds, or materials for the maintenance to be taken care of. So, can we hold them [tenants] to account if they don’t also repair the houses? The good ones [tenants] take care of minor maintenance…” (Estate officer, RCC, Tamale, 2015). Still on maintenance, an officer tells how some LAs are getting around the situation of lack of funds:

“we say the minor, minor repairs, you [tenant] will do that yourself. But if it is beyond you [tenant], you have to write to us and if we don't have money to do it we will let our

The 19th AfRES Annual Conference 145 engineer make the estimates and if you are in the position, you do it and we use it to off-set your rent.” (Housing officer, Navrongo, 2015).

On the question of the attitude of LA managers towards tenants, the majority (30, 75%) said they do not get responses from when they report complaints for repairs. Some tenants said:

“We visit their [LAs] offices to complain as a group formally or individually. But they [LAs] don’t mind us”; “When you report a complain, they don’t do anything at all”; “No need to contact them [LAs] because no attention is paid to tenants in terms of maintenance of the facilities in general”; “I go there to make verbal complaints about the management of the environment and maintenance. But they [LAs] don’t respond to us at all.” (Tenant interviews, 2015).

The evidence show that LA managers respond poorly to complaints and requests to maintain the units; so is their relationship with tenants. This situation does not signal that housing management is driven by any organisational values and attitudes. Furthermore, it points to a situation of low tenant participation, which rather is critical in housing management. After all, tenant satisfaction is the ultimate aim of housing management. The poor organisational culture may be attributed inter alia to the lack of, or inadequate professionals, and lack of requisite training. Frustrations as a result of lack of funds for maintenance and absence of clear guidelines for management may also explain the poor culture.

Quality of public housing Housing quality relates to houses meeting basic acceptable standards in terms of initial construction and subsequent maintenance. The study found that all the houses are constructed of sandcrete (cement and sand) blocks. Sandcrete block is regarded as durable and a dominant wall construction material, accounting for about 57.5% of housing construction in Ghana (GSS, 2013). Most of the houses were constructed as late as the 1970s. It further found that very minimal maintenance occurs in public housing. The majority of tenants (87.5%) said LAs do not perform their maintenance responsibility. In response to the question of whether the LA maintain their housing stock. Some tenants said:

146 The 19th AfRES Annual Conference “they do not maintain the houses, look, the walls are cracked, ceiling is falling off as a result of leaks from the roof, the window frames are weak and everything is falling apart.”; Never has there been anything of the sort for this residence. I pay for all the damages since I moved in here.”; “Most complaints never end anywhere. The story is always the same. No money. Meanwhile, we pay rent”; “The Assembly [LA] is supposed to repair but they would not, and they have refused to allow us repair.” (Tenant interviews, 2015).

The lamentation by LA managers about lack of funds, hence their inability to maintain the houses has been adequately reported. The response from an officer succinctly summarises the impact of non-maintenance. He said: “…for residential, I do not remember the last time PWD was able to do maintenance, with the exception of prestige buildings…because we are not maintaining them, they are deteriorating” (Estate officer, Housing ministry, 2015).

It is obvious that the problem with housing quality is largely due to lack of regular maintenance. The result is that most of the houses are dilapidated as in figures 4 and 5, and to a large extent not suitable for occupation. Most of the houses are in bad physical conditions – showing visibly faded wall painting, rotten wooden components, dysfunctional fittings and fixtures and leaking roofs (See figure 4 and 5). Some tenants described the condition of the houses as follows:

“the roof is old and leaks whenever there is heavy rain. The ceiling is also discoloured. The doors are weak, windows weak, and the nets are torn”; We had to replace the plumbing and some of the electrical fittings, so now its ok”; “the roofing is ‘infected’ with heavy leakages, the doors are broken and windows also broken. The walls are weak and parts of the foundation eroded. Electrical fittings are so poor that they cause problems every now and then”(Tenant interviews, 2015).

The 19th AfRES Annual Conference 147 The description by tenants of conditions in public housings says it all, that there are challenges with management; these challenges find expression in the conditions of public housing.

Figure 4: Faded painting, cracked walls and rotten ceiling of some public housing units

Figure 5: Public housing flats

6. Summary of challenges and directions for solution It has been shown in the previous section that public housing management by LAs is fraught with challenges, which have tended to impact negatively on housing conditions. These challenges are summarised in this section and potential directions for solution discussed.

First, there is no adequate policy and regulatory guidance for public housing management. Unlike the Netherlands and England, Acts and regulations have defined the structure and requirements for social or council housing management (Aziabah, 2018). Even though the percentage of social housing

148 The 19th AfRES Annual Conference differs greatly in these two countries compared to Ghana, they present important lessons for developing policy and regulations for public housing. Second, there is a poorly defined organisational structure for housing management. This has given grounds for confusion and ineffectiveness in management. Both the CAGD and LAs collect rents. As a result, LAs are not able to fully mobilise rent revenue for maintenance. But, it is more effective to concentrate all operational activities, including rent collection at the LA level for effective utilisation and greater impact. If necessary, central government through the ministry for housing or an agency may supervise management. A similar model used in the Netherlands (where there is a supervisory board, and management and operational units) has proven effective in giving housing associations the independence to operate, and at the same time keeping a close watch at their activities to minimize losses (AEDES, 2016).

Third, LAs do not have the full complement of skilled personnel to manage public houses. The Local Government (Departments of the district assemblies) (Commencement) Instrument 2009, LI1961 requires metropolitan, municipal, and district assemblies to establish Estate departments and have qualified officers manage public property. It appears this requirement has not been fully satisfied. LA could take advantage and engage professionals being by the universities. The requisite artisans will need to be recruited for the Works department and where necessary major maintenance works contracted out. This model has been used in several contexts including Hong Kong (Cheung & Yip, 2003), and the Netherlands (Straub, 2004). It is noted that the trend today is to keep a skeletal maintenance team and contract out much of the especially specialised maintenance. Admittedly, the broader social context must support such a model, and it seems Ghana and most Africa are not yet prepared for it.

Fourth, lack of sustainable source of finance for management and maintenance. The lack of clear and coordinated roles by local and central government largely accounts for this challenge. Without delving into the ability of current rents to sufficiently cover maintenance, the non-transfer of rent revenues to LAs means they cannot maintain (See S. B. Aziabah, 2018). Even though this study did not delve into how LAs utilise the rents they currently collect, the persistent refrain of no money to maintain gives cause for concern. Thus, if LAs succeed to fully collect rent locally, how these rents are spent will be an important issue to address.

The 19th AfRES Annual Conference 149 Firth, there is poor participation of tenants in housing management. The relationship and attitude of managers towards tenants point to this. There are not spelled out customer care codes for managers. But, the impact of tenant participation in housing management cannot be overestimated. Among others, it promotes accountability, better financial control and reduces the burden of bureaucracy (Lang, 2015). Tenant participation has led to enhanced service delivery and higher satisfaction among tenants in public or social housing (Redmond & Norris, 2007; Wong, 2006; Yip, 2001). Structures must be in place to promote tenant participation. Such structures may be spelled out in law or by regulation as is the case in public housing in Hong Kong, the Netherlands and England (Aziabah, 2018).

7. Conclusion The role of public housing in addressing the ever increasing housing deficit cannot be overemphasized. That notwithstanding, housing actors have decried the quality and conditions of public housing in Ghana, blaming it on poor management and maintenance. This paper examined the challenges of public housing management in Ghana. It addressed the questions: how is public housing by LAs currently organised? How can the organisation of public housing be analysed? And what challenges confront the organisation and practice of housing management by LAs in Ghana?

The paper finds that public rental housing management is embedded in local government administration, with central government, through the Controller and Accountant General’s Department being involved in rent collection. The study used the adapted 7S based model as a framework to analyse housing management by LAs and identified the following challenges. First, there is no adequate policy and regulatory framework for public housing management. Second, the organisational structure is poorly defined. As a result, there is lack of coordination among actors in management. Third, the financial structure is poorly outlined; consequently, LAs are not able to collect all rents and apply them to housing management. Fourth, LAs do not have the full complement of competent housing professionals and artisans to manage and maintain public houses; and fifth, there is poor tenant participation in housing management. All these challenges act collectively to produce the quality and conditions prevailing in public housing today. These challenges are not peculiar to the Ghanaian context; many other African countries face similar challenges. It

150 The 19th AfRES Annual Conference is hoped that this paper stimulates discourse among experts and practitioners to find enduring solutions to them.

Acknowledgement This paper/presentation is kindly sponsored by IRE|BS Foundation for African Real Estate Research.

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The 19th AfRES Annual Conference 151 Boelhouwer, P. (1999). International comparison of social housing management in Western Europe. Journal of Housing and the Built Environment, 14(3), 225-240. Cadstedt, J. (2010). Private rental housing in Tanzania — a private matter? Habitat International, 34(1), 46-52. doi:http://dx.doi.org/10.1016/j.habitatint.2009.05.001 Cheung, B. L. A., & Yip, N. M. (2003). Customerizing the tenants, empoweing the managers: Impact of public housing governance reform in Hong Kong. Housing, Theory and Society, 20(2), 98-109. Cobbinah, P. J. (2010). Maintenance of buildings of public insitutions in Ghana. Case study of selected institutions in the ashanti region of ghana. (Master of Science in Development Policy and Planning Dissertation), Kwame Nkrumah University of Science and Technology, Kumasi, Dube, S. P. (2013). A study of public-private partnerships in the development of affordable housing projects: A case of Johannesburg. University of the Witwatersrand, Gilmour, T. (2009). Network Power: An International Study of Strengthening Housing Association Capacity. (PhD Book), The University of Sydney, Unpublished. Gruis, V., Tsenkova, S., & Nieboer, N. (Eds.). (2009). Management of Privatised Housing. International Policies and Practice. Chichester United Kingdom Wiley-Blackwell Publishing Ltd. GSS. (2013). 2010 Population and Housing Census: National Analytical Report. Accra: Ghana Statistical Service. GSS. (2014). Ghana Living Standards Survey Round 6 (GLSS 6). Accra: Ghana Statistical Service Harris, R., & Arku, G. (2006). Housing and Economci Development. the evolution of an idea since 1945. Habitat International, 30. doi:10.1016/j.habitatint.2005.10.003 Hennink, M., Hutter, I., & Bailey, A. (2011). Qualitative Research Methods. London: SAGE Publications Ltd. Ibem, O. E., & Amole, D. (2013). Residential Satisfaction in Public Core Housing in Abeokuta, Ogun State, Nigeria. Social Indicators Research, 113(1), 563-581. doi:10.1007/s11205-012-0111-z Ibem, O. E., Anosike, M. N., & Azuh, E. D. (2011). Challenges in public housing provision in the post-independence era in Nigeria. International Journal of Human Sciences, 8(2).

152 The 19th AfRES Annual Conference Komu, F. (2010). Housing Decay and maintenance: the Case of Public Housing in Tanzania. (PhD Dissertation), Royal Institute of Technology, Stockholm. Konadu-Agyemang, K. (2001). A survey of housing conditions and characteristics in Accra, an African city. Habitat International, 25(1), 15-34. doi:http://dx.doi.org/10.1016/S0197- 3975(00)00016-3 Kwofie, T. E., Adinyira, E., & Botchway, E. (2011). Historical overview of housing provision in pre and post independence ghana. Paper presented at the West Africa Built Environment Research (WABER), Accra. Lang, R. (2015). Bringing real localism into practice through co-operative housing governance: The prospects for community-led housing in England. Retrieved from Luginaah, I., Arku, G., & Baiden, P. (2010). Housing and Health in Ghana: The Psychosocial Impacts of Renting a Home. International Journal of Environmental Research and Public Health, 7(2), 528-545. doi:10.3390/ijerph7020528 Miles, B. M., Huberman, A. M., & Saldana, J. (2014). Qualitative data analysis: A methods sourcebook (Third ed.). London: SAGE Publications Ltd. Miles, M. B., & Huberman, A. M. (1994). Qualitative data analysis: An expanded sourcebook (Second ed.). London: Sage Publications. Murie, A., & Rowlands, R. (2006). Housing Management. In v. K. Ronnald, A. Murie, T. Knorr-Siedow, & I. Tosics (Eds.), Regenerating large housing estates in Europe. A guide to better practice. Utrecht: Urban and Regional Research Centre. Ngomba, T. (2014). Challenges of Urban Housing Provision in Lagos and Johannesburg. Retrieved from Obeng-Odoom, F. (2011a). Private rental housing in Ghana: Reform or renounce? Journal of International Real Estate and Construction Studies, 1(1), 71. Obeng-Odoom, F. (2011b). REFORMING HOUSING MANAGEMENT IN GHANA: THE ROLE OF EDUCATION. International Public Management Review, 12(1). Obeng-Odoom, F., & Amedzro, L. (2011). Inadequate housing in Ghana. Urbani Izziv, 22(1), 127-137. Oladapo, A. A. (2006). A study of tenants’ maintenance awareness, responsibility and satisfaction in institutional housing in nigeria.

The 19th AfRES Annual Conference 153 International Journal of Strategic Property Management, 10(4), 217-231. doi:10.1080/1648715X.2006.9637554 Olayiwola, A. L. M., Adeleye, O., & Ogunshakin, C. L. (2005). Public Housing Delivery In Nigeria Problems And Challenges. Paper presented at the World congress on Housing Transforming Housing Environments through the Design, Pretoria South Africa. Osumanu, I. K., Kosoe, E. A., & Dapilah, F. (2016). Residential housing in Ghana’s low-income urban areas: An analysis of households living conditions in the Wa Municipality. Journal of Geography and Regional Planning, 9(7), 139-153. doi:10.5897/JGRP2016.0557 Peters, T. (2011). A brief history of the 7-S ('McKinsey 7-S') model. Golden Bay , New Zealand. Priemus, H., Dieleman, F., & Clapham, D. (1999). Current developments in social housing management. Journal of Housing and the Built Environment, 14(3), 211-223. Redmond, D., & Norris, M. (2007). Reforming local authority housing management: The case of tenant participation in estate management. In Housing Contemporary Ireland: Policy, Society and Shelter (pp. - 204). Straub, A. (2004). Housing management and maintenance practise of Dutch housing associations. Paper presented at the ENHR, Cambridge. Tipple, A. G. (1988). The History and practice of rent contol in Kumasi, ghana. Tipple, A. G. (1999). Transforming government-built housing: Lessons from developing countries. Journal of Urban Technology, 6(3), 17-35. doi:Doi 10.1080/10630739983560 Tipple, A. G., & Korboe, D. (1998). Housing policy in Ghana: Towards a supply-oriented future. Habitat International, 22(3), 245-257. doi:10.1016/s0197-3975(98)00009-5 Tsenkova, S. (2009). Housing policy reforms in post socialist Europe. Lost in transition. In (pp. 1-266). Retrieved from http://www.scopus.com/inward/record.url?eid=2-s2.0- 77950511356&partnerID=40&md5=e346aa6b9a6e093b66709228 b21415d5 Tufuor, T. (2004). Reforming the public rental sector in Accra. (Master of Science), Institute for Housing and Urban Development Studies (IHS) Rotterdam, The Netherlands, and Lund University, Sweden (HDM), Unpublished.

154 The 19th AfRES Annual Conference Ukoha, M. O., & Beamish, O. J. (1997). Assessment of residents' satisfaction with public housing in Abuja, Nigeria. Habitat International, 21(4), 445-460. UN-HABITAT. (2003). Rental Housing: An essential option for the Urban Poor in developing countries. Nairobi: UN-HABITAT. UN-HABITAT. (2011). Ghana Housing Profile. Nairobi: United Nations Human Settlements Programme. van Wyk, J. J. (2006). A housing management model for developing countries. International Journal for Housing Science and Its Applications, 30(2), 105-122. Waterman Jr., R. H., Peters, T. J., & Phillips, J. R. (1980). Structure is not organization. Business Horizons, 23(3), 14-26. doi:http://dx.doi.org/10.1016/0007-6813(80)90027-0 Wong, C.-y. (2006). Tenants' participation in public rental housing: a study of the Estate Management Advisory Committee Scheme in SunTin Wai Estate. (Master of Housing Management Dissertation), University of Hong Kong, Hong Kong. Yakubu, I., Akaateba, M. A., & Akanbang, B. A. A. (2014). A study of housing conditions and characteristics in the Tamale Metropolitan Area, Ghana. Habitat International, 44, 394-402. doi:10.1016/j.habitatint.2014.08.003 Yip, N. M. (2001). Tenant participation and the management of public housing - The Estate Management Advisory Committee of Hong Kong. Property Management, 19(1), 10-18. doi:10.1108/02637470110366176

The 19th AfRES Annual Conference 155 PERFORMANCE OF REITS IN EMERGING MARKETS: THE CASE OF NIGERIAN PROPERTY MARKET

Daniel Ibrahim Dabara1 Olusegun Adebayo Ogunba2 1Department of Estate Management, Federal Polytechnic Ede, Nigeria, [email protected] 2Department of Estate Management, Obafemi Awolowo University Ile-Ife, Nigeria, [email protected]

Abstract Purpose: The study assessed the return/risk performance of Real Estate Investment Trusts in emerging markets, using Nigeria as a case study with a view to providing information for investment decisions.

Design/Methodology/Approach: The study population consisted of all the three existing REIT companies in Nigeria. Secondary data on dividends and share prices of Real Estate Investment Trusts in Nigeria (N-REITs) were sourced from periodicals of the respective companies covering a time frame from 2007 to 2016. These were subsequently translated to the income, capital, total and risk-adjusted returns of N-REITs. The Kwiatkowski-Phillips- Schimidt-Shin (KPSS) and Philip-Perron (PP) Unit Root Analysis; the Auto- Regressive Integrated Moving Average (ARIMA) as well as the Granger Causality Tests were carried out on the data series used in the study.

Findings: The study revealed that the performance of Nigerian REIT companies in terms of income, capital, total and risk-adjusted returns had been low and even negative in some cases. The study found that below optimal performance of N-REITs was traced to the capital return component of N-REITs which had remained static and even negative in most of the investment period.

Practical Implication: Results of this study revealed the peculiar nature of Nigerian REITs; this information can be used by stakeholders in the real estate industry such as pension funds, asset managers, individual investors and insurance companies in making informed investment decisions.

Originality/Value: This study is one of the pioneering research works on Nigerian REITs which is a new investment vehicle in one of the African emerging markets. The study will add to the scanty research in this field as

156 The 19th AfRES Annual Conference well as equip both foreign and domestic investors with valuable information for investment decisions.

Keywords: Investment, performance, property, returns, risk, volatility.

1. Introduction Real Estate Investment Trusts (REITs) are increasingly gaining global attention because of their consistent exhibition of some unique attributes such as favorable return/risk characteristics, diversification benefits and inflation-hedging capability among others (Graff, 2001; Dabara, Odewande, Adaranijo, Ankeli, & Abefe-Balogun, 2016). REITs are indirect form of investments in real estate characterized by an encouraging investment performance that makes them attractive to both individual and institutional investors (Devos, Ong, & Speiler, 2016; Dabara and Ogunba, 2019). Direct investment in real estate is observed to be encumbered with many unfavorable conditions (for example, huge capital outlay and maintenance cost required) which make it prohibitive for many prospective investors (Li & Chow, 2015). The attempt to address these unfavorable conditions have led to a revolution in the global real estate market which had translated to yet another important real estate investment vehicle called ‘Real Estate Investment Trusts’ (Noguera, 2015). This study aims at evaluating the return/risk performance of Real Estate Investment Trusts in Nigeria (N- REITs) with a view to providing investment information that will guide prospective investors in making informed investment decisions in property markets of emerging economies like Nigeria. According to Bekaert, Harvey & Lundblad (2003), the liberalization of global equity markets (including emerging markets) have provided ample opportunities for foreign investors to invest in domestic equities and vice-versa. Hence, there is need to carry out such empirical studies in Nigerian emerging property market.

Oreagba (2010) defined REITs as “a company that owns, and operates income producing real estate, whose shares are publicly traded in a way similar to any stock”. REITs can be classified into three types: Equity REITs (which involves investing in direct real estate such as: office, health-care, industrial, retail, lodging and residential); Mortgage REITs (this involves investing in mortgage properties or mortgage-related securities) and Hybrid REITs (a combination of both equity and mortgage REITs). REITs were first introduced in US in the year 1960 (Chiang, 2010; Naidoo, 2014). One of the objectives of its creation was to help in making the advantages and benefits

The 19th AfRES Annual Conference 157 of investing in direct real estate available to prospective investors who do not have huge capital outlay but could afford to buy REITs shares with small investable funds (Chiang, Kozhevnikov, Lee, & Wisen, 2006). This was made possible because like the traditional stocks, REITs are also traded in the capital market and are made available to all categories of investors (Seguin, 2016).

Ernest & Young (2012) posited that REITs have become one of the vital investment vehicles in mostly the developed economies such as the US, UK, and Germany. This is evident in the amount of investments in REITs which is clearly portrayed by their substantial market capitalizations. For example, Aro-Gordon, Bashir, Abdulsalam & Abdullahi (2014) asserted that in 2012, REITs market capitalizations for the following countries were: US REITs ($400 billion); Singapore REITs ($30.5 billion); and Japan REITs ($42 billion). Li & Chow (2015) estimated the global REITs capitalization as at 2013 at about $1.1 trillion. More recently (2017) global REITs market capitalization was estimated at over $3 trillion and about 37 countries have introduced REITs in their capital markets (NAREIT, 2018). This decision could be informed by REITs investment benefits such as real-time pricing, greater liquidity, market/tax transparency, portfolio rebalancing/asset allocation advantages and easy marketability (Zietz, Sirmans & Friday. 2003; McKinley, 2014). It is however observed that emerging markets of especially African countries are yet to fully maximize the inherent potentials in investments in equities such as REITs (Bekaert, Harvey & Lundblad, 2003).

It is obvious that the Nigerian property market is an emerging one. REIT being a new real estate investment vehicle was introduced in 2007. From the annual report and accounts of Skye Shelter Fund (2007), it was reported that the Skye Shelter Fund was the first REIT Company in Nigeria. It was introduced in the Nigerian capital market in the year 2007 with an IPO (Initial Public Offering) of ₦2billion ($6,535,948). It was also reported in the annual Report and Accounts of the Union Home Hybrid REITs (2008), that the Union Home Hybrid REITs was similarly created and introduced into the Nigerian capital market in the year 2008, with an IPO of ₦50billion ($163,398,693). The UPDC (UACN Property Development Company) REITs was introduced in 2013 with an IPO of ₦30 billion which is about $98,039,216 (UPDC Annual Report and Accounts, 2013). The aforementioned are the three REITs companies presently operating in the Nigerian capital market. It was however observed that the REITs industry in

158 The 19th AfRES Annual Conference Nigeria was not doing well in terms of return performance on investment (Akpan & Ogunba, 2015) when compared with other REITs industries such as the US, UK, Malaysia and Japan among others.

Nigeria is adjudged to be one of the fastest growing economies in Africa thereby making it a good playing field for both domestic and foreign investments in the real estate sector (Aro-Gordon et al, 2014; Dabara & Oyewole, 2015). However, there is dearth of data on REITs to assist investors, hence, this study will add to the scanty existing research work in yet another important emerging real estate market (Nigeria). Similar studies which evaluated the performance of REITs in terms of its risk/return characteristics included the study carried out in Hong Kong by Newell, Wu, Chau & Wong (2010); in Asia by Kundus & Sin (2011) and in Finland by Niskanen (2012). From this group of studies, the observed gap was dearth of studies from emerging real estate markets with current and relevant investment information for consideration by prospective investors. Hence, there is need to provide information on the performance of N-REITs to reflect recent and current situation of the investment vehicle in the Nigerian capital market. This is because both the property markets as well as the capital markets where it operates are dynamic; there is the need for updating from time to time to reflect current happenings in the sector. Therefore, this study will cover a period spanning from the inception of REITs in Nigeria in 2007 to a recent investment transacted year (2016) thereby updating the timeframe for such study in Nigeria. The paper is structured as follows: the next section presents the literature review of relevant papers; followed by the methodology adopted for the study, then the presentation and discussions of results and the paper closes with a conclusion.

2. Literature Review REITs in Global Context REITs were first introduced by former US President, Dwight D. Eisenhower through a congressional legislation which was signed into law on the 14th of September, 1960 (Naidoo, 2014). REITs is said to be one of the viable and profitable investment asset classes in global markets (adjudged to be the third largest investment vehicle according to Imperiale, 2002 and Jackson, 2008). This is evident in the performance of REITs in developed economies such as the US, UK, and Germany among others (NAREIT, 2018). On the other hand, REITs in most developing nations are still new and characterized

The 19th AfRES Annual Conference 159 by features of an emerging property market such as lack of data for investment decisions and challenges of liberalization and integration into the global capital market (Bekaert, et. al., 2003; Ankeli, Dabara, Omotehinshe, Lawal, Odeyomi, & Adebowale, 2017). However, some emerging markets like Malaysia and South Africa developed substantially their REITs markets and had kept growing at an encouraging pace (Zhu, 2008; Kundus & Sin, 2011).

The quests to maximize profit from investment funds have prompted both investors and researchers all over the world to investigate the investment performance of various asset classes (Lee, Kuo, Lee & Lin, 2011). A group of studies have examined the inflation-hedging potentials of REITs. These studies include Aik (2012) and Arnason & Persson (2012). Similarly, studies such as Khoipham (2013) and Naidoo (2014) have investigated the diversification benefits of REITs with contradictory findings as regards the ability of REITs to provide diversification benefits in an investment portfolio. Another group of studies have evaluated the performance of REITs in terms of their risk/return characteristics. Examples include the study carried out in Hong Kong by Newell, Wu, Chau & Wong (2010); in Asia by Kundus & Sin (2011) and in Finland by Niskanen (2012).

Lizieri, McAllister and Ward (2003) in a study conducted in Europe found that in comparison to the general securities in Europe, real estate securities experiences slower transmission of monetary integration due to its small size. Lin and Yung (2004) conducted a study in the US which examined the performance of real estate mutual funds between 1993 and 2001. The methodology adopted for the study involved the use of CAPM and Jensen’s alpha among others. Findings from the study revealed that real estate mutual funds underperformed the US equity markets’ benchmark for both stocks and direct real estate within the study period. The study also indicated a correlation between the direct real estate market and its related mutual funds. This is congruent with findings of similar study conducted in Hong Kong which provided insight to the correlations between direct real estate and real estate equities (Chau Kwong Wing and Siu Kei, 2004)

Chaudhry, Maheshwari and Webb (2004) investigated the predictors of idiosyncratic risk in REITs. The study period was from 1994 to 2000 (divided into two separate periods: 1994 to 1988 as period one and 1996 to 2000 as period two). Data from 84 REITs companies were used in period one and

160 The 19th AfRES Annual Conference data from 91 REITs companies were used in period two. Using a two-stage regression model, the study found that earning variability, financial leverage, performance, liquidity and size of REITs Company were the significant predictors in period one. While the other aforementioned predictors were also significant in period two, it was observed that size and capital were not significant in predicting idiosyncratic risk in period two. Lee and Chiang (2004) examined the substitutability of Equity REITs and Mortgage REITs in a diversified asset portfolio. The authors found that these REITs types due to their similarity in responding to both economic and financial forces are highly substitutable. Sahin (2005) examined the market performance of REITs prior, during and subsequent to announcement of acquisitions. A sample consisting of thirty five acquisition transactions between 1994 and 1998 were used in the study. The study revealed that within three days of acquisition announcements, target REITs had about 4.31% positive abnormal returns. However, the opposite was observed in the long run (within the three years subsequent to the acquisition).

Jackson (2008) carried out a study in the US which compared the risk/return investment performance of lodging REITs and that of other equity REITs (office, health-care, industrial, retail, specialty and residential) for a period from 1993 to 2005. The study employed descriptive statistical tools such as mean and standard deviations as well as the Jensen’s index and regression models in analyzing the data obtained. Findings from the study indicated that equity REITs performed better than lodging REITs (on risk/return basis), the study further revealed that the former was more resilient than the latter in the US capital market over the investment period (13 years). However, the study only used one investment indicator (risk/return characteristics) to measure the performance of this investment asset class, the choice of multiple investment indicators (such as diversification potentials, inflation- hedging capability etc) could give a better picture of the true performance of REITs in the study area.

REITs in Emerging Economies Bekaert, Harvey & Lumsdaine (2002), carried out a study in 20 emerging markets including Brazil, Nigeria, India and Zimbabwe among others. The study aimed at examining the dynamics of emerging market equity as it relates to the correlations among capital flows, dividend yields, returns and interest rates. The methodology adopted for the study used the Vector Autoregression Models, Granger Causality Test and Test of Stationarity of

The 19th AfRES Annual Conference 161 data sets used in the study. Findings from the study suggested that there was an increase of equity flow by 1.4 % of market capitalization after liberalization of the markets. Showing that capital in emerging markets leaves faster than when it comes in, this was determined in both the pre as well as the post break dynamics. The study also revealed that a decrease of about 0.3% in interest rates had an effect of increasing foreign holdings by about 0.04% of the market capitalization. Similarly, there was a significant positive effect on returns as a result of unexpected shocks to equity flows in the selected emerging markets. In another similar study conducted by Bekaert, Harvey & Lundblad (2007), the authors examined the relationship between liquidity and expected returns in 19 emerging equity markets including Argentina, Greece, Mexico and Pakistan among others. The methodology adopted for the study involved the use of a Simple Asset Pricing Model. Findings from the study indicated that local market liquidity had significant impact on expected returns in emerging markets.

Aik (2012) conducted a study in Asia which was aimed at investigating the impact of the global economic crisis of 2008 on M-REITs. The study period which was divided into 3 regimes (before, during and after the financial crisis) spanned from 2001 to 2010. Comparison was made of the level of correlations, degree of risk/returns capacities of M-REITs in Taiwan, Singapore and Hong Kong in Asia. The methodology used involved the use of Holding Period Returns, Mean, standard deviations, Spearman Rank Correlations, Treynor and Jensen Alpha indices as well as the Capital Asset Pricing Model (CAPM). Findings from the study revealed that M-REITs performed better during the financial crisis period as against pre-financial crisis and post-financial crisis periods. Similarly, M-REITs were found to be good hedges against inflation within the study period.

Mohamad and Zolkifli (2014) carried out a study which covered the following Asian countries: Singapore, Taiwan, Japan, Malaysia, Thailand and Hong Kong. The study aimed at examining the performance of REITs in the study areas between 2007 and 2011 using dividend yield, risk performance, size of the investment and net returns as yardstick for measuring the performance of the said investment asset. The methodology employed consisted of mean, standard deviation, Net Asset Value (NAV), correlations as well as multiple regression model. Findings from the study indicated that the major factors affecting the performance of REITs in the study areas were: size of investment, dividend yield and risk/returns on investment.

162 The 19th AfRES Annual Conference However, the study did not consider other investment indicators such as diversification and inflation-hedging characteristics of REITs in the study areas, inclusion of the aforementioned indicators could give a better view on the performance of REITs in the study areas.

A group of studies conducted in South Africa by Akinsomi, Kola, Ndlovu and Motloung (2016) investigated the performance of the broad based black economic empowerment (BBBEE) of both listed and delisted property firms in South Africa. The study covered the period from 2006 to 2012. The return and risk performance of the property firms were obtained by means of holding period returns formulae, capital asset pricing model, sharpe ratio and alfa among others. Findings from the study revealed that Black Economic Empowerment (BEE) compliant firms outperformed the non-BEE compliant firms with respect to both returns and risk performance. Similarly, Akinsomi, Balcilar, Demirer, and Gupta (2017) revealed that speculation in gold market have impact on REITs returns in South Africa, particularly during the global economic meltdown experienced around 2008 to 2011. In the same vein, Ntuli and Akinsomi (2017) found that South African REITs are good return-enhancers with diversification benefits which could encourage shrewd investors to consider its inclusion in their mixed asset portfolios. Another study conducted in South Africa by Ijasan, Tweneboah and Mensah (2017) showed evidence of anti-persistence in South African REITs returns.

REITs in Nigeria REITs was introduced in Nigeria in the year 2007. Aro-Gordon, et, al. (2014) investigated the investment performance of Nigerian REITs (N-REITs) in one of the pioneering studies conducted in the Nigerian capital market. In the study the methodology adopted employed the use of Capital Asset Pricing Model (CAPM), as well as correlation and regression analysis. Findings from the study revealed that N-REITs showed no correlation with other market portfolio in Nigeria. Similarly, N-REITs have diversification benefits in a mix- asset portfolio. However, the study was limited by the sample size used; this is understandable being that REITs was recently introduced into the Nigerian capital market. Hence, the results from this study cannot be generalized, therefore, investors should take caution when applying or using the findings of the study as a basis for investment decision in the Nigerian capital market. This study will add to the existing body of knowledge in this field in Nigeria by updating the timeframe to cover from

The 19th AfRES Annual Conference 163 the inception of REITs in the country to the most recent transacted investment year. Olanrele, Said & Daud (2014) investigated the influence of external factors on the returns on Nigerian REITs (N-REIT). The external factors considered in the study comprised: political leadership, security, infrastructure and investors’ perception of N-REITs. Data for this study was obtained through a questionnaire survey. Both descriptive and inferential statistics were used in analyzing the data. Frequency distributions, percentages, spearman’s correlation and correlation matrixes were used in the analysis to determine the relationship between the said external factors and N-REITs returns/dividends in the study area. Findings from the study suggested that among all the external factors considered, only investor’s perception showed a non-significant relationship or correlation with any other factor. Similarly, the study also revealed that N-REITs performance with respect to dividend and returns was low within the study period. However, the study did not consider internal factors relating to the structure and conduct of N-REITs in the Nigerian capital market.

Akpan & Ogunba (2015) in a comparative study examined the performance of direct and indirect (REITs inclusive) real estate investments in an emerging real estate market (Nigeria) and a developed and matured real estate market (the US). The risk/return investment indicators were used as parameters for evaluating the investment performance of the investment asset vehicles in question. The methodology employed involved the use of holding period returns, standard deviations, Sharpe index and Pearson Moment Correlation model in analysis of the data used. Findings from the study suggested that investments in both the direct and indirect real estate in Nigeria outperformed that of its US counterpart (in terms of total returns, total risk, risk-adjusted return and diversification potential) within the study period (2004 to 2013). The study did not consider the structure of the N- REITs companies which could provide explanation for the performance of the N-REITs industry. In a more recent study conducted by Daraba & Ogunba (2019), the authors evaluated the performance of N-REITs from the view point of internal factors. This was with a view to determining the relationship among the structure, conduct and performance of N-REITs. The methodology used involved the structure-conduct-performance model, stationarity test of data used, Granger causality test as well as regression analysis. Findings from the study revealed that there is a bi-directional relationship among the structure, conduct and performance of Nigerian REITs within the study period.

164 The 19th AfRES Annual Conference In summary, the studies provided insight to the performance of REITs globally, in emerging economies as well as in Nigeria. The studies revealed that REITs as an alternative real estate investment asset is doing well in terms of return/risk performance (Jackson, 2008; Aik, 2012). This is congruent with findings on direct real estate investments (from which REITs derives its income), this assertion is supported by studies such as Chau Kwong Wing and Siu Kei (2004) and Dabara (2015). However, other studies indicated that REITs when compared to other assets classes in the capital market underperformed the benchmark for these markets (Lizieri, et. al, 2003; Chau Kwong Wing and Siu Kei, 2004). There was also evidence of correlations between REITs and direct real estate investments as well as other investment vehicles in the capital market (Akpan and Ogunba, 2015; Olanrele, Adegunle and Fateye, 2018). Similarly, there was an evidence of diversification and inflation hedging attributes by REITs (Aik, 2012; Arnason and Persson, 2012; Khoipham, 2013; Naidoo, 2014). Studies such as Olanrele, et, al. (2014) and Mohamad and Zolkifli (2014) revealed that factors such as size of investment, investors perception among other factors affect the performance of REITs. Existing gaps from these studies borders on absence of studies from African emerging markets and lack of liberalization and integration of emerging market REITs into the global market space (Bekaert, et. al, 2002; Bekaert, et. al, 2007), hence this study will extend the frontier of knowledge in this field by covering these identified gaps.

3. Methodology Presently there are three REITs companies in Nigeria. This study obtained data from all the three existing REITs companies so as to provide the true picture of the REITs industry in the study area. This will guide both domestic and foreign prospective investors (either individual or institutional investors) in making informed investment decisions. The data required for this study consisted of the dividend and share prices of the 3 N-REITs companies for the study period (2007 to 2016). These were sourced from secondary sources (online data bases of the three N-REITs companies as well as their respective annual reports). The data were subsequently used to calculate the income, capital and total returns on N-REITs within the study period. Similarly, the risk-adjusted returns was also calculated which showed the risk-adjusted performance of the N-REIT companies. Furthermore, the test for stationarity using the Kwiatkowski-Phillips- Schmidt-Schin (KPSS) and the Philip-Perron (PP) unit root analysis, the Auto-

The 19th AfRES Annual Conference 165 Regressive Integrated Moving Average (ARIMA) as well as the Granger causality tests were carried out on the returns variables.

Equation 1 measured the income return of the N-REIT companies; income return is the percentage of the return derived from the rental income or dividend of a company over a particular period. This is obtained by dividing dividend by share price over a particular time period as presented in Equation 1. In contrast to the income return, the capital return measures the increase in capital value of an asset over the measurement period divided by the beginning portfolio capital value. This was measured using Equation 2. Total return in performance measurement is the actual rate of return obtained from an investment over a specified period. It is the summation of both income and capital returns capturing both changes in dividends and capital appreciation of the investment in question (see Equation 3). Risk-Adjusted return in performance measurement refines an investment’s return by measuring the level of risk that is involved in producing that return within the investment period. The risk-adjusted return of Real Estate Investment Trusts in Nigeria was calculated using the return-risk ratio, the coefficient of variation and the Sharpe Ratio as presented in Equations 4 to 6. The KPSS and PP unit root analysis were used to test the null hypothesis of a unit root in the data set and ARIMA was used to analyze future predictions of N-REITs returns so as to serve as basis for forecasting. The Granger Causality tests were carried out to determine the causal relationships among the components of the return variables of N- REITs within the study period in the study area.

The income return is expressed as follows IRt = 푵풍 풕 (ퟏ) 푪푽풕−ퟏ

Where: IRt = income return for period t NIt = Net income received in period t (dividend) CVt-1 = CV at the end of period t-1

The capital return is expressed as CRt = 푪푽 − 푪푽 풕 풕−ퟏ (ퟐ) 푪푽풕−ퟏ

166 The 19th AfRES Annual Conference Where: CRt = Capital return for period t CVt = CV at the end of measurement period CVt-1 = CV at the start of period t-1

The total return is expressed as 푵푰풕 + (푪푽풕− 푪푽풕−ퟏ) TRt = (ퟑ) 푪푽풕−ퟏ TRt = Total return CVt-1 = Capital value of N-REITs at the beginning CVt = Capital value of N-REITs at the end NIt = Income of N-REITs received during the holding period

Furthermore, the researchers analyzed the risk-adjusted returns on N-REITs using the following:

Sharpe ratio This was used to measure the risk-adjusted returns of N-REITs. It showed both the risk as well as the return performance profile of the N-REIT companies. It is presented as: 푬(푹푷)−푹푭 푺푷 = (4) 흈(푹푷) Where: E (RP) = denotes the expected return of the portfolio; RF= denotes the return on the risk-free asset (proxied by the 90 days Treasury bill rates); σ (RP)= denotes the standard deviation of the portfolio returns.

Coefficient of Variation CV = σ (RP)/ E (RP) (5) Where CV= Coefficient of Variation σ (RP)= denotes the standard deviation of the portfolio returns E (RP) = denotes mean of the expected return of the portfolio

Return Risk Ratio RR = E (RP)/ σ (RP) (6) RR = Return Risk Ratio σ (RP) = denotes the standard deviation of the portfolio returns E (RP) = denotes mean of the expected return of the portfolio

The 19th AfRES Annual Conference 167 Trend Analysis: Trendlines were used to graphically display trends in the data sets that were used for this study to help analyze future predictions. Also, the moving average of the trendlines was used to smoothen out fluctuations in the data and show the pattern or trend more clearly. The R2 value was used to determine the reliability of the trend and the accuracy of the forecast or predictions made. “A trendline is said to be most accurate when its R-Squared value is at or near 1. Similarly, least square linear regression equations were generated for predictions of returns values’.

The equation is in this form: y = mx + b (7) Where: y is the dependent variable (dividend, share prices and returns values as the case may be) m is the slope of the line, which equals the change in the y value divided by the change in the x value; x is the dependent variable (year in this case); and b is the y-axis intercept of the line.

Kwiatkowski-Phillips-Schmidt-Schin (KPSS) as well as the Philip-Perron (PP) The Kwiatkowski-Phillips-Schmidt-Schin (KPSS) as well as the Philip-Perron (PP) unit root analyses were used to test the null hypothesis of a unit root (stationarity properties) on the return variables in the N-REITs industry.

Granger Causality Tests on N-REITS Granger causality is a way to examine the causality between or among two or more variables in a time series. The Granger Causality test is a probabilistic account of causality; it uses empirical data sets to find patterns of correlation or relationships in a uni-directional or bi-directional way among the variables. The Granger Causality tests were carried out to determine the causal relationships among the components of the return variables of N-REITs within the study period.

4. Results and Discussions The researchers obtained the dividend and share prices of Skye Shelter Fund REITs, Union Homes REITs and UPDC REITs covering a period from 2007 to 2016 from the companies’ respective annual reports. The collated data were presented in Table 1. The dividend and share prices were subsequently used to calculate the income returns, capital returns and total returns of investments in the three N-REITs companies using Equations 1, 2 and 3 respectively.

168 The 19th AfRES Annual Conference Table 1: Quarterly data on the share prices and dividends on the N-REITs companies Skye Shelter Fund REITs Union Homes REITs UPDC REITs Year Share Price Dividend Share Price Dividend Share Price Dividend Q1 100.00 (.327) - - - - - Q2 100.00 (.327) - - - - - 2007 Q3 100.00 (.327) - - - - - Q4 100.00 (.327) - - - - -

Q1 115.12 (.376) 1.16 (.004) 50.00 (.163) - - - Q2 117.49 (.384) 1.16 (.004) 50.00 (.163) - - - 2008 Q3 118.79 (.388) 1.16 (.004) 50.00 (.163) - - - Q4 118.28 (.387) 1.16 (.004) 50.00 (.163) - - -

Q1 108.00 (.353) 1.75 (.006) 50.00 (.163) 1.00 (.003) - - Q2 103.00 (.337) 1.75 (.006) 50.00 (.163) 1.00 (.003) - - 2009 Q3 105.00 (.343) 1.75 (.006) 50.00 (.163) 1.00 (.003) - - Q4 96.84 (3.16) 1.75 (.006) 50.00 (.163) 1.00 (.003) - -

Q1 100.00 (.327) 1.60 (.005) 50.75 (.166) 0.19 (.001) - - Q2 100.00 (.327) 1.60 (.005) 50.85 (.166) 0.19 (.001) - - 2010 Q3 98.69 (.323) 1.60 (.005) 50.85 (.166) 0.19 (.001) - - Q4 99.51 (.325) 1.60 (.005) 50.95 (.167) 0.19 (.001) - -

Q1 99.51 (.325) 1.01 (.003) 50.00 (.163) 0.57 (.002) - -

The 19th AfRES Annual Conference 169 Skye Shelter Fund REITs Union Homes REITs UPDC REITs Year Share Price Dividend Share Price Dividend Share Price Dividend Q2 99.51 (.325) 1.01 (.003) 50.00 (.163) 0.57 (.002) - - 2011 Q3 97.80 (.320) 1.01 (.003) 50.00 (.163) 0.57 (.002) - - Q4 97.38 (.318) 1.01 (.003) 50.00 (.163) 0.57 (.002) - -

Q1 100.00 (.327) 1.25 (.004) 50.00 (.163) 0.53 (.002) - - Q2 100.00 (.327) 1.25 (.004) 50.00 (.163) 0.53 (.002) - - 2012 Q3 100.00 (.327) 1.25 (.004) 50.00 (.163) 0.53 (.002) - - Q4 100.00 (.327) 1.25 (.004) 50.00 (.163) 0.53 (.002) - -

Q1 100.00 (.327) 1.31 (.004) 50.00 (.163) - 10.00 (.033) - Q2 100.00 (.327) 1.31 (.004) 50.00 (.163) - 10.00 (.033) - 2013 Q3 100.00 (.327) 1.31 (.004) 50.00 (.163) - 10.00 (.033) - Q4 100.00 (.327) 1.31 (.004) 50.00 (.163) - 10.00 (.033) -

50.00 (.163) Q1 99.68 (.326) 1.45 (.005) - 10.00 (.033) 0.08 (.0003) Q2 98.72 (.323) 1.45 (.005) 48.55 (.159) - 9.48 (.032) 0.08 (.0003) 2014 Q3 98.05 (.320) 1.45 (.005) 47.90 (.157) - 9.49 (.031) 0.08 (.0003) Q4 97.79 (.319) 1.45 (.005) 47.71 (.156) - 9.03 (.295) 0.08 (.0003)

Q1 100.00 (.327) 1.79 (.006) 45.55 (.149) - 9.78 (.032) 0.11 (.0004) Q2 100.00 (.327) 1.79 (.006) 45.55 (.149) - 9.60 (.031) 0.11 (.0004) 2015 Q3 100.00 (.327) 1.79 (.006) 45.55 (.149) - 9.79 (.032) 0.11 (.0004)

170 The 19th AfRES Annual Conference Skye Shelter Fund REITs Union Homes REITs UPDC REITs Year Share Price Dividend Share Price Dividend Share Price Dividend Q4 100.00 (.327) 1.79 (.006) 45.55 (.149) - 9.95 (.033) 0.11 (.0004)

Q1 100.00 (.327) - 50.00 (.163) - 10.00 (.033) 0.06 (.0002) Q2 100.00 (.327) - 50.00 (.163) - 10.00 (.033) 0.06 (.0002) 2016 Q3 100.00 (.327) - 50.00 (.163) - 10.00 (.033) 0.06 (.0002) Q4 100.00 (.327) - 50.00 (.163) - 10.00 (.033) 0.06 (.0002) Source: Online data base and annual reports of the Skye Shelter Fund REITs, Union Homes REITs and UPDC REITs Note: 1. Q1 = First quarter, Q2 = Second quarter, Q3 = Third quarter, Q4 = Fourth quarter 2. The figures in parenthesis are the USD equivalent of share prices and dividend within the study period ($1 to ₦306 at Central Bank of Nigeria’ official exhange rate). 3. The year of commencement of the companies are 2007, 2008 and 2013 for Skye Shelter Fund, Union Homes REITs and UPDC REITs respectively, hence the data used reflecting this fact. 4. At the time of writing this report, dividend for some of the years were not declared e.g Skye Shelter Fund in 2016

The 19th AfRES Annual Conference 171 Table 1 presented the quarterly dividends and share prices of the Skye Shelter Fund REITs, Union Homes REITs and the UPDC REITs from inception of the respective companies (i.e 2007, 2008 and 2013 respectively) to 2016. It was observed that there were no dividend returns at some points in the respective companies, this could be because the companies at such points did not declare dividends (being a new investment asset class that is just trying to stabilize in an emerging market in a developing economy, similarly its creation was at the time of the global economic crisis). By the same token, it was also observed that the share prices for Nigerian REITs have been static over long period of time. This could be adduced to the fact that REITs is new in Nigeria, and there are little changes in transactions on REITs in the capital market which invariably affects the changes in supply and demand for REITs shares, thereby making the share prices as well as the dividend returns static over long periods.

The quarterly share prices of the Skye Shelter Fund REITs ranged between ₦96.84 ($0.32) and ₦118.79 ($0.39) with the highest share price recorded in the third quarter of 2008. At this time, though REITs was relatively new in Nigeria, it had begun to gain popularity and people were beginning to get interested in the investment asset. The quarterly dividends ranged between ₦1.01 ($0.003) recorded in 2011 and ₦1.79 ($0.006) recorded in 2015 (at this time N-REITs investments were gradually improving in performance subsequent to the global economic meltdown). For the Union Homes REITs, its quarterly share prices ranged between ₦45.55 ($0.15) and ₦50.95 ($0.17) with the highest share price obtained in the fourth quarter of the year 2010. Its quarterly dividends ranged between ₦0.19 ($0.001) and ₦1.00 ($0.003) within the study period. The highest dividend was recorded in the year 2009 a year after the introduction of Union Homes REITs into the market. Similarly, the UPDC REITs’ quarterly share prices ranged between ₦9.03 ($0.03) and ₦10.00 ($0.033) and its dividends ranged between ₦0.06 ($0.0001) and ₦0.11 ($0.0004) within the study period. It was observed that the companies performed better in terms of share prices and dividend prior to and subsequent to the global economic meltdown.

For the Skye Shelter Fund Company, as well as the UPDC REITs Company (as at the time of writing this paper), it was observed that there was a relative consistency in issuance of dividend unlike the Union Homes REITs. This could perhaps be because of the low performance of the investment asset in the capital market. The share prices and dividend of N-REITs is generally

172 The 19th AfRES Annual Conference considered low when compared to other global REITs industries such as the US (a developed economy) and Malaysia (a developing economy) within the same investment period (Akpan & Ogunba, 2015; Olanrele, et al, 2015). This implies that performance of N-REITs is neither a time phenomenon nor an emerging market phenomenon. The share prices and dividends presented in Table 1 were used to calculate the income, capital and total returns presented in Tables 2, 3 and 4 respectively in the sub-sections below.

Quarterly Income Return on Real Estate Investment Trusts in Nigeria Income return is the percentage of the return derived from the rental income or dividend of a company over a particular period.

Table 2: Quarterly Income Return on Real Estate Investment Trusts in Nigeria UPDC Year Skye Shelter Fund REITs Union Homes REITs REITs Q1 - - - Q2 0.0 - - 2007 Q3 0.0 - - Q4 0.0 - -

Q1 1.2 - - Q2 1.0 0.0 - 2008 Q3 1.0 0.0 - Q4 1.0 0.0 -

Q1 1.5 2.0 - Q2 1.6 2.0 - 2009 Q3 1.7 2.0 - Q4 1.7 2.0 -

Q1 1.7 0.4 - Q2 1.6 0.4 - 2010 Q3 1.6 0.4 - Q4 1.6 0.4 -

Q1 1.0 1.1 - Q2 1.0 1.1 - 2011 Q3 1.0 1.1 -

The 19th AfRES Annual Conference 173 UPDC Year Skye Shelter Fund REITs Union Homes REITs REITs Q4 1.0 1.1 -

Q1 1.3 1.1 - Q2 1.3 1.1 - 2012 Q3 1.3 1.1 - Q4 1.3 1.1 -

Q1 1.3 0.0 - Q2 1.3 0.0 0.0 2013 Q3 1.3 0.0 0.0 Q4 1.3 0.0 0.0

Q1 1.5 0.0 0.8 Q2 1.5 0.0 0.8 2014 Q3 1.5 0.0 0.8 Q4 1.5 0.0 0.8

Q1 1.8 0.0 1.2 Q2 1.8 0.0 1.1 2015 Q3 1.8 0.0 1.1 Q4 1.8 0.0 1.1

Q1 0.0 0.0 0.6 Q2 0.0 0.0 0.6 2016 Q3 0.0 0.0 0.6 Q4 0.0 0.0 0.6 Source: Analysis of survey data Note: Q1 = First quarter, Q2 = Second quarter, Q3 = Third quarter, Q4 = Fourth quarter

Similarly, the companies started at different time period i.e 2007, 2008 and 2013 for the Skye Shelter Fund, Union Homes and UPDC REITs respectively.

Table 2 presented the quarterly income returns for Skye Shelter Fund REITs, Union Homes REITs and UPDC REITs from their respective years of inception (i.e 2007, 2008 and 2013 respectively) to 2016. The quarterly income returns of the N-REITs companies were observed to have kept fluctuating

174 The 19th AfRES Annual Conference within the study period. For example, the income returns for the Skye Shelter Fund REITs indicated that in the first quarter of 2008, 1.2% income return was realized, this decreased to 1.0% in the last three quarters of that investment year. The highest income return for the company was obtained in 2015 (1.8%) from the first to the fourth quarter of that year. For the Union Homes REITs and the UPDC REITs, the highest income return obtained were 1.1% in 2012 and 1.2% in the first quarter of 2015 respectively. Analysis from the 3 companies showed that the highest income returns on investment in the N-REITs industry (i.e 2.0%) was recorded by the Union Homes REITs in the year 2009, followed by 1.8% income returns recorded by the Skye Shelter Fund in the year 2015. From Table 2 the companies had better returns prior to and subsequent to the global economic depression. This implies that the global economic depression had a negative impact on the N-REITs industry. The quarterly income returns for all the N-REITs companies were observed to be very low within the study period. Studies from some developed economies such as Seguin (2016) and Li & Chow (2015) presented better returns values on investment in REITs. This suggests that N-REIT not performing up to mark is not a global phenomenon.

However, it is important to note that all the income return values in all the 3 N-REITs companies were positive; suggesting that, investment in any of the three companies provided positive income return values though it was generally low. This could be attributable to the performance of the direct real estate market in Nigeria (from which REITs derive its income) which was in agreement with similar studies such as Dabara (2015) and Akpan & Ogunba (2015). Both foreign and domestic prospective investors who desire to enjoy returns on their investment could consider investing in N-REITs to take advantage of the positive income returns it provides. Figure 1 below presents the trend analysis of the income return of the N-REITs companies.

The 19th AfRES Annual Conference 175 Skye Shelter Fund Union Homes REITs UPDC REITs Linear (Skye Shelter Fund) Linear (Union Homes REITs) Linear (UPDC REITs)

10 8 y = 0.1861x + 4.6939 R² = 0.21 6 y = -0.375x + 6.3267 4 y = -0.832xR² += 7.4720.4611 2 R2 = 0.652 0 200820092010201120122013201420152016 Income Income Return -2 -4 Year

Figure 1: Trend analysis of income return on N-REITs companies

Figure 1 showed that for all the three N-REIT companies there was a high level of volatility for their respective income returns as indicated by their respective trend lines, with the Union Homes REITs showing the highest level of volatility when compared to the other companies. Similarly, for the UPDC REITs and Union Homes REITs, the smoothed trend lines indicated a consistent and steady decrease in its income returns from 2008 to 2016, while the Skye Shelter fund indicated a steady increase in its returns for the study period. A future forecast with respect to the income returns in the study area for additional three years, from 2017, was made. The analysis indicated continues steady increase for the Skye Shelter Fund and decrease for the Union Homes REITs and UPDC REITs income returns. The level of reliability of the trend and accuracy of the forecast as determined by the R2 value (which is the coefficient of determination) for the three N-REITs companies’ respective income returns were 21% for the Skye Shelter Fund, 46.11% for the Union Homes REITs and 65.2% for the UPDC REITs. The least square regression equation in the analysis can be used to generate returns in the study area for years beyond the study period for the purpose of forecast or predictions. ‘Y’ in the equation represents returns in the study

176 The 19th AfRES Annual Conference area while ‘X’ represents the year selected for the desired analysis. From the analysis above, it can be inferred that the income return for the Skye Shelter Fund has a steady and consistent increase over the study period and this increase is likely to be maintained over the next three years as seen from the predictive trend lines. While the Union Homes REITs and the UPDC REITs have a steady and consistent decrease over the study period and this decrease is likely to be maintained over the next three years as seen from the predictive trend lines.

Quarterly Capital Return on Real Estate Investment Trusts in Nigeria In contrast to the income return, the capital return measures the changes (increase or decrease) in capital value of an asset over the measurement period. The capital return of the Real Estate Investment Trusts in Nigeria was calculated using Equation 2 and the results are presented in Table 3.

Table 3: Quarterly capital returns of N-REITs companies Skye Shelter Union Homes Fund REITs REITs UPDC REITs Year Q1 - - - Q2 0.0 - - 2007 Q3 0.0 - - Q4 0.0 - -

Q1 15.1 - - Q2 20.6 0.0 - 2008 Q3 01.1 0.0 - Q4 -0.4 0.0 -

Q1 -8.7 0.0 - Q2 -4.6 0.0 - 2009 Q3 1.9 0.0 - Q4 -7.8 0.0 -

Q1 3.3 1.5 -

The 19th AfRES Annual Conference 177 Skye Shelter Union Homes Fund REITs REITs UPDC REITs Year Q2 0.0 0.2 - 2010 Q3 -1.3 0.0 - Q4 0.8 0.2 -

Q1 0.0 1.9 - Q2 0.0 0.0 - 2011 Q3 -1.7 0.0 - Q4 -0.4 0.0 -

Q1 2.7 0.0 - Q2 0.0 0.0 - 2012 Q3 0.0 0.0 - Q4 0.0 0.0 -

Q1 0.0 0.0 - Q2 0.0 0.0 0.0 2013 Q3 0.0 0.0 0.0 Q4 0.0 0.0 0.0

Q1 -0.3 0.0 0.0 Q2 -1.0 -2.9 -5.2 2014 Q3 -0.8 -1.3 0.1 Q4 -0.3 -0.4 -4.9

Q1 2.3 -4.5 8.3 Q2 0.0 0.0 -1.8 2015 Q3 0.0 0.0 2.0 Q4 0.0 0.0 1.6

178 The 19th AfRES Annual Conference Skye Shelter Union Homes Fund REITs REITs UPDC REITs Year Q1 0.0 9.8 0.5 Q2 0.0 0.0 0.0 2016 Q3 0.0 0.0 0.0 Q4 0.0 0.0 0.0 Source: Analysis of survey data Note: Q1 = First quarter, Q2 = Second quarter, Q3 = Third quarter, Q4 = Fourth quarter

Table 3 presented the quarterly capital returns of the N-REITs companies within the study period. The highest capital return was obtained in the second quarter of 2008 (20.6%) by the Skye Shelter Fund REIT Company (this was when REITs just came on board in the Nigerian capital market, all the 20,000,000 share units offered at the Initial Public Offering by the company at ₦100 ($ 0.32) each were all fully subscribed and paid for, investors were interested in the new investment vehicle, hence, demand and supply positively influenced the capital value of the REITs shares at that time). For the Union Homes REITs company, it had its highest capital return in the first quarter of 2016 (9.8%), this could be attributed to the fact that the country was just recovering from the economic depression it experienced in 2015 as a result of a change in government. The least capital returns for the company was recorded in the first quarter of 2015 (-4.5%), that was when the national economic depression was at its peak. Surprisingly, the UPDC REIT Company which came on board in 2013 had its highest capital returns in the first quarter of 2015 (8.3%) despite the economic depression experienced in Nigeria at that time (this indicated that REITs in an emerging economy like Nigeria could be resilient to certain level, even in economic depressions). The least capital return for the company was recorded in the second quarter of 2014 (-5.2%). Generally the capital returns of the N-REIT Companies were observed to be low and even negative in some cases. Similar studies from other emerging markets like the Asian REITs industries showed better return values within similar time frame (see Kundus & Sing, 2011; Khoipham, 2013), suggesting that the performance of N-REIT is not an emerging market phenomenon as other REITs industries in emerging markets were seen to be doing well despite being situated in emerging markets.

The 19th AfRES Annual Conference 179 The poor capital return performance observed in the study area could be traceable to the forces of demand and supply in the N-REITs industry, as this economic law tends to increase share prices of assets in the capital market when there is high demand for such shares and vice-versa when the demands is low. This invariably affects the capital returns of such an investment. Similarly, REITs is new in Nigeria and many people do not know about the investment potential inherent in this investment vehicle hence the low demand. Figure 2 below presents the trend analysis of the capital return of the N-REITs companies.

Skye Shelter Fund Union Homes REITs UPDC REITs Linear (Skye Shelter Fund) Linear (Union Homes REITs) Linear (UPDC REITs)

20 15 y = 3.625x - 28.933 10 y = -0.245x + 0.6175 5 R² = 0.6782R² = 0.433 0 -5 -10 2008200920102011201220132014y =2015 -0.9782x2016 + 4.0257 -15 -20 R² = 0.573

Capital Return Capital -25 -30 Year

Figure 2: Trend analysis of capital return on N-REITs companies

Figure 2 shows that for all the three N-REITs companies, there was a slight or minimal level of volatility for their respective capital returns as indicated by their respective trend lines, with the Skye Shelter Fund showing the highest level of volatility when compared to the other two companies. Similarly, for the Skye Shelter Fund and Union Homes REITs, the smoothed trend lines indicated a consistent and steady decrease in their capital returns from 2008 to 2016, while the UPDC REITs indicated a steady

180 The 19th AfRES Annual Conference increase in its returns for the study period. A future forecast with respect to the capital returns in the companies for additional three years, from 2017, was also made.

The analysis indicated continues steady increase for the UPDC REITs and decrease for the Union Homes REITs and the Skye Shelter Fund’ capital returns. The level of reliability of the trend and accuracy of the forecast as determined by the R2 value for the three N-REITs companies’ respective capital returns were 57.3% for the Skye Shelter Fund, 43.3% for the Union Homes REITs and 67.82% for the UPDC REITs. The least square regression equation in the analysis which was used to generate returns in the study area for years beyond the study period for the purpose of forecast or predictions indicated that the capital return for the UPDC REITs have a steady and consistent increase over the study period and this increase is likely to be maintained over the predicted years as seen from the predictive trend lines. While the Union Homes REITs and the Skye Shelter Fund have a steady and consistent decrease over the study period and this decrease is likely to be maintained over the next three years as seen from the predictive trend lines.

Quarterly Total Return on Real Estate Investment Trusts in Nigeria Total return in performance measurement is the actual rate of return obtained from an investment over a specified period. The total return of Real Estate Investment Trusts in Nigeria was calculated using Equation 3 and the results are presented in Table 4.

The 19th AfRES Annual Conference 181 Table 4: Quarterly total returns of N-REITs companies Skye Shelter Union Homes Year Fund REITs REITs UPDC REITs Q1 - - - Q2 0.0 - - 2007 Q3 0.0 - - Q4 0.0 - -

Q1 16.1 - - Q2 21.6 - - 2008 Q3 2.1 - - Q4 0.6 - -

Q1 -7.1 2.0 - Q2 -2.9 2.0 - 2009 Q3 3.6 2.0 - Q4 -6.1 2.0 -

Q1 4.9 1.9 - Q2 1.6 0.6 - 2010 Q3 0.3 0.4 - Q4 2.4 0.6 -

Q1 0.1 3.0 - Q2 0.1 1.1 - 2011 Q3 -0.7 1.1 - Q4 0.6 1.1 -

Q1 4.0 1.1 - Q2 1.3 1.1 - 2012 Q3 1.3 1.1 - Q4 1.3 1.1 -

Q1 1.3 0.0 - Q2 1.3 0.0 0.0 2013 Q3 1.3 0.0 0.0 Q4 1.3 0.0 0.0

Q1 1.2 0.0 0.8

182 The 19th AfRES Annual Conference Skye Shelter Union Homes Year Fund REITs REITs UPDC REITs Q2 0.5 -2.9 -4.4 2014 Q3 0.7 -1.3 0.9 Q4 1.2 -0.4 -4.1

Q1 4.1 -4.5 9.4 Q2 1.8 0.0 -0.7 2015 Q3 1.8 0.0 3.1 Q4 1.8 0.0 2.7

Q1 0.0 9.8 1.1 Q2 0.0 0.0 0.6 2016 Q3 0.0 0.0 0.6 Q4 0.0 0.0 0.6 Source: Analysis of survey data Note: Q1 = First quarter, Q2 = Second quarter, Q3 = Third quarter, Q4 = Fourth quarter

Table 4 presented the quarterly total returns of N-REITs companies within the study period. The highest total return obtained by the Skye Shelter Fund REITs was in the second quarter of 2008 (21.6%) while the least was in the first quarter of 2009 (-7.1%). The Union Homes REITs had its highest total returns in first quarter of 2011 (3.0%) and had its least total return in the first quarter of 2015 (-4.5%). The UPDC REIT Company had its highest total return in the first quarter of 2015 (9.4%) and its least total return was obtained in the second quarter of 2014 (-4.1%). It was observed that the total returns obtained from the N-REIT Companies were generally low. In comparison to studies within similar time frame, REITs industry in the UK recorded a total returns as high as 23.9% in 2012 while Malaysia recorded return values as high as 9.77% in 2008 (NAREIT, 2017). This suggests that the performance of N-REIT is not based on time phenomenon as other REITs industries were seen to be doing well within the same time frame.

It is also important to note that all the return values in all the 3 N-REITs companies were mostly positive but for some few exceptions, this suggests that investment in any of the three companies provided positive total return values in most of the years within the investment period, though the values were observed to be low. This findings is congruent with similar studies such

The 19th AfRES Annual Conference 183 as Dabara, Ogunba & Araloyin (2015) and Dabara, Omotehinshe, Okunola, Ankeli & Adaranijo (2016).

Figure 3 below presents the trend analysis of the total return of the N-REITs companies. Skye Shelter Fund Union Homes REITs UPDC REITs Linear (Skye Shelter Fund) Linear (Union Homes REITs) Linear (UPDC REITs)

30

20 y = 3.74x - 22.46 R² = 0.5688 10 y = -0.4755x + 7.7696 R² = 0.221 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 -10 y = -1.2126x + 7.0068 TotalReturn R² = 0.4474 -20

-30 Year

Figure 3: Trend analysis of total return on N-REITs companies

Figure 3 shows that for all the three N-REITs companies there was less volatility for their respective total returns as indicated by their respective trend lines, with the Union Homes REITs showing the least level of volatility when compared to the other two companies. Similarly, for the Skye Shelter Fund and Union Homes REITs, the smoothed trend lines indicated a consistent and steady decrease in its total returns from 2008 to 2016, while the UPDC REITs indicated a steady increase in its total returns for the study period. A future forecast with respect to the total returns in the study areas for additional three years, from 2017, indicated a continuous steady increase for the UPDC REITs and decrease for the Union Homes REITs and Skye Shelter Fund’ total returns.

The level of reliability of the trend and accuracy of the forecast as determined by the R2 value for the three N-REITs companies’ respective

184 The 19th AfRES Annual Conference total returns were 22.1% for the Skye Shelter Fund, 44.74% for the Union Homes REITs and 56.88% for the UPDC REITs. The least square regression equation in the analysis used for the purpose of predictions revealed that the total return for the UPDC REITs had a steady and consistent increase over the study period and this increase is likely to be maintained over the next three years as seen from the predictive trend lines. While the Union Homes REITs and the Skye Shelter Fund have a steady and consistent decrease over the study period and this decrease is likely to be maintained over the next three years as seen from the predictive trend lines.

Comparative Analysis of the Income, Capital and Total Returns on the N- REITs Industry For the purpose of comparison, a comparative analysis of the income, capital and total returns of the N-REITs industry in Nigeria was carried out. This is to help investors such as pension funds, insurance companies and asset managers as well as individual investors in decision making. Table 5 presents returns data in the industry while Figure 4 presents the trend analysis of the returns in the N-REITs industry.

Table 5: Comparative Analysis of the Income, Capital and Total Returns of N-REITs Total Year Quarter Income Return Capital Return Return Q1 0.0 0.0 0.0 Q2 0.0 0.0 0.0 2007 Q3 0.0 0.0 0.0 Q4 0.0 0.0 0.0

Q1 1.2 15.1 16.3 Q2 1.0 20.6 21.6 2008 Q3 1.0 1.1 2.1 Q4 1.0 -0.4 0.6

The 19th AfRES Annual Conference 185 Total Year Quarter Income Return Capital Return Return Q1 3.5 -8.7 -5.2 Q2 3.6 -4.6 -1.0 2009 Q3 3.7 1.9 5.6 Q4 3.7 -7.8 -4.1

Q1 2.1 4.8 6.9 Q2 2.0 0.2 2.2 2010 Q3 2.0 -1.3 0.7 Q4 2.0 1.0 3.0

Q1 2.1 1.9 4.0 Q2 2.1 0.0 2.1 2011 Q3 2.1 -1.7 0.4 Q4 2.1 -0.4 1.7

Q1 2.4 2.7 5.1 Q2 2.4 0.0 2.4 2012 Q3 2.4 0.0 2.4 Q4 2.4 0.0 2.4

Q1 1.3 0.0 1.3 Q2 1.3 0.0 1.3 2013 Q3 1.3 0.0 1.3 Q4 1.3 0.0 1.3

186 The 19th AfRES Annual Conference Total Year Quarter Income Return Capital Return Return

Q1 2.3 -0.3 2.0 Q2 2.3 -9.1 -6.8 2014 Q3 2.3 -2.0 0.3 Q4 2.3 -5.6 -3.3

Q1 3.0 6.1 9.1 Q2 2.9 -1.8 1.1 2015 Q3 2.9 2.0 4.9 Q4 2.9 1.6 4.5

Q1 0.6 10.3 10.9 Q2 0.6 0.0 0.6 2016 Q3 0.6 0.0 0.6 Q4 0.6 0.0 0.6

Source: Analysis of survey data Note: Q1 = First quarter, Q2 = Second quarter, Q3 = Third quarter, Q4 = Fourth quarter

From Table 5, the highest income return values were recorded in the 3rd and 4th quarter 2009 (3.7%) respectively, while the lowest was recorded in 2016 (0.6%) for all the four quarters. The highest recorded capital return value was 20.6% recorded in 2008 while the least was -9.1% obtained in the 2nd quarter of 2014. For the total returns, the highest return value was recorded in 2008 (21.6%) while the least was recorded in 2014 (-6.8%). It was observed that the income returns in each year of the investment period have positive return values. This showed that the return problem

The 19th AfRES Annual Conference 187 experienced by the N-REITs industry was not attributable to the income return component; this is congruent with the findings of a similar study conducted on emerging markets by Dabara (2015). However, the capital returns was observed to be negative in most of the investment years indicating that the major problem as regards return could be attributable to the capital return component. The trend analysis of the income, capital and total returns on the N-REITs industry is presented in Figure 4.

Income return Capital return 25 Total return Linear (Income return) 20 Linear (Capital return) Linear (Total return)

15

10

y = -0.399x + 5.9483 5Returns R² = 0.591 0 y = -1.2907x + 11.17 2008 2009 2010 2011 2012 2013 2014 2015 2016R² = 0.2793 -5 y = -0.9243x + 5.3139 R² = 0.1464 -10 Year Figure 4: Trend analysis of the income, capital and total return on N-REITs companies

Figure 4 shows that the income, capital and total returns on the N-REITs industry revealed some levels of volatility for their respective returns as indicated by their respective trend lines, with the capital returns showing the highest level of volatility when compared to the other two returns indicators. Similarly, for all the returns, the smoothed trend lines indicated a consistent and steady decrease from 2008 to 2016. A future forecast with respect to the returns in the N-REITs industry for additional three years, from 2017 was made. The analysis indicated continues steady decrease in all the returns in the N-REITs industry. The level of reliability of the trend and accuracy of the forecast as determined by the R2 value for all the returns were 59.1% for the income return, 14.64% for the capital return and 27.93% for the total return. The least square regression equation used in this

188 The 19th AfRES Annual Conference analysis showed that the income, capital and total returns in the N-REITs industry all showed a steady and consistent decrease over the study period and this decrease is likely to be maintained over the next three years as seen from the predictive trend lines.

Table 6: Descriptive statistics of the Income, Capital and Total returns of the N-REITs industry Statistics Income Return Capital Return Total Return Mean 4 3.14 3.57

Median 3.9 -0.9 2.9

Std. Deviation 1.4 9.68 6.7

Skewness 1.2 1.48 0.7

Kurtosis 1.8 0.85 0.7

Minimum 2.4 -6.1 -0.2

Maximum 7 22 22

Sum 36 28.2 42 Source: Analysis of survey data, 2017

Table 6 presented the descriptive statistics of the three return components (income, capital and total) in the N-REITs industry. Hence, it shows the range, minimum, maximum and mean values of the variables. It also shows the standard deviation, skewness and kurtosis for each of the variables.

Risk-Adjusted Return on Real Estate Investment Trusts in Nigeria Risk-Adjusted return in performance measurement refines an investment’s return by measuring the level of risk that is involved in producing that return within the investment period. The risk-adjusted return of Real Estate

The 19th AfRES Annual Conference 189 Investment Trusts in Nigeria was calculated using the return-risk ratio, the coefficient of variation and the Sharpe Ratio as presented in Equations 4 to 6. The data used for the calculation included the Treasury Bill Rates obtained from the annual reports of the Central Bank of Nigeria, total returns on investments of the N-REITs companies and Standard Deviations of the returns on N-REITs’ investment.

190 The 19th AfRES Annual Conference Table 7: Average Quarterly T-Bill rates and Total return of N-REITs companies from 2007 to 2016

Year Quarter T-Bill Rates Total Return Skye Shelter Fund Total Return Union Homes REITs Total Returns UPDC REITs Q1 6.95 - - -

Q2 2.01 0.0 - -

2007 Q3 6.44 0.0 - -

Q4 6.88 0.0 - -

Q1 8.57 16.1 - -

Q2 8.36 21.6 - -

2008 Q3 9.14 2.1 - -

Q4 6.74 0.6 - -

Q1 2.80 -7.1 2 -

Q2 3.31 -2.9 2 -

191 The 19th AfRES Annual Conference Year Quarter T-Bill Rates Total Return Skye Shelter Fund Total Return Union Homes REITs Total Returns UPDC REITs

2009 Q3 4.51 3.6 2 -

Q4 4.52 -6.1 2 -

Q1 2.36 4.9 1.9 -

Q2 1.71 1.6 0.6 -

2010 Q3 4.06 0.3 0.4 -

Q4 7.27 2.4 0.6 -

Q1 7.62 0.1 3 -

Q2 8.78 0.1 1.1 -

2011 Q3 7.80 -0.7 1.1 -

Q4 14.6 0.6 1.1 -

Q1 14.70 4.0 1.1 -

192 The 19th AfRES Annual Conference Year Quarter T-Bill Rates Total Return Skye Shelter Fund Total Return Union Homes REITs Total Returns UPDC REITs

Q2 13.78 1.3 1.1 -

2012 Q3 13.62 1.3 1.1 -

Q4 12.44 1.3 1.1 -

Q1 10.41 1.3 0 -

Q2 10.88 1.3 0 0

2013 Q3 11.26 1.3 0 0

Q4 10.86 1.3 0 0

Q1 11.52 1.2 0 0.8

Q2 10.46 0.5 -2.9 -4.4

2014 Q3 9.86 0.7 -1.3 0.9

Q4 10.15 1.2 -0.4 -4.1

The 19th AfRES Annual Conference 193 Year Quarter T-Bill Rates Total Return Skye Shelter Fund Total Return Union Homes REITs Total Returns UPDC REITs

Q1 10.95 4.1 -4.5 9.4

Q2 10.07 1.8 0 -0.7

2015 Q3 10.12 1.8 0 3.1

Q4 6.43 1.8 0 2.7

Q1 4.85 0.0 9.8 1.1

Q2 7.87 0.0 0 0.6

2016 Q3 13.76 0.0 0 0.6

Q4 14.00 0.0 0 0.6

Source: Annual report of Central Bank of Nigeria and analysis of survey data, 2017

194 The 19th AfRES Annual Conference Table 7 presented the Treasury Bill Rates within the study period; the highest T-bill rates obtained within the study period was 14.70 in the first quarter of 2012, while the lowest was 1.71 recorded in the second quarter of 2010. It also presented the total returns of the respective N-REITs companies. The total return values for the three REITs companies kept fluctuating within the study period as aforementioned earlier. The data presented in Table 7 was used in calculating the mean return values for each of the company within the investment period as well as the total risk (Standard Deviations) of each of the N-REITs companies. The results are presented in Table 8.

Table 8: Total return and total risk of N-REITs companies N-REIT Company Total Return Total Risk

Skye Shelter Fund REITs 4.70 6.23

Union Homes REITs 1.35 4.00

UPDC REITs 2.94 3.78

Mean 3.00 4.67 Source: Analysis of survey data, 2017

From Table 8 the Skye Shelter Fund REITs Company presented the highest return value within the investment period (4.70) with a corresponding high risk (6.23). UPDC REITs provided the second highest return value (3.00) in the industry with the least risk (3.78). While the Union Homes REITs provided the least return value (1.35) and the second highest risk (4.00). The mean total return for the N-REITs industry within the study period was 3.00 while the mean risk within the study period was 4.67. These results have implications for prospective investors in N-REITs as they need to weigh both returns and risk before making investment decisions, being that investors are risk averse and have different levels of risk tolerance. The data presented in Table 8 was used to calculate the risk-adjusted returns of the N-REITs companies. The result of the analysis was presented in Table 9.

195 The 19th AfRES Annual Conference Table 9: Risk-Adjusted Returns of N-REITs companies Return N-REIT Risk Coefficient of Sharpe Company Ratio Variation Ratio

Skye Shelter Fund REITs 0.6 1.13 -0.53

Union Homes REITs 0.35 2.56 -1.69

UPDC REITs 0.89 1.06 -1.19

Mean 0.61 1.58 -1.14 Source: Analysis of survey data, 2017

Table 9 presented the risk-adjusted returns of N-REITs companies which comprised the return risk ratio, coefficient of variation as well as the Sharpe ratio of the N-REITs companies for comparative analysis. The Skye Shelter Fund REITs provided a return risk ratio of 0.6 with a coefficient of variation of 1.13 and a Sharpe ratio of -0.53; the Union Homes REITs presented a return risk ratio of 0.35, a coefficient of variation of 2.56 and a Sharpe ratio of -1.69; while the UPDC REITs presented a return risk ratio of 0.89, a coefficient of variation of 1.06 and a Sharpe ratio of -1.19. The mean return risk ratio for the N-REITs industry within the study period was 0.61, while mean for the coefficient of variation for the industry was 1.58 and that of the Sharpe ratio was -1.14. It is important to note that, all the return values in all the 3 N-REITs companies with respect to Sharpe ratios were negative. These results are not congruent with findings from similar emerging markets like Malaysia and South Africa (Zhu, 2008; Aik, 2012; Naido, 2014) as well as property markets of developed economies like the US (Jackson, 2008). The implication of this scenario is that when weighing both returns and risk, individual and institutional investors (whether foreign or domestic) need to exercise caution when investing in N-REITs. In global markets generally, a Sharpe Ration of 3.0 or higher is considered good. However, for N-REITs the values are all below this benchmark.

The sub-section below presents the unit root analysis conducted to test for the stationarity properties of the returns variables as well as the ARIMA and Granger Causality test on the said variables.

196 The 19th AfRES Annual Conference Table 10: KPSS and PP unit root test on data for the structure, conduct and performance of N-REITs Returns Variabl KPSS 1% Critical 5% Critical 10% Critical PP 1% Critical 5% Critical 10% Critical es Statistics Value Value Value Statistics Value Value Value Income Return 0.337500* 0.739 0.463 0.347 -5.18639* -2.93722 -2.00629 -1.59807 Capital Return 0.3257150* 0.739 0.463 0.347 -10.6668* -2.8861 -1.99587 -1.59909 Total Return 0.320190* 0.739 0.463 0.347 -5.84822* -2.8861 -1.99587 -1.59909

Source: Analysis of survey data, 2017 Note: * = stationary at level

197 The 19th AfRES Annual Conference Kwiatkowski-Phillips-Schimidt-Shin (KPSS) and Philip-Perron (PP) Unit Root Analysis

Unit root test (test of stationarity) of the data sets used in the study was carried out using the Kwiatkowski-Phillips-Schmidt-Schin (KPSS) as well as the Philip-Perron (PP) models for analyzing the stationarity characteristics of the data series. The choice of these unit root tests tools were in line with previous studies such as Arltova & Fedorova (2016) which posited that the most suitable stationarity tests for short time series data set are the PP tests complimented by the KPSS test. The unit root analysis was used to test the null hypothesis of a unit root (stationarity properties) for the entire data set. The result from the test was reported in Table 10.

The computed KPSS and PP test-statistics as seen in Table 10 are integrated of order I(0). The computed unit root test indicated stationary series (at level) with respect to the data sets used. It was observed that the KPSS and PP statistics were smaller than the critical values - "tau" at 10%, 5%, and 1% significant levels respectively; therefore we can reject Ho for the income, capital and total returns variables. This means that the data series are all stationary series at 10%, 5% and 1% significant levels and are integrated of order I(0).

Auto-Regressive Moving Average (ARIMA) Analysis ARIMA (Autoregressive Integrated Moving Average), is a statistical analysis model used in forecasting time series data to predict future trends based entirely on its own inertia. This helps in predicting future points in the time series. Hence it “shows the pattern of growth/decline in the data, the rate of change of the growth/decline in the data as well as the noise between consecutive time points in the series”

Skye Shelter Fund’s returns Model: ARIMA (0, 0, 1) (0, 0, 1). ARIMA with non-seasonal MA and seasonal MA of order 1.

198 The 19th AfRES Annual Conference Coefficients: MA(1) SMA(1) Intercept Coefficients 0.5111 0.3733 1.5874 Standard Error 0.1666 0.1484 0.6222

AIC = 225.35 Table 11: Point forecast for Skye Shelter Fund’s returns Year Point Forecast 2017 Q1 1.270089 2017 Q2 2.217628 2017 Q3 2.210949 2017 Q4 2.183155 2018 Q1 1.800227 2018 Q2 1.587422 2018 Q3 1.587422 2018 Q4 1.587422

2019 Q1 1.587422 2019 Q2 1.587422 2019 Q3 1.587422 2019 Q4 1.587422 Source: Analysis of survey data, 2017

The 19th AfRES Annual Conference 199

Figure 5: Graphical forecast for Skye Shelter Fund’s returns

The expected Skye Shelter Fund’s returns are expected to drop below 2.0 from first quarter of 2018.

Union Homes REITs Returns Model ARIMA ( 0,0,1)(0,0,1). ARIMA with non-seasonal MA of order 1 and a seasonal MA of order 1.

MA(1) SAR(1) Intercept Coefficients 0.3031 0.5946 0.5670 Standard Error 0.1780 0.2256 0.2921

AIC = 142.54 Table 12: Point forecast for Union Homes REITs returns Point Forecast 2017 Q1 -5.19309 2017 Q2 0.904101 2017 Q3 0.904101 2017 Q4 0.904101 2018 Q1 3.991724 2018 Q2 0.366555 2018 Q3 0.366555 2018 Q4 0.366555 2019 Q1 -1.46923

200 The 19th AfRES Annual Conference 2019 Q2 0.686161 2019 Q3 0.686161 2019 Q4 0.686161 Source: Analysis of survey data, 2017

Figure 6: Graphical forecast for Union Homes REITs returns

It can be observed that the Union Homes returns are expected to drop below 0 in 2019.

UPDC REITs Returns Model: ARIMA (1,0,0). ARIMA with non-seasonal autoregressive model with order 1.

The 19th AfRES Annual Conference 201 AR(1) Intercept Coefficients -0.3635 0.7217 Standard Error 0.2293 0.5400

Aic = 79.67 Table 13: Point forecast for UPDC REITs returns Point Forecast 2017 Q1 0.765876 2017 Q2 0.70558 2017 Q3 0.727498 2017 Q4 0.719531 2018 Q1 0.722427 2018 Q2 0.721374 2018 Q3 0.721757 2018 Q4 0.721618 Source: Analysis of survey data, 2017

Figure 7: Graphical point forecast for UPDC REITs returns

202 The 19th AfRES Annual Conference It can be also seen that the expected forecast up till the last quarter of 2018 is approximately 0.7.

N-REITs returns Model: ARIMA (1,0,0). AIMA with autoregressive model with order 1.

AR(1) Intercept Coefficients 0.2195 2.4424 Standard Error 0.1527 0.9873

AIC = 246.8 Table 14: Point forecast for N-REITs returns Point Forecast 2017 Q1 2.037934 2017 Q2 2.353589 2017 Q3 2.422881 2017 Q4 2.438092 2018 Q1 2.441431 2018 Q2 2.442164 2018 Q3 2.442325 2018 Q4 2.44236 2019 Q1 2.442368 2019 Q2 2.44237 2019 Q3 2.44237 2019 Q4 2.44237 2020 Q1 2.44237 2020 Q2 2.44237 2020 Q3 2.44237 2020 Q4 2.44237 Source: Analysis of survey data, 2017

The 19th AfRES Annual Conference 203

Figure 8: Graphical point forecast for N-REITs returns It can be observed from the forecast that the N-REITs would experience an average constant return from second quarter of 2019.

Granger Causality Tests on Returns of N-REITS This test was conducted to determine the causal relationship between the income, capital and total returns of N-REITs within the study period. Table 15 presents results of the test.

Table 15: Granger causality tests for the income, capital and total returns variables of N-REITs

Null Hypothesis: F-Statistic P-Value

INC_RET does not Granger Cause CAP_RET 10.4776 0.0471 CAP_RET does not Granger Cause INC_RET 0.33881 0.7469

TOT_RET does not Granger Cause CAP_RET 7.9986 0.0526

CAP_RET does not Granger Cause TOT_RET 2.20062 0.3124

TOT_RET does not Granger Cause INC_RET 0.49541 0.6687

INC_RET does not Granger Cause TOT_RET 4.12774 0.1950

204 The 19th AfRES Annual Conference Analysis of survey data, 2017 Table 15 presented the results of Granger Causality tests of the returns performance of N-REITs. The results obtained indicated a bi-directional Granger Causality for the income, capital and total returns of N-REITs, suggesting that there was a two way positive relationships existing among the return variables. This means that the income returns of N-REITs affected both the capital returns (with P-value as 0.0471) and total returns (with P- value as 0.1950) of the N-REITs industry. Similarly, the capital returns of N- REITs also affected both the income (with P-value as 0.7469) and total returns (with P-value as 0.3124) of the N-REITs industry. By the same token, the total returns of the N-REITs also affected the income returns (with P- value as 0.6687) and capital returns (with P-value as 0.0526) of the N-REITs industry. The implication of this result to the N-REITs industry is that an increase or decrease in any of the returns component will have a corresponding effect on the others.

5. Conclusion This study evaluated the return/risk performance of N-REITs within the study period (2007 to 2016). Findings from the study showed that the performance of Nigerian REITs companies in terms of income, capital, total and risk-adjusted returns have been very low and even negative in some cases from inception to 2016. This result is congruent with what was found in literature. Studies such as Akpan & Ogunba (2015) and Olanrele et al. (2015) presented similar results in the Nigerian property market. However, in comparison to REITs of other countries (both developed and emerging markets) such as the US, Canada, Japan, Germany, South Africa and Malaysia, studies (within similar time frame/both developed and emerging markets) have shown that performance of REITs in such countries were high (Imperiale, 2002; Jackson, 2008). The implication of this findings is that the performance of N-REITs as seen from this study, was not a reflection of the performance of REITs in the global markets, neither was it a time phenomenon nor emerging market phenomenon, but very specific to Nigeria. Thus, both individual and institutional investors such as pension funds, insurance companies and asset managers need to exercise caution when investing in N-REITs. However, considering that the income return component of N-REITs was positive throughout the investment period under investigation (with a mean return of 4%) and the investment potential inherent in the Nigerian property market from which N-REITs derives its income, both foreign and domestic investors could consider

The 19th AfRES Annual Conference 205 investing in N-REITs to enjoy such returns. The limitation of this study borders on data availability, the number of REIT companies in Nigeria used for the study and the time frame covered. The researchers could not obtain all the desired data for the study, similarly Nigeria has only three REIT companies which started operations in 2007, 2008 and 2013 respectively, a larger sample and longer time frame could have provided a better view of the industry.

Acknowledgment The authors wish to acknowledge Nigerian Tertiary Education Trust Fund (TETFund) for sponsoring this research work.

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210 The 19th AfRES Annual Conference Ntuli, M. and Akinsomi, O. (2017). An Overview of the Initial Performance of the South African REIT Market. Journal of Real Estate Literature, 25(2), 365-388. Olanrele, O. O. (2014). REIT performance analysis: Are other factor determinants constant? Asian Economic and Financial Review, 4(4), 492-502. Olanrele, O. O., Said, R., & Daud, N. (2015). An evaluation of the performance and acceptability of REIT in Nigeria. Proceedings of the15th African Real Estate Society (AFRES) Annual Conference, 31st August – 3rd September 2015. Pg 269-286, Kumasi Ghana. Olanrele, O. O., Adegunle, T. O. and Fateye, O. B. (2018). Causal relationship of N-REITs dividend yield and money market indicators: A case study of Skye Shelter REITs. Proceedings of the 18th African Real Estate Society (AFRES) Annual Conference, 11th – 15th September, 2018, Park Inn by Radisson, Abeokuta, Nigeria, pp. 307 - 328. Oreagba, F. (2010). Position paper on the implementation of REITs in Nigeria (N-REIT) Union Homes REITs. (2008). Annual report and accounts. Lagos, Nigeria. UACN Property Development Company. (2013). Annual report and accounts. Lagos, Nigeria. Sahin, O. F. (2005). The Performance of Acquisitions in the Real Estate Investment Trust Industry, Journal of Real Estate Research, 27 (3), 321-342. Retrieved from http://pages.jh.edu/jrer/papers/pdf/past/vol27n03/04.321_342. pdf Seguin, P. J., (2016). The relative value of public non-listed REITs. Journal of Real Estate Research (JRER). 38(1), 59 – 92. Skye Shelter Fund. (2007). Annual report and accounts. Lagos, Nigeria. Zhu, H. (2008). The diversification benefits of Asian REITs. A thesis submitted to the University of North Carolina Wilmington in partial fulfillment of the requirement for the degree of Masters in Business Administration. Retrieved from http://citeseerx.ist.psu.edu/viewdoc/download;jsessionid=CA2F0ADEC9D C8A9165F6123BF0885C23?doi=10.1.1.427.4200&rep=rep1&type =pdf Zietz E. N., Sirmans G., & Friday H. (2003). The environment and performance of real estate investment trusts. Journal of Real Estate Portfolio Management, 9(2), 127-165.

The 19th AfRES Annual Conference 211 ANALYSIS OF THE RELATIONSHIP BETWEEN INFLATION AND INDIRECT REAL ESTATE INVESTMENTS IN NIGERIA

Daniel Ibrahim DABARA1*, Augustina CHIWUZIE1 Olusegun Joseph OMOTEHINSHE1, Anthony TINUFA2, John Oyekunle SOLADOYE3 1Federal Polytechnic Ede, Nigeria 2Federal Polytechnic Idah, Nigeria 3Federal Polytechnic Offa, Nigeria * [email protected] (Corresponding Author)

Abstract The study aims at investigating the relationship between inflation and securitized real estate investments in Nigeria with a view to providing information for informed investment decisions. The timeframe for the study covers between 2007 and 2016. Population for the study comprised all securitized real estate companies in Nigeria. Data for the study were collected from the databases of the aforementioned companies. The data comprised share prices and dividends of the respective companies as well as inflation rates. The data were analyzed by means of descriptive and inferential statistical tools. Findings from the study revealed that the return profile of REITs and non REITs equities in Nigeria had some level of volatility, with the non REITs outperforming the REITs investment asset (the highest returns obtained from REITs investment was 5.43%, while the highest returns for the non REITs was 41.79%). Inflation was seen to be mostly in double digits and had kept increasing throughout the study period, ranging between 4.37 and 18.45. The study suggested a perverse hedging characteristics for all the securitized real estate investments. Findings from the study can be useful for investment forecast and investment decisions as regards the type of asset to include in an investor’s portfolio, taking to consideration the influence of inflation on such asset(s).

Keywords: inflation, investments, real estate, risk, volatility.

1. Introduction The influence of inflation on investment returns of various asset classes have remained a primary challenge to investors. Previous studies have shown that during periods of inflation, some investment assets were observed to underperform, some co-moved at the same rate with inflation, others outperformed specified benchmarks, while others provided negative return values (Arnason and Persson, 2012; Dabara, Tinufa, Soladoye,

212 The 19th AfRES Annual Conference Ebenezer and Omotehinshe, 2018). Analysis of specific investment assets in respect of their response to inflation is very important as this will guide investors in making informed investment decisions. The major theory underpinning the relationship between inflation and investment returns is the Fama and Schwert (1977) theory on inflation hedging. The debate on inflation and investment returns pioneered by Fama and Schwert (1977) have produced an extensive literature. Studies that made up such literature includes investigations of the inflation hedging characteristics of asset classes such as: investments in real estate, REITs (Real Estate Investment Trusts), gold, stocks, commodities, bonds, antiques, equities, and shares among others (Dabara, Ogunba and Araloyin, 2015). The results of these studies have shown a varying pattern, indicating that there is no consensus on the hedging characteristics of various asset classes in different parts of the world.

An asset is said to be a hedge against inflation if it provides certain degree of protection against a rise in the general level of prices of goods and services in an economy (Arnasosn and Persson, 2012). Nigeria is presented in this paper as a case study of an African emerging country where the property market is opaque with a high degree of property market immaturity and dearth of literature on hedging capabilities of indirect investments in real estate for prospective investors’ consideration.

In the real estate sector, investors have the option of investing in either direct or indirect real estate investment assets (Blau, Nguyen and Whitby, 2015; Ankeli, Dabara, Oyediran, Guyimu and Oladimeji, 2015). Investments in direct real estate assets implies the acquisition and management of physical properties such as residential and commercial buildings (Lee and Ting, 2009). Investments in indirect real estate on the other hand, denotes investing in a product whose performance is based on some measure of property performance; this includes buying shares or equities in a publicly quoted REITs or non REITs listed property companies (Kim, 2009, Li and Chow, 2015). Unlike investments in direct real estate assets, which were observed to be hampered by its need for huge capital outlay and maintenance cost; the indirect form of investment in real estate was rather seen to be characterized by a more flexible financial requirement which accommodates different categories of investors irrespective of their financial capabilities. Furthermore, it was observed to have been providing

The 19th AfRES Annual Conference 213 an encouraging investment returns that makes them very attractive to investors (Devos, Ong and Speiler, 2016).

In Nigeria currently, there exist three REITs companies namely: Skye shelter fund REITs, Union Homes REITs and UPDC REITs. Similarly there is only one listed non REITs property company which is the UACN Property Development Company. These companies are listed on the Nigerian Stock Exchange (NSE) with a combined market capitalization of about ₦72,050,847,955 which is equivalent to $234,693,316 (Dabara, et al. 2018).

In global markets, real estate investment asset classes are perceived to be good hedges against inflation (Dabara, 2014). This assertion was tested by studies such as Leung (2010); Lee (2012) and Dabara (2015) among others. Findings from these studies were observed to be divergent and conflicting. Some specific studies conducted in African property markets included Akinsomi, Kola, Ndlovu and Motloung (2016) which investigated the performance of the broad based black economic empowerment (BBBEE) of both listed and delisted property firms in South Africa. The study found that Black Economic Empowerment (BEE) compliant firms outperformed the non-BEE compliant firms with respect to both returns and risk performance. In the same vein, Ntuli and Akinsomi (2017) found that South African REITs are good return-enhancers. In Nigeria, relevant performance studies on real estate investments included the studies carried out by Odu (2011), Ogunba (2013) and Dabara and Ogunba (2019) among others. However, no study so far to the best of the authors’ knowledge have looked at the relationship between inflation and indirect real estate investments. This study attempted to fill this observed gap in literature. Hence, the aim of the study is to examine the relationship between inflation and indirect real estate investments in Nigeria with a view to providing information for local and international portfolio investment decision making. The specific objectives of the study are to examine the return profile of REITs and non REITs equities investments in Nigeria within the study period; determine the inflation trend in the study area and analyze the relationship between inflation and indirect real estate investments in the study area.

The remainder of the paper is structured as follows: Section 2 provides a brief literature review, section 3 presents the methodology adopted for this study, section 4, presents and discusses the results obtain from the study and section 5 concludes the study.

214 The 19th AfRES Annual Conference 2. Literature Review In an effort to address their concerns, investors and researchers all over the world are re-examining the capacity of various asset classes to offer inflation hedge, should inflation become problematic. Hence, vast literature investigated the inflation hedging characteristics of various asset classes in both developed and developing economies. The earliest empirical study on the relationships of asset returns and inflation was carried out by Fama and Schwert (1977). This forms the theoretical base upon which subsequent studies in this field were anchored. The authors examined the extent to which various assets were hedges against inflation rates between 1953 and 1971 in the US. The authors used the Ordinary Least Square regression model to analyze the inflation hedging characteristics of these assets. Findings from this study showed that private residential real estate was a complete hedge against inflation in the study area.

Most subsequent studies have followed the Fama and Schwert (1977) model with various modifications. In Nigeria for example, Bello (2005) carried out a comparative analysis of the inflation-hedging attributes of residential investments in real estate, ordinary shares and naira denominated deposits between 1996 and 2002. Findings from the study showed that real estate investment does not hedge against inflation in Nigeria. In another Nigerian study conducted by Odu (2011), it was shown that there were variations in the hedging capacities of office property types in Victoria Island and Ikeja. In Dabara (2014, 2015) findings indicated that in Akure, commercial properties provided perverse inflation hedge while in Gombe, residential properties provided a partial hedge against inflation. These findings are congruent with similar study conducted by Dabara, Uwaezuoke, Omotehinshe, Lawal and Ebenezer (2018). All these Nigerian studies focused on direct real estate investments, none considered indirect real estate investments.

Terahni, Zarei and Parirokh (2012) investigated the short term and long- term inflation hedging effectiveness of direct real estate investments in some countries in emerging economies. The study employed the co- integration model for data analysis. Findings from the study showed that the Third World Countries of emerging economies’ small and medium size residential property, provides an effective hedge against inflation. The study also revealed that residential properties in Third World Countries have been a better short term and long term inflation hedge than stock and time deposit. Similar results were found in a study conducted in Malaysia

The 19th AfRES Annual Conference 215 by Newell and Osmadi (2010). However, in studies conducted in developed economies, there seems to be no consensus as regard the inflation hedging capacities of real estate investments. For example in China, Zhou and Clements (2010) found that Chinese real estate was not an effective inflation hedging asset. Arnason and Persson (2012) found similar results in Sweden. Contrary to the aforementioned, Park and Bang (2012) found that Korean commercial real estate serves as both short and long-run inflation hedge. Other studies includes: Chiang and Tang (2008) which focused on real estate investments in China; similarly the study of Newell, Wu, Chau and Wong (2010) focused on Hong kong’ real estate. The results of these studies have shown a varying pattern which are not congruent with each other.

However, certain gaps were observed to exist in the aforementioned studies: First, most of the studies were conducted in developed economies such as the US, Canada, Sweden etc. The emerging property markets of developing economies like Nigeria possesses great investment opportunities for property investors and accordingly deserve in-depth studies of the hedging capability of its real estate investments to assist prospective investors. Second, it was observed that most of the studies were carried out on investment in direct real estate asset classes such as residential and commercial properties, REITs and other listed real estate equities from emerging African markets which are equally important and profitable to investors, have hitherto been notably under investigated. Third, the time frames for which most of the studies were carried out needs to be updated due to the fact that inflation is a time related phenomenon; hence an updating of the time frames for such time series studies is imperative. It is necessary to continuously update the time period of this kind of study to reflect the current market situation due to the dynamism associated with both inflation and the real property market. Finally, in Nigeria dearth of literature in this field is particularly amplified; this presents a compelling motivation for this study.

3. Methodology This study followed the Fama and Schwert (1977) model of analyzing the relationship between real estate returns and inflation. However, the study improved on prior Nigerian studies such as Bello (2005), Odu (2011) and Oluwasegun and Dabara (2013) by first testing for the stationarity of the data set used and focusing on a hitherto unconsidered major real estate

216 The 19th AfRES Annual Conference assets classes (REITs and non REITs listed real estate equities) in Nigeria. The population for the study comprised all securitized real estate companies in Nigeria namely Skye Shelter Fund REITs, Union Home REITs, UPDC REITs and UACN Property Company. The data required for the study were data on share prices and dividends of the selected asset classes as well as data on inflation between 2007 and 2016. The data on share prices and dividends were sourced from the databases and quarterly reports of the Skye Shelter fund REITs, Union Homes REITs, UPDC REITs, and UACN Property Development Company respectively. The data on inflation was obtained from the quarterly reports of the Nigerian National Bureau of Statistics. The data obtained were treated as follows: first, the data on share prices and dividends were used to calculate the income, capital and total or holding period returns from investments in both the REITs and non REITs assets in Nigeria.

The income return is expressed as follows IRt = 푵풍 풕 (ퟏ) 푪푽풕−ퟏ Where: IRt = income return for period t NIt = Net income received in period t (dividend) CVt-1 = CV at the end of period t-1 (Share prices)

The capital return is expressed as CRt = 푪푽 − 푪푽 풕 풕−ퟏ (ퟐ) 푪푽풕−ퟏ Where: CRt = Capital return for period t (Share prices) CVt = CV at the end of measurement period (Share prices) CVt-1 = CV at the start of period t-1 (Share prices)

The total return is expressed as TRt = 푵푰풕 + (푪푽 − 푪푽 ) 풕 풕−ퟏ (ퟑ) 푪푽풕−ퟏ TRt = Total return CVt-1 = Capital value of N-REITs at the beginning (Share prices) CVt = Capital value of N-REITs at the end (Share prices) NIt = Income of N-REITs received during the holding period

The 19th AfRES Annual Conference 217 Second, data on inflation rates and holding period returns of the selected investment assets were analyzed by means of trend analysis. Third, an initial test for the stationarity properties of the data sets using the Kwiatkowski- Phillips-Schmidt-Schin (KPSS) as well as the Philip-Perron (PP) was undertaken. This was important so as to avoid spurious results in subsequent analysis and to efficiently capture the relationship between the variables.

Fourth, following the determination of the stationarity of the data sets, the dependent variable (returns on both REITs and non REITs listed properties in the study area) was regressed against the independent variable (inflation rates in the study area) using the Fama and Schwert (1977) regression model to determine the inflation hedging characteristics of investment asset classes under consideration. The regression equation is expressed as:

Rjt = αj + βjE(Δt | øt-1) + yj[Δt - E(Δt | øt-1)] + Ԑjt (4)

Where: Rjt is the nominal return (could be measured in income return or capital return term) on real estate type j from period t‐1 to t;

αj is the intercept term in the regression model, it reflects the real return on real estate type j from period t‐1 to t;

βj is the slope coefficients for expected inflation for real estate type j with respect to income return or capital return;

E(Δt | øt-1) is best estimation of the expected value of inflation rate in time t Δt based on the information set available up to time t‐1, denoted as øt-1;

Δt is the true value of observed inflation rate from period t‐1 to t; yj is the slope coefficients for unexpected inflation for real estate type j with respect to income return or capital return;

Δt - E(Δt | øt-1) is used to measure shocks after acknowledgement of true inflation rate Δt, or rather the unexpected or unanticipated inflation rate, which is known in time t;

Ԑjt is the error term for return of real estate type j from period t‐1 to t.

218 The 19th AfRES Annual Conference 4. Results and Discussions This section presents the results and discussions of results obtained for the study. Table 1 shows the real estate companies listed on the Nigerian Stock Exchange. This is made up of both REITs and non REITs companies.

From Table 1 below, it was shown that the UACN property company (the only non REIT real estate company listed on the Nigerian Stock Exchange) was the first indirect real estate company established in Nigeria in the year 1991. It also has the highest number of shares as well as the highest market capitalization ($98,422,231) when compared to others. The Skye Shelter REITs was the first REIT Company to be established in Nigeria (in the year 2007) however, it has the lowest market capitalization ($6,514,658). The sector has a combined market capitalization of about $234,693,316. This is quite small when compared to the market capitalization of similar real estate equities listed on the stock exchange of most developed economies such as the US, UK, Germany etc (Dabara, et al. 2018). This is not surprising as the Nigerian real estate equity sector is still new and the real estate asset class is trying to gain grounds in the stock exchange. The situation is slightly different in South Africa which presents a more robust listed real estate equities than Nigeria as confirmed by studies carried out by Akinsomi, et al. (2016). Table 1: Real estate companies listed on the Nigerian Stock Exchange Property Type Year of Number of Share Price Market Company Commencement Shares Per Unit Capitalization Non REITs ₦17.58 ₦30,215,624,912 UACN 1991 1,718,749,995 ($0.06) ($98,422,231)

Skye Shelter ₦100 ₦2,000,000,000 REITs 2007 20,000,000 ($0.33) ($6,514,658)

REITs Union Homes ₦47.59 ₦11,898,441,378 REITs 2008 250,019,781 ($0.16) ($38,757,138)

₦10.49 ₦27,936,781,665 UPDC REITs 2013 2,668,269,500 ($0.03) ($90,999,289)

₦175.64 ₦72,050,847,955 Total 4,657,039,276 ($0.57) ($234,693,316)

₦43.91 ₦18,012,711,989 Mean 1,164,259,819 ($0.14) ($58,673,329)

The 19th AfRES Annual Conference 219 Source: Databases of Skye Shelter REITs, Union Homes REITs, UACN and UPDC REITs, Estate Intel Database and quarterly reports and accounts of the respective companies

Table 2 presents the quarterly dividends and share prices of all the companies. The quarterly share prices of the Skye Shelter Fund REITs ranged between ₦96.84 ($0.32) and ₦118.79 ($0.39) while the quarterly dividends ranged between ₦1.02 ($0.003) and ₦1.79 ($0.006) within the study period. For the Union Homes REITs, its quarterly share prices ranged between ₦45.55 ($0.15) and ₦50.95 ($0.17) while its quarterly dividends ranged between ₦0.19 ($0.0006) and ₦1.00 ($0.0033) within the study period. Similarly, the UPDC REITs’ quarterly share prices ranged between ₦9.03 ($0.03) and ₦10.00 ($0.033), and its dividends ranged between ₦0.06 ($0.0002) and ₦0.11 ($0.0004) within the study period. For the UACN property company, its quarterly share prices ranged between ₦9.99 ($0.033) and ₦25.67 ($0.084), while its dividend ranged between ₦0.12 ($0.0004) and ₦1 ($0.003).

Table 3 presents the quarterly income returns for the companies. The income returns of the investment assets were observed to have kept fluctuating within the study period. For example the income returns for the Skye Shelter Fund REITs indicated that in the first quarter of 2008, 1.2% income return was realized, this decreased to 1.0% in the last three quarters of that investment year. The highest income return for the company was obtained in 2015 (1.8%) from the first to the fourth quarter of that year.

220 The 19th AfRES Annual Conference Table 2: Quarterly data on the share prices and dividends on the both REITs and non REITs listed companies in Nigeria Skye Shelter Fund REITs Union Homes REITs UPDC REITs UACN Share Dividend Year Share Price (₦) Dividend (₦) Share Price (₦) Dividend (₦) Share Price (₦) Dividend (₦) Price (₦) (₦) Q1 100.00 - - - - - 17.23 0.12 Q2 100.00 - - - - - 24.31 0.12 2007 Q3 100.00 - - - - - 22.48 0.12 Q4 100.00 - - - - - 21.11 0.12

Q1 115.12 1.16 50.00 - - - 24.74 0.19 Q2 117.49 1.16 50.00 - - - 25.32 0.19 2008 Q3 118.79 1.16 50,00 - - - 25.67 0.19 Q4 118.28 1.16 50.00 - - - 24.31 0.19

Q1 108.00 1.75 50.00 1.00 - - 18.2 0.13 Q2 103.00 1.75 50.00 1.00 - - 19.47 0.13 2009 Q3 105.00 1.75 50.00 1.00 - - 16.29 0.13 Q4 96.84 1.75 50.00 1.00 - - 20.19 0.13

Q1 100.00 1.60 50.75 0.19 - - 20.59 0.14 Q2 100.00 1.60 50.85 0.19 - - 22.83 0.14 2010 Q3 98.69 1.60 50.85 0.19 - - 19.86 0.14 Q4 99.51 1.60 50.95 0.19 - - 17.41 0.14

Q1 99.51 1.01 50.00 0.57 - - 17.01 0.16 Q2 99.51 1.01 50.00 0.57 - - 17.25 0.16 2011 Q3 97.80 1.01 50.00 0.57 - - 18.18 0.16 Q4 97.38 1.01 50.00 0.57 - - 12.13 0.16

Q1 100.00 1.25 50.00 0.53 - - 11.57 0.18

221 The 19th AfRES Annual Conference Skye Shelter Fund REITs Union Homes REITs UPDC REITs UACN Share Dividend Year Share Price (₦) Dividend (₦) Share Price (₦) Dividend (₦) Share Price (₦) Dividend (₦) Price (₦) (₦) Q2 100.00 1.25 50.00 0.53 - - 10.54 0.18 2012 Q3 100.00 1.25 50.00 0.53 - - 9.99 0.18 Q4 100.00 1.25 50.00 0.53 - - 11.18 0.18

Q1 100.00 1.31 50.00 - 10.00 - 15.34 0.18 Q2 100.00 1.31 50.00 - 10.00 - 15.42 0.18 2013 Q3 100.00 1.31 50.00 - 10.00 - 15.95 0.18 Q4 100.00 1.31 50.00 - 10.00 - 17.82 0.18

Q1 99.68 1.45 50.00 - 10.00 0.08 20.15 0.13 Q2 98.72 1.45 48.55 - 9.48 0.08 20.01 0.13 2014 Q3 98.05 1.45 47.9 - 9.49 0.08 19.56 0.13 Q4 97.79 1.45 47.71 - 9.03 0.08 19.9 0.13

Q1 100.00 1.79 45.55 - 9.78 0.11 15.34 0.18 Q2 100.00 1.79 45.55 - 9.60 0.11 15.42 0.18 2015 Q3 100.00 1.79 45.55 - 9.79 0.11 15.95 0.18 Q4 100.00 1.79 45.55 - 9.95 0.11 17.82 0.18

Q1 100.00 - 50.00 - 10.00 0.06 17.01 0.16 Q2 100.00 - 50.00 - 10.00 0.06 17.25 0.16 2016 Q3 100.00 - 50.00 - 10.00 0.06 25 1.75 Q4 100.00 - 50.00 - 10.00 0.06 25 1 Source: Online data base of the Skye Shelter Fund REITs, Union Homes REITs, UACN and UPDC REITs Note: Q1 = First quarter, Q2 = Second quarter, Q3 = Third quarter, Q4 = Fourth quarter

222 The 19th AfRES Annual Conference Table 3: Quarterly income returns of REITs and non REITs listed companies in Nigeria UPDC UACN Year Skye Shelter Fund REITs Union Homes REITs REITs Q1 - - - 0 Q2 0.0 - - 0.69 2007 Q3 0.0 - - 0.49 Q4 0.0 - - 0.53

Q1 1.2 - - 0.9 Q2 1.0 0.0 - 0.77 2008 Q3 1.0 0.0 - 0.75 Q4 1.0 0.0 - 0.74

Q1 1.5 2.0 - 0.54 Q2 1.6 2.0 - 0.71 2009 Q3 1.7 2.0 - 0.67 Q4 1.7 2.0 - 0.8

Q1 1.7 0.4 - 0.69 Q2 1.6 0.4 - 0.68 2010 Q3 1.6 0.4 - 0.61 Q4 1.6 0.4 - 0.71

Q1 1.0 1.1 - 0.92 Q2 1.0 1.1 - 0.94 2011 Q3 1.0 1.1 - 0.93 Q4 1.0 1.1 - 0.88

Q1 1.3 1.1 - 1.34 Q2 1.3 1.1 - 1.56 2012 Q3 1.3 1.1 - 1.71 Q4 1.3 1.1 - 1.8

Q1 1.3 0.0 - 1.61 Q2 1.3 0.0 0.0 1.17 2013 Q3 1.3 0.0 0.0 1.67 Q4 1.3 0.0 0.0 1.13

Q1 1.5 0.0 0.8 0.73 Q2 1.5 0.0 0.8 0.65 2014 Q3 1.5 0.0 0.8 0.81 Q4 1.5 0.0 0.8 0.76

223 The 19th AfRES Annual Conference UPDC UACN Year Skye Shelter Fund REITs Union Homes REITs REITs Q1 1.8 0.0 1.2 1.61 Q2 1.8 0.0 1.1 1.17 2015 Q3 1.8 0.0 1.1 1.67 Q4 1.8 0.0 1.1 1.13

Q1 0.0 0.0 0.6 0.92 Q2 0.0 0.0 0.6 0.94 2016 Q3 0.0 0.0 0.6 8.68 Q4 0.0 0.0 0.6 4.0 Source: Analysis of survey data Note: Q1 = First quarter, Q2 = Second quarter, Q3 = Third quarter, Q4 = Fourth quarter

Table 4 shows that the highest capital return was obtained in the first quarter of 2013 (37.21%) by the UACN company and the least was obtained in 2007 (-41.09%) by the same company. For the Union Homes REITs company, it had its highest capital return in the first quarter of 2016 (9.8%) and the least in the first quarter of 2015 (-4.5%). The UPDC REIT Company had its highest capital returns in the first quarter of 2015 (8.3%) and the least in second quarter of 2014 (-5.2%). Generally the capital returns of the N-REIT Companies were observed to be low and even negative in some cases.

Table 4: Quarterly capital returns of REITs and non REITs listed companies in Nigeria Skye Shelter Union Homes UACN Fund REITs REITs UPDC REITs Year Q1 - - - 0 - Q2 0.0 - - 41.09 2007 Q3 0.0 - - -7.53 Q4 0.0 - - -6.09

Q1 15.1 - - 17.2 Q2 20.6 0.0 - 2.24 2008 Q3 01.1 0.0 - 1.38

224 The 19th AfRES Annual Conference Skye Shelter Union Homes UACN Fund REITs REITs UPDC REITs Year Q4 -0.4 0.0 - -5.3

- Q1 -8.7 0.0 - 25.13 Q2 -4.6 0.0 - 6.98 - 2009 Q3 1.9 0.0 - 16.33 Q4 -7.8 0.0 - 23.94

Q1 3.3 1.5 - 1.98 Q2 0.0 0.2 - 10.88 - 2010 Q3 -1.3 0.0 - 13.01 - Q4 0.8 0.2 - 12.34

Q1 0.0 1.9 - -2.3 Q2 0.0 0.0 - 1.41 2011 Q3 -1.7 0.0 - 5.39 - Q4 -0.4 0.0 - 31.08

Q1 2.7 0.0 - -7.66 Q2 0.0 0.0 - -8.9 2012 Q3 0.0 0.0 - -5.22 Q4 0.0 0.0 - 11.91

Q1 0.0 0.0 - 37.21 Q2 0.0 0.0 0.0 0.52 2013 Q3 0.0 0.0 0.0 3.44 Q4 0.0 0.0 0.0 11.72

Q1 -0.3 0.0 0.0 13

The 19th AfRES Annual Conference 225 Skye Shelter Union Homes UACN Fund REITs REITs UPDC REITs Year Q2 -1.0 -2.9 -5.2 12.9 2014 Q3 -0.8 -1.3 0.1 12.54 Q4 -0.3 -0.4 -4.9 13.03

Q1 2.3 -4.5 8.2 37.20 Q2 0.0 0.0 -1.8 0.52 2015 Q3 0.0 0.0 2.0 3.44 Q4 0.0 0.0 1.6 11.72

Q1 0.0 9.8 0.5 -2.3 Q2 0.0 0.0 0.0 1.41 2016 Q3 0.0 0.0 0.0 25 Q4 0.0 0.0 0.0 0.0 Source: Analysis of survey data Note: Q1 = First quarter, Q2 = Second quarter, Q3 = Third quarter, Q4 = Fourth quarter

Table 5 shows that the highest return obtained by the Skye Shelter Fund REITs was in the second quarter of 2008 (21.6%) while the least was in the first quarter of 2009 (-7.1). The Union Homes REITs had its highest return in first quarter of 2011 (3.0%) and had its least return in the first quarter of 2015 (-4.5%). The UPDC REIT Company had its highest return in the first quarter of 2015 (9.4%) and its least return was obtained in the second quarter of 2014 (-4.1). Similarly, UACN company had its highest returns in the second quarter of 2007 (41.79%) and its least returns in the fourth quarter of 2011 (-30.2%). It was observed that the holding period returns obtained from the companies were generally low.

226 The 19th AfRES Annual Conference Table 5: Quarterly holding period returns of REITs and non REITs listed companies in Nigeria Skye Shelter Union Homes UACN Year Fund REITs REITs UPDC REITs Q1 - - - 0.0 Q2 0.0 - - 41.79 2007 Q3 0.0 - - -7.03 Q4 0.0 - - -5.56

Q1 16.1 - - 18.1 Q2 21.6 - - 3.11 2008 Q3 2.1 - - 2.13 Q4 0.6 - - -4.56

Q1 -7.1 2.0 - -24.6 Q2 -2.9 2.0 - 7.69 2009 Q3 3.6 2.0 - -15.67 Q4 -6.1 2.0 - 24.74

Q1 4.9 1.9 - 2.68 Q2 1.6 0.6 - 11.56 2010 Q3 0.3 0.4 - -12.4 Q4 2.4 0.6 - -11.63

Q1 0.1 3.0 - -1.38 Q2 0.1 1.1 - 2.35 2011 Q3 -0.7 1.1 - 6.32 Q4 0.6 1.1 - -30.2

Q1 4.0 1.1 - -6.23 Q2 1.3 1.1 - -7.35 2012 Q3 1.3 1.1 - -3.51 Q4 1.3 1.1 - 13.71

Q1 1.3 0.0 - 38.82 Q2 1.3 0.0 0.0 1.7 2013 Q3 1.3 0.0 0.0 4.6 Q4 1.3 0.0 0.0 12.85

The 19th AfRES Annual Conference 227 Skye Shelter Union Homes UACN Year Fund REITs REITs UPDC REITs Q1 1.2 0.0 0.8 13.81 Q2 0.5 -2.9 -4.4 13.4 2014 Q3 0.7 -1.3 0.9 13.35 Q4 1.2 -0.4 -4.1 13.79

Q1 4.1 -4.5 9.4 38.82 Q2 1.8 0.0 -0.7 1.7 2015 Q3 1.8 0.0 3.1 4.6 Q4 1.8 0.0 2.7 12.85

Q1 0.0 9.8 1.1 -1.38 Q2 0.0 0.0 0.6 2.35 2016 Q3 0.0 0.0 0.6 32.75 Q4 0.0 0.0 0.6 4.0 Source: Analysis of survey data Note: Q1 = First quarter, Q2 = Second quarter, Q3 = Third quarter, Q4 = Fourth quarter

Table 6 shows that the highest returns obtained from REITs investment was 5.43% in the first quarter of 2008, while the least was -2.27 obtained in the second quarter of 2014. The non REITs investment had its highest returns in the first quarter of 2007 (41.79%), the least was -24.6% obtained in the first quarter of 2009. The figures in Table 6 revealed that the non REITs asset outperformed the REITs asset in the study area within the study period. Inflation was seen to be high and had kept increasing within the study period. Inflation rates within the study period ranged between 4.37 and 18.45.

The trend analysis in Figure 1 showed that for non REITs real estate investments, there was a high level of volatility for its returns as indicated by its trend line. The smoothed trend lines indicated a consistent and steady decrease for both REITs and non REITs returns within the study period. A future forecast with respect to both returns and inflation indicated continues steady increase for inflation and decrease for returns of both REITs and non REITs real estate investments returns. The level of reliability of the trend and accuracy of the forecast as determined by the R2 value (which is the coefficient of determination) for inflation and returns in the

228 The 19th AfRES Annual Conference study is as follows: 82.18% for inflation, 75.13% for non REITs asset and 84.35% for REITs assets.

‘Y’ in the equation represents returns in the study area while ‘X’ represent the year selected for the desired analysis. From the analysis above, it can be inferred that the returns for both REITs and non REITs have a steady and consistent slight decrease over the study period and this decrease is likely to be maintained over the next three years as seen from the predictive trend lines. While inflation rates have a steady and consistent increase over the study period and this increase is likely to be maintained over the next three years as seen from the predictive trend lines. The implication of this is that as inflation increases, returns from indirect real estate investments in the study area decreases. This findings is not congruent with the relationship between direct real estate investments in the same study area. Studies such as Akpan and Ogunba (2015) and Dabara (2015) found that returns from direct investments in real estate in Nigeria increases as inflation increases.

Table 6: Quarterly holding period returns of REITs and non REITs industries and inflation rates in Nigeria Holding Holding Period Period Inflation Rate in Year Return f N- Return (%) Nigeria REITs (%) Of UACN Q1 0 0 6.77 2007 Q2 0 41.79 5.07 Q3 0 -7.03 4.37 Q4 0 -5.56 5.47

Q1 5.43 18.1 8.13 2008 Q2 1.02 3.11 9.97 Q3 0.69 2.13 13.13 Q4 0.18 -4.56 14.87

Q1 -1.74 -24.6 14.33 2009 Q2 -0.34 7.69 12.57 Q3 1.88 -15.67 10.83 Q4 -1.37 24.74 12.63

Q1 2.27 2.68 14.93

The 19th AfRES Annual Conference 229 2010 Q2 0.79 11.56 14 Q3 0.2 -12.4 13.43 Q4 1.01 -11.63 12.67

Q1 0.09 -1.38 12 2011 Q2 0.72 2.35 11.3 Q3 0.15 6.32 9.73 Q4 0.58 -30.2 10.43

Q1 1.68 -6.23 12.2 2012 Q2 0.77 -7.35 12.83 Q3 0.77 -3.51 11.93 Q4 0.77 13.71 12

Q1 0.44 38.82 9.03 2013 Q2 0.44 1.7 8.83 Q3 0.44 4.6 8.3 Q4 0.44 12.85 7.9

Q1 0.64 13.81 7.83 2014 Q2 -2.27 13.07 8,03 Q3 0.13 12.85 8.3 Q4 -1.48 4.6 8

Q1 4.54 1.7 8.37 2015 Q2 0.84 2.35 8.97 Q3 1.64 6.32 9.3 Q4 1.62 32.75 9.41

Q1 0.27 18.1 11.26 2016 Q2 0.2 3.11 15.26 Q3 0.2 2.13 17.53 Q4 0.2 4.1 18.45 Source: Analysis of survey data Note: Q1 = First quarter, Q2 = Second quarter, Q3 = Third quarter, Q4 = Fourth quarter

230 The 19th AfRES Annual Conference REITs returns non REITs returns Inflation rates Linear (REITs returns) Linear (non REITs returns) Linear (Inflation rates) 35

30

25 y = 1.209x + 4.8353 R² = 0.8218 20

15

Returns y = -0.0928x + 9.3113 10 R² = 0.7513

5 y = -0.0669x + 1.184 R² = 0.8435 0 2007200820092010201120122013201420152016 -5 Year

Figure 1: Trend analysis of REITs/non REITs returns and inflation rates in Nigeria from 2007 to 2016

The computed KPSS and PP test-statistics as seen in Table 7 below are integrated of order I(1). The computed unit root test indicated stationary series with respect to the data used some at first differencing while others are after second differencing accordingly. It was observed that the KPSS and PP statistics were smaller than the critical values - "tau" at 10%, 5%, and 1% significant levels respectively; therefore we can reject Ho for the variables. This means that the data series are all stationary series at 10%, 5% and 1% significant levels and are integrated of order I(0) at first and second differencing accordingly.

The 19th AfRES Annual Conference 231 Table 7: Unit root analysis REITs non REITs Unit root test returns returns Inflation rates KPSS Statistics 0.184361** 0.215458*** 0.235293** 1% Critical Value 0.739 0.739 0.739 5% Critical Value 0.463 0.463 0.463 10% Critical Value 0.347 0.347 0.347

PP Statistics -2.56094*** 2.84645** 2.495929** 1% Critical Value -3.0074 5.11981 5.11981 5% Critical Value -2.0212 3.5196 3.5196 10% Critical Value -1.5973 2.89842 2.89842 Source: Analysis of survey data, 2019 Note: * = stationary at level ** = stationary at first differencing *** = stationary at second differencing

From Table 8, the results shows negative Beta coefficients for both REITs and non REITs indirect investments in the study area indicated by a beta coefficient of - 0.127 and -0.225 for REITs and non REITs asset classes respectively. This indicates perverse hedging characteristics for all the property types. The proportion of explained variance as measured by adjusted R-Square which indicates the variation in property returns explained by inflation was seen to be 1.6% in REITs and 5.1% in non REITs investment assets. This shows that there may be other factors influencing the returns on indirect investments in real estate rather than inflation. Dabara, Omotehinshe, Chiwuzie, Asa and Soladoye (2018) suggested that financial structure, market structure and other investment parameters can greatly impact on indirect investment assets classes. The findings of this study refuted the result obtained from earlier studies conducted in the US by Fama & Schwert (1977) and in Korea by Park and Bang (2012), similarly it refutes the findings of the study conducted in some third world countries by Terahni et al. (2012) which concluded that real estate provides complete hedge against inflation. However, the study was found to be congruent with the findings of Bello (2005), Zhou and Clements (2010) and Arnasson and person (2012). The authors respectively found that real estate provides perverse hedges against actual inflation as seen in this study.

232 The 19th AfRES Annual Conference Table 8: Inflation Hedging Performance of investments in indirect real estate in Nigeria Retur Property Consta Standardized R Type of

ns Type nt Coefficient Square Hedge Beta

20.01 -0.225 0.051 Perverse Non REITS

Returns N-REITs 14.018 -0.127 0.016 Perverse

Source: Analysis of survey data, 2019

5. Conclusion The study examined the impact of inflation on indirect real estate investments (both REITs and non REITs) in Nigeria. Findings from the study revealed that the return profile of REITs and non REITs equities in Nigeria had experienced some level of volatility with the non REITs outperforming the REITs investment asset. Inflation was seen to be mostly in double digits and had kept increasing throughout the study period ranging between 4.37 and 18.45. Analysis of the relationship between indirect real estate investment returns and inflation in the study area revealed negative Beta coefficients for both REITs and non REITs suggesting a perverse hedging characteristics. The findings of this study refuted the result obtained from earlier studies such as Fama and Schwert (1977), Park and Bang (2012) and Terahni, et al. (2012). However, the study was found to be congruent with the findings of studies such as Bello (2005), Zhou and Clements (2010) and Arnasson and person (2012). The conflict of results makes it obvious that inflation hedging capability varies from place to place and across investment assets even within the same country. Hence, the results of this study should not be generalized.

Nigeria is considered to be one of the fastest growing economies with divers’ opportunities for investments in all ramifications. The result of this study can be useful for investment forecast and investment decisions as regards the type(s) of asset(s) to include in an investor’s portfolio taking to

The 19th AfRES Annual Conference 233 consideration the impact of inflation on such asset(s). The study is however limited by the number of companies considered (only four real estate companies are presently listed on the Nigerian Stock Exchange and all were considered in this study).

Acknowledgment The authors wish to acknowledge Nigerian Tertiary Education Trust Fund (TETFund) for sponsoring this research work.

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236 The 19th AfRES Annual Conference Odu, T. (2011). Analysis of relative inflation hedging capacities of prime commercial properties in Lagos. Global Journal of Human Social Science. 11(10) 42-51. Retrieved from: https://globaljournals.org/GJHSS_Volume11/8-An-Analysis-of- Relative-Inflation-Hedging-Capacities.pdf Ogunba, O. A. (2013). Principles and practice of property valuation in Nigeria. Atlantis Books, Ibadan. Oluwasegun, A., and Dabara, I.D. (2013). Inflation-Hedging capability and risk-return strategies of commercial real estate investment in Nigeria. African Journal of Management and Administration, 6(4), 40-54. Park, Y. W., and Bang, D. W. (2012). Direct commercial real estate as an inflation hedge: Korean evidence. Journal of Real Estate Portfolio Management, 18 (2), 187-203. Seguin, P. J., (2016). The relative value of public non-listed REITs. Journal of Real Estate Research (JRER). 38(1), 59 – 92. Terahni, R., Zarei, S., and Parirokh, T. (2012). An approach in market residential using co-integration traditional model. Australian Journal of Basic and Applied Sciences, 6(8), 112-114. Zhou, X., and Clements, S. (2010). The inflation hedging ability of real estate in China. Journal of Estate Portfolio Management, 16 (3), 267-277.

The 19th AfRES Annual Conference 237 PROGRAMMES DE CONSTRUCTION DE LOGEMENTS SOCIAUX ET RÉACTION SOCIALE DANS LE DISTRICT D’ABIDJAN

Par DẺDOU Zozo Alain ([email protected]) KOUAKOU Konan Isidore ([email protected]) Assistants, UFR Criminologie Université Félix Houphouët-Boigny Abidjan/Côte d’Ivoire

Résumé Cette étude a pour objectif d’analyser les opinions, attitudes et comportements de la population en rapport avec les programmes de construction de logements sociaux dans le district d’Abidjan entamé au lendemain de la crise post-électorale. Une enquête axée sur des observations et des entretiens semi-directifs menés auprès d’un échantillon empirique de 205 personnes, constitué essentiellement de souscripteurs ou non et de promoteurs immobiliers permettra de recueillir des discours, des témoignages, des faits et gestes avant de procéder à leur analyse. La théorie au fondement de cette étude est la théorie de la réaction sociale de Lemert. Les résultats attendus seront structurés autour de deux points essentiels : D’une part, les agences immobilières agrées et leurs programmes de construction de logements sociaux et la réaction de la population abidjanaise de l’autre. Dans le premier cas, les informations générales sur le programme de constructions de logements sociaux seront mises en exergue. Dans le second, nous analyserons la réaction sociale muée en opinions, attitudes et comportements de la population abidjanaise en rapport avec les programmes de construction de logements sociaux.

Mots clés: Programmes de construction – logements sociaux – opinions – attitudes – comportements.

Abstract: This study aims to analyze the opinions, attitudes and behaviors of the population in relation to social housing construction programs in the district of Abidjan started in the aftermath of the post-electoral crisis. A semi- structured survey and interviews conducted with an empirical sample of 205 people, consisting primarily of underwriters and real estate developers, will collect speeches, testimonies, facts and actions before proceeding with

238 The 19th AfRES Annual Conference their analysis. . The expected results will be structured around two essential points: On the one hand, the approved real estate agencies and their programs of construction of social housing and the reaction of the Abidjan population on the other. In the first case, real estate agencies and their construction programs will be highlighted. In the second, we will analyze the social reaction transformed into opinions, attitudes and behaviors of the Abidjan population in relation to social housing construction programs.

Key words: Construction programs - social housing - opinions - attitudes - behaviors.

I-Introduction La crise de logements, en termes de pénurie, qualité ou coût, constitue aujourd’hui l’un des problèmes sociaux majeurs auxquels sont confrontés la plupart des ménages urbanisés à travers le monde. Selon ONU-HABITAT (2018), jusqu’en 2030, environ 40 % de la population mondiale, auront besoin d’un logement convenable et de l’accès à des infrastructures et des services de base, comme l’eau et les systèmes d’assainissement. Ceci se traduit par un besoin d’ériger 96 150 logements par jour sur des terrains enregistrés et viabilisés entre 2018 et 2030. Pour pallier cette situation, l’on assiste à une floraison de programmes de construction de logements sociaux résultant des réflexions différenciées de nombreux gouvernements des pays du monde. Cependant, cette politique semble ne pas toujours avoir l’effet escompté. Autrement dit, il existe toujours un déséquilibre béant entre l’offre et la demande.

En Europe, une enquête de l’institut d’opinion « Skop » pour le syndicat des locataires révèle que dans la capitale suédoise, moins de la moitié des jeunes âgés de 20 à 27 ans vivent dans leur propre logement. Les raisons seraient selon Gontek (2013), le manque criant de logements et le prix élevé des loyers. Par ailleurs selon l’auteur, les jeunes familles dans les pays en difficultés financières comme la Grèce, l’Espagne et le Portugal sont particulièrement touchées. Dans ces zones, ajoute-t-il, les hypothèques et les loyers ne sont plus versés, des centaines de milliers de personnes se retrouvent sans abris. Ả l’instar de ces localités, dans des pays solvables financièrement comme la France, la détresse immobilière est presque aussi chronique. Selon les chiffres actuels, il manquerait un million de logements pour combler le déficit entre offre et demande (Gontek, 2013). En Île-de- France, Dietrich-Ragon (2013) indique que se loger est devenu pour

The 19th AfRES Annual Conference 239 beaucoup de personnes un véritable problème du fait de la crise du logement et de l’explosion des prix tant à l’achat qu’à la location. En effet, selon IAU (Dietrich-Ragon, 2013), le nombre de ménages demandeurs franciliens est passé de 264 000 en 1973 à 406 000 en 2010. Le délai d’attente théorique pour un logement est de 5,4 ans, alors qu’en 1978 il était de 3,1 ans. Il n’y a cependant pas d’équivalence automatique entre les difficultés de logement et la demande.

En Afrique Subsaharienne, le même problème de déficit de logements se pose. Dans ce cadre, en 2013, le CAHF (BM, 2015) indiquait une pénurie de 17 000 000 logements au Nigéria, 3 000 000 en Tanzanie, 2 100 000 en Afrique du Sud, 2 000 000 respectivement en Angola et au Madagascar, 1 600 000 logements au Ghana et 1 000 000 logements en Ethiopie. Au Mali, selon Cans (2003), la demande dans la seule ville de Bamako, la capitale économique serait estimée à 12 000 nouveaux logements par an, alors que, selon le ministère de l’Urbanisme et de l’Habitat, les constructions annuelles dépassent difficilement les 3 000.

La Côte d’Ivoire n’échappe pas à cette situation. Pour preuve, dans plusieurs villes de ce pays, la construction de logements sociaux connaît un développement sans précédent. En effet, les besoins non satisfaits de la population sont évalués actuellement à 400 000 logements par an dont 200 000 dans le district d’Abidjan (Mieu, 2015). Ce déficit s’accroît de 10% par an. Ce déficit de logement selon les acteurs est dû au désengagement de l’Etat dans la construction direct de logements depuis les années 1980. Ce qui a provoqué une pénurie dans ce secteur et constitue aujourd’hui un problème socioéconomique pour le gouvernement. Pour tenter de combler ce déficit de logements, les autorités ont lancé officiellement depuis le 28 Mars 2013, un vaste programme de construction de 60 000 logements sociaux sur toute l’étendue du territoire ivoirien avec 50 000 logements à Abidjan, la capitale économique. En 2018, Mamadou Sanogo, Ministre ivoirien de la Construction, du Logement, de l’Assainissement et de l’Urbanisme d’alors avait annoncé qu’une superficie de 2 000 hectares sur l’ensemble du territoire est dédiée au projet de construction de logements sociaux pour lequel 72 000 souscripteurs ont été enregistrés. Ce projet ajoute-t-il est confié à 48 promoteurs agréés pour la production de logements sociaux.

240 The 19th AfRES Annual Conference Dans ce contexte, les entreprises immobilières agréées ont essayé d’adapter leurs offres pour que chaque ivoirien puisse disposer d’un toit. Aujourd’hui, le constat fait état de ce que des logements sociaux sortent de terre dans plusieurs communes d’Abidjan avec une propension accrue à Songon, une banlieue située à 10 kilomètres d’Abidjan quand d’autres selon des promoteurs immobiliers sont prêts à être livrés. Parallèlement, l’on assiste à diverses réactions relativement à ces activités de construction. La théorie qui sous-tend cette étude est la théorie de la réaction sociale de Lemert. Laquelle théorie porte sur l’analyse de la réaction sociale au crime. Dans le cadre de notre étude, il s’agit d’analyser la réaction de la population abidjanaise vis-à-vis du non-respect des programmes de construction d’une part et des dysfonctionnements existants de l’autre. Ce présent article se propose donc d’analyser les opinions, attitudes et comportements de la population abidjanaise en rapport avec ces réalisations. Nous nous appuyons pour ce faire sur les conditions d’éligibilité au projet et les offres des prestataires de services en termes de coûts, types de logements et temps de livraison pour mieux apprécier les réactions des promoteurs immobiliers et des souscripteurs ou non. Mais avant, l’étude de ces éléments, nous devons exposer la démarche suivie par rapport à l’appréhension de l’objet.

II-Méthodologie Sites et participants Les participants de cette étude sont des individus âgés de 30 à 50 ans, de sexe masculin ou féminin, au nombre de 205 (dont 35 femmes et 170 hommes), répartis comme suit : 105 souscripteurs, 95 non souscripteurs et 10 promoteurs immobiliers. L’échantillon principal composé essentiellement de souscripteurs et de promoteurs immobiliers a été construit à l’aide de la méthode d’échantillonnage par boule de neige. En dehors de l’échantillon principal les autres catégories sociales sont d’importance, puisqu’elles constituent des témoins privilégiés du lancement du vaste programme de constructions de logements sociaux entamé officiellement le 28 mars 2013 et qui est en cours. Elles ont été choisies à l’aide de la méthode d’échantillonnage par choix raisonné. Les investigations sur le terrain ont été précédées d’une étude documentaire. Elles ont été menées durant deux (2) mois (15 mars – 15 mai 2019) dans le district d’Abidjan qui renferme les communes d’Anyama, Bingerville, Songon et la ville d’Abidjan. Ces localités ont servi de sites de rencontre des souscripteurs ou non. Parallèlement, trois (3) agences

The 19th AfRES Annual Conference 241 immobilières ont été choisies à l’aide de la technique d’échantillonnage probabiliste de type aléatoire simple parmi les quarante-huit (48) entreprises agréées de la base des données: EGC CI, Entreprise Mouroufié et Ital Costruzioni respectivement à Port-Bouët, Cocody-Riviéra et Cocody- II Plateaux, des communes d’Abidjan. Ces structures nous ont permis de rencontrer des promoteurs immobiliers ou leurs représentants.

Instruments de recueil et analyse des données L’observation, la recherche documentaire et l’entretien à travers l’enquête- interrogation ont servi d’instruments de recueil des données. Le premier nous a permis de nous rendre compte non seulement de l’effectivité des réalisations déjà faites en matière de construction de logements sociaux mais également d’analyser les sentiments et émotions des enquêtés à travers les faits et gestes en rapport avec ce programme. Ả travers le deuxième, nous avons recueilli des données en lien avec l’objet d’étude. Avec la dernière technique (entretien), les discours, récits, témoignages, faits et gestes ont été retenus. Le guide d’entretien a été constitué essentiellement de questions ouvertes pour permettre au locuteur de s’exprimer assez librement.

L’analyse quantitative et qualitative ont été utilisées à la fois. Nous avons mis l’accent sur le traitement statistique des données en termes de statistiques descriptives dans le premier cas. Dans le second, les réactions des enquêtés en lien avec les programmes de construction de logements sociaux ont été retenus. Quelques extraits de discours sont présentés pour soutenir le texte narratif.

III- Résultats Les résultats portent sur les points suivants : Informations relatives au programme de construction de logements sociaux et les réactions sociales des enquêtés.

1- Informations relatives au programme de construction de logements sociaux

1-1- Informations générales sur les obligations des parties Selon le Ministère de l’Habitat et du Logement Social (MHLS, 2016), les informations relatives aux obligations des parties (Etat et Société) par

242 The 19th AfRES Annual Conference rapport au processus de construction de logements sociaux sont les suivantes :

• Pour l’Etat • L’Etat garantit au promoteur la mise à disposition de plusieurs fichiers de souscripteurs jusqu’à atteindre au minimum 3 000 acquéreurs. • L’Etat garantit au Promoteur la communication de toutes informations utiles sur des acquéreurs déjà identifiés pour faciliter la commercialisation des Logements. • L’Etat garantit au Promoteur de définir avec les banques octroyant les crédits acquéreurs des modalités de crédit et de garantie correspondant au meilleur profit de remboursement possible pour les acquéreurs, notamment par un taux préférentiel n’excédant pas 5,5% et l’allongement des durées de remboursement allant de 11 à 20 ans. Toutefois, l’Etat peut autoriser le promoteur à signer un partenariat avec les banques disposées à proposer des financements hors CDMH avec un taux du crédit acquéreur légèrement supérieur au taux susvisé.

• L’Etat accorde des exonérations fiscales au promoteur. Lesdites exonérations sont approuvées par arrêté du Ministre en charge de l’économie et des Finances sous resserve du strict respect du contenu de l’annexe fiscale à la loi n∞ 2012-1179 du 27 décembre 2012 portant budget de l’année 2013;

• L’Etat s’engage à réaliser les travaux de VRD primaires en hors site, Lesdits travaux peuvent se faire avant, pendant ou après le démarrage des travaux du promoteur. Toutefois, toute disposition contraire à cet engagement fera l’objet Dun avenant d’accord parti entre l’Etat et le promoteur.

• Le Ministère de la Construction, du Logement, de l’assainissement et de l’urbanisme s’engage à accélérer la procédure de consolidation des droits fonciers du promoteur pour les parcelles à purge immédiate. A cet effet, le promoteur bénéficiera Dun titre de propriété définitif délivré par les services compétents du Ministère de la Construction, du Logement, de l’assainissement et de l’urbanisme. Tous les frais liés à l’établissement de cet acte seront supportés par le promoteur. Ce titre foncier définitif conférant la pleine propriété sur les terrains est délivré

The 19th AfRES Annual Conference 243 sous resserve du paiement de la purge des droits coutumiers dans un certain délai. Il en sera de mime pour les terrains à purge diffère. Toutefois le Ministère de la Construction, du logement, de l’assainissement et de l’urbanisme se resserve le droit de retirer les titres de propriété en cas de non-respect des engagements pris dans un délai de six (6) mois après la délivrance des titres définitifs.

• Pour le démarrage des travaux du programme, les services compétents du Ministère de la Construction, du Logement, de l’assainissement et de l’urbanisme transmettront au promoteur les coordonnées du terrain affecté à la réalisation de son programme. Le promoteur s’engage à accepter lesdits terrains qui seront situés à Abidjan et/ou à l’intérieur du pays.

• Les services compétents du Ministère de la Construction mettront à la disposition du promoteur un certificat de réservation sur les sites qui lui sont attribués pour faciliter les Etudes préalables, les négociations avec les banques et d’autres partenaires,

• L’Etat s’engage à apporter son appui au promoteur dans l’exécution du projet à travers la facilitation et l’accélération de l’obtention de tous les documents administratifs conformément à ladite n∞ 0010 MCLAU/DGLCV/DLC en date du 31 mai 2013 portant création, organisation, fonctionnement d’une Commission d’appui aux Activités des Promoteurs Immobiliers (C2API) en matière de logements sociaux et Economiques.

Pour la société • Créer dans un délai de trois (3) semaines une société de droit ivoirien chargée de la mise en œuvre du protocole

• L’Etat garantit au Promoteur la communication de toutes informations utiles sur des acquéreurs déjà identifiés pour faciliter la commercialisation des Logements.

• Introduire, dans un délai de trois (3) semaines à compter de la date denrée en vigueur du protocole une demande en vue dite agréer en qualité de promoteur immobilier.

244 The 19th AfRES Annual Conference • Assurer dans un délai n’excédant pas un (1) mois à compter de la date de signature du protocole le paiement de la première avance des frais de purge à hauteur de trente pour cent (30%) du montant total. Ce dispositif est valable pour les parcelles à purger immédiatement,

• Régler les droits de purge pour les parcelles appartenant en propre au Ministère de la Construction, du Logement, de l’assainissement et de l’urbanisme, après la commercialisation de la première tranche du programme.

• Mobiliser les ressources nécessaires pour la finalisation du paiement de la purge des droits coutumiers selon un Echéancier Etablit d’accord partie avec les détenteurs de droits coutumiers au fur et à mesure de la livraison des maisons.

• Réaliser et soumettre à la validation de l’Etat, toutes les Etudes techniques d’avant-Projet Sommaire (APS) utiles à la réalisation du projet dans un délai n’excédant pas un (1) mois à compter de la remise des coordonnés du (des) terrain (s) à purge diffère proposé(s) par l’Etat.

• Mobiliser les ressources nécessaires à la construction d’au moins 3 000 logements,

• Réaliser les travaux de VRD secondaires et tertiaires,

• Mobiliser les ressources nécessaires à la construction d’au moins 3 000 logements,

• Construire les logements selon les règles de l’art et garantir la qualité et les performances techniques des matériaux de construction.

• Procéder au démarrage immédiat du programme avec la construction d’au moins 25 logements sur le site qui lui ait affecté ou sur tout autre site lui appartenant.

• Réaliser sur l’ensemble des terrains affectés une densité d’occupation au sol de 120 à 150 logements à l’hectare repartis à hauteur de 10% de logements en villa basse et 90% de logements en immeubles collectifs.

The 19th AfRES Annual Conference 245

• Rétrocéder le chantier à un autre promoteur choisi d’autorité par le Ministère de la Construction pour la finalisation des travaux et la livraison des logements en cas de difficultés avérées et/ou dirait des travaux du chantier. Le Ministère de la Construction Evaluera au frais du promoteur le niveau financier de l’avancement du chantier. Le nouveau promoteur procèdera aux remboursements des montants engagés par le promoteur défaillant. Pour le remboursement celui-ci Etablira un Echéancier qui prend effet à compter de la fin de la commercialisation de la tranche concernée. En outre, les apports des acquéreurs logés dans les comptes séquestres du promoteur défaillant seront transfères automatiquement dans les comptes séquestres du nouveau promoteur.

• Tenir à la disposition du Ministère de la Construction toutes les preuves des capacités financières du promoteur et certifiées par ses banques ou ses Etablissements financiers.

• Tenir une comptabilité régulière

• Accepter que au cas où plusieurs promoteurs disposent de terrains jouxtant les uns avec les autres, leurs urbanistes travailleront en collaboration pour identifier les axes structurants et les Equipements de proximité communs. A cet effet, les voies primaires ou secondaires communes seront prises en charge par l’ensemble des promoteurs mais proportionnellement à la surface attribuée à chacun. En cas de conflit la direction générale du logement assurera l’arbitrage.

• Recevoir dans un délai n’excédant pas deux (2) semaines à compter de la date de signature du protocole, une Equipe du Ministère de la Construction chargée d’inspecter: – Le niveau d’équipement des bureaux commerciaux – Le niveau et la qualité du personnel technique d’encadrement – Le niveau et la qualité du personnel commercial d’encadrement – Les supports commerciaux (plaquettes, prospectus, plans type des logements), – Le matériel de chantier

246 The 19th AfRES Annual Conference • Commercialiser les logements sociaux et Economiques en respectant les critères d’éligibilité des acquéreurs tels que définis par l’Etat,

• Tenir une comptabilité régulière

• Fournir une lettre d’engagement d’ouverture d’un ou plusieurs comptes séquestres auprès des banques ayant un siège en Côte d’ivoire pour y domicilier tous les fonds versés par les acquéreurs au titre de leurs apports. Ce compte reste indisponible jusqu’à la main levée partielle ou totale par le Ministère de la Construction

• Accepter que les paiements se fassent exclusivement au fur et à mesure de la livraison des maisons par tranche dont le nombre sera fixé dans la convention. Les payements se faisant sur présentation d’une main levée du Ministre de la Construction du Logement de l’assainissement et de l’urbanisme ou son représentant.

• Ne pas collecter l’épargne des acquéreurs des logements sociaux et Economiques sur des comptes autres que ceux des comptes séquestres. Le non-respect du présent alinéa constitue une faute lourde pouvant entrainé le retrait de l’agent promoteur et l’annulation de façon unilatérale par le ministère de la construction du logement de l’assainissement et de l’urbanisme du protocole d’accord sans que cela ne donne lieu en faveur du promoteur à des dommages et interdits de quelques natures que ce soit,

• Respecter les prix plafonds de commercialisation de 5 à 10 000 000 FCFA pour les logements sociaux et 10 à 15 000 000 FCFA pour les logements Economiques pour les 60% de logements sociaux et Economiques du programme. Le promoteur est libre de fixer les prix des logements de standing,

• Respecter le cahier des charges type.

• Le promoteur s’engage à informer le Ministère de tous les accords déjà signés avec d’autres partenaires techniques et financiers et pouvant affectés la mise en œuvre du pressent protocole d’accord. Toutes conventions, contrats, protocoles etc., signés avec d’autres partenaires

The 19th AfRES Annual Conference 247 et non portés à la connaissance du ministère entraine de facto l’annulation du protocole.

• Le promoteur s’engage à informer le Ministère de tous les accords déjà signés avec d’autres partenaires techniques et financiers et pouvant affectés la mise en œuvre du pressent protocole d’accord. Toutes conventions, contrats, protocoles etc… Signés avec d’autres partenaires et non portés à la connaissance du ministère entraine de facto l’annulation du protocole.

1-2- Conditions d’éligibilité et d’acquisitions de logements Selon les investigations sur le terrain, pour être éligible au projet de construction de logements sociaux, il faut être ivoirien de nationalité et remplir certaines conditions économiques en termes de revenu mensuel n’excédant pas 400 000 Francs CFA. Ensuite, il faudra compter entre 5 millions et 10 millions de F CFA (entre 7 620 et 15 240 euros) pour un logement social ; entre 10 millions et 15 millions de F CFA pour un logement dit économique ; entre 15 millions et 22 millions de F CFA pour une habitation de moyen standing ; et plus de 25 millions de F CFA pour le haut standing. Les acquéreurs devront en outre payer un droit de préinscription de 30 000 F CFA, puis verser un apport initial représentant 10 % du prix du logement. Le montant restant pourra être versé de façon échelonnée sur un certain nombre d’années en fonction du type de logement choisi.

1-3- Agences immobilières agréées Les agences immobilières agréées sont consignées dans le tableau suivant :

Tableau n°1 : Répartition des agences immobilières agréées N° Société Parcelles Localités Superficie m2 attribuées 1 AGINEC GROUPE ABIDJAN SONGON 110 000 INTERIEUR AGBOVILLE 64 300 2 BISMACK ENOK ABIDJAN SONGON 110 000 HOLDING INTERIEUR TOUMODI 51 100 3 CNE-CI-TP N’SIKAN ABIDJAN SONGON 110 000 INTERIEUR MAN 70 775 4 EGBV ABIDJAN SONGON 110 000 INTERNATIONALE INTERIEUR BOUNA 50 000 5 EGC CI ABIDJAN SONGON 11O OOO INTERIEUR GAGNOA 35 096

248 The 19th AfRES Annual Conference 6 ENTREPRISE ABIDJAN BASSAM 110 000 MOUROUFIE INTERIEUR ABENGOUROU 53 100 7 ETABLISSEMENT ABIDJAN SONGON 110 000 CYGNES INTERIEUR SASSANDRA 52 500 8 GROUPE AMAOS ABIDJAN SONGON 110 000 9 GROUPE GENIE ABIDJAN SONGON 110 000 BATIM-THARA IM INTERIEUR ODIENNE 11 200 10 INTERBAT ABIDJAN SONGON 110 000 INTERIEUR YAMOUSSOUKRO 73 476 11 SUISSE ABIDJAN ABOBO BAOULE 540 000 CONSTRUCTION SA INTERIEUR YAMOUSSOUKRO 70 200 12 ENSBTP ABIDJAN BASSAM 110 000 INTERIEUR BONDOUKOU 50 000 13 GDMF ABIDJAN SONGON 110 000 INTERIEUR KORHOGO 49 775 14 3CB ABIDJAN BASSAM 110 000 INTERIEUR MANKONO 50 000 15 LGI BTP ABIDJAN SONGON 110 000 INTERIEUR BOUAFLE 50 000 16 LES LYS DE MARIE ABIDJAN SONGON 110 000 INTERIEUR FERKE 47 500 17 ALLIANCES CÔTE ABIDJAN ANYAMA 550 000 D’IVOIRE SA INTERIEUR - 18 OPES HOLDING SA ABIDJAN YOPOUGON 160 000 INTERIEUR ABOISSO 30 000 19 PROMOGIM ABIDJAN SONGON 110 000 INTERIEUR DUEKOUE 50 000 20 ROSIERS ABIDJAN SONGON 110 000 INTERIEUR ADZOPE 50 400 21 LES LAURIERS ABIDJAN SONGON 110 000 INTERIEUR DABOU 50 000 22 ORIBAT ABIDJAN SONGON 110 000 23 ITAL COSTRUZIONI ABIDJAN BINGERVILLE 120 000 INTERIEUR SEGUELA 60 600 24 MAB GASNIER ABIDJAN BASSAM 110 000 INTERIEUR - 25 GROUPE CEB ABIDJAN BASSAM/SONGON 110 000/54 000 INTERIEUR GUIGLO - 26 ADOHA ABIDJAN LOCODJRO 110 000 INTERIEUR - 27 RHEVA SERVICES ABIDJAN SONGON 110 000 INTERIEUR MINIGNAN 50 000

The 19th AfRES Annual Conference 249 28 BATIM-CI ABIDJAN ABOBO/SONGON 50 100 INTERIEUR DALOA 37 700 29 KIMEC ABIDJAN SONGON 110 000 CONSTRUCTION INTERIEUR SOUBRE 30 000 30 SPIAC-SARL ABIDJAN BINGERVILLE 110 000 INTERIEUR BOUAKE 50 000 31 S3I ABIDJAN BINGERVILLE 110 000 INTERIEUR DIMBOKRO 56 900 32 SCTPH ABIDJAN SONGON 110 000 INTERIEUR DIVO 30 000 33 AGB ABIDJAN MODESTE - INTERIEUR - 34 CAD-CI ABIDJAN MODESTE - INTERIEUR - 35 SEFAN ABIDJAN MODESTE - INTERIEUR - 36 PIEMME ABIDJAN SONGON 110 000 37 VFC ABIDJAN SONGON 110 000 INTERIEUR YAMOUSSOUKRO 80 000 38 ETS CNET ABIDJAN YOPOUGON 20 051 INTERIEUR BOUNDIALI - 39 AEBI SERVICES ABIDJAN SONGON 110 000 INTERIEUR BONGOUANOU - 40 EICER-SARL ABIDJAN BASSAM - INTERIEUR SAN-PEDRO - 41 SARL RESIAM ABIDJAN SONGON 110 000 INTERIEUR TOUBA - 42 AFRICONSULT ABIDJAN SONGON 110 000 INTERIEUR - 44 AFRIKBAT ABIDJAN SONGON 110 000 INTERIEUR - 45 SOGECIM INTER ABIDJAN SONGON 110 000 INTERIEUR - 46 AGEM-CI ABIDJAN SONGON 110 000 INTERIEUR KATIOLA - 47 YRISSA ABIDJAN BINGERVILLE - INTERIEUR - 48 SIDI ABIDJAN BASSAM-MODESTE - INTERIEUR - Source: Ministère de la Construction, du Logement, de l’Assainissement et de l’Urbanisme (MCLAU, 2013)

250 The 19th AfRES Annual Conference Le tableau des répartitions des agences immobilières agréées indique que toutes les sociétés (100,0%) retenues dans le cadre de la construction des logements sociaux proposent des services dans le district d’Abidjan. Ce qui montre un manque criant de logements dans cette zone.

En ce qui concerne les travaux déjà effectués par l’ensemble des entreprises agréées, l’ex-Ministre de la Construction, du Logement, de l’Assainissement, et de l’Urbanisme, Monsieur Claude Isaac Dé a déclaré le 13 juillet 2018 que dans le cadre du Programme présidentiel de logements sociaux et économiques, 12 785 logements ont été construits sur la période de 2012-2017. En 2017, sur les 12 785 logements, 4 003 ont déjà été livrés. Il a ajouté que l’objectif du gouvernement pour l’année 2018 porterait sur la livraison de 10 000 logements.

Quelles réactions suscitent ce vaste programme de constructions de logements sociaux chez les promoteurs, les souscripteurs ou non ?

2-Réaction sociale des enquêtés

Tableau n°2: Types de réactions des promoteurs, des souscripteurs et non- souscripteurs Enquêtés Promoteurs Souscripteurs Non- Types immobiliers souscripteurs de réactions

N % N % N % Déception - - 30 28,6 16 16,8 Mécontentement - - 50 47,6 30 31,6 Indifférence - - - - 20 21,0 Moquerie ------Plainte (judiciaire) - - 10 9,5 - - Satisfaction 10 100,0 3 2,9 - - Frustration - - 12 11,4 29 30,5 Compréhension ------Source: Enquête de terrain (15 mars – 15 mai 2019)

D’une manière générale, le mécontentement est le type de réaction exprimé chez 47,6% des souscripteurs et 31,6% des non souscripteurs au projet de construction de logements sociaux. Cette réaction a pour

The 19th AfRES Annual Conference 251 corollaire les attitudes et comportements suivants adoptés : indifférence, plainte, frustration. La satisfaction apparaît avec une proportion faible.

En effet, la plupart des souscripteurs ou non expriment un sentiment de mécontentement quant au processus d’acquisition des logements sociaux. Les discours suivants en sont fortement révélateurs :

K.A. (43 ans, souscripteur) : «Je ne suis pas du tout content de ce programme de construction de logements sociaux. Les gens nous ont encouragés à souscrire aux logements sociaux malgré notre réticence. Ils nous ont convaincus que ce programme fait partie du Programme Présidentielle d’Urgence (PPU) et que c’est un projet sûr. Et comme j'ai eu confiance au programme du président, j'ai accepté de souscrire.»

T.A. (45 ans, souscripteur) : «Juste après le lancement officielle du vaste programme de construction de logements sociaux, j'ai souscrit pour un logement social de deux pièces d'un coût de dix (10) millions Fcfa, à Songon Cassamblé. J'ai payé un million quatre cent quatre-vingt-dix mille (1.490.000) Fcfa. On m'a présenté les plans des maisons que j'ai choisies. Ils m'ont ensuite demandé le type de contrat pour lequel je voulais souscrire, et j'ai opté pour un contrat à tempérament. Quelques temps après, le promoteur m’a convoqué. Je me suis rendu dans ses locaux et j’ai été vraiment contrarié quand il m’a dit que la maison pour laquelle j’ai souscrit a été vendue à d’autres personnes qui ont payé cash.»

L’enquête de terrain montre en effet que le mécontentement est, en général, une réaction majoritaire chez les souscripteurs. Ce sentiment apparaît également de façon majoritaire chez les non souscripteurs, comme l’indique le discours suivant : O.P. (47 ans, non souscripteur) : « On a été informé du vaste programme de construction de logements sociaux. Je me suis rendu au siège de la SICOGI pour l’achat des pochettes et là j’ai été informé qu’il fallait d’abord verser une importante somme comme apport initial. Vraiment c’est n’importe quoi, finalement où est le côté social de la chose ? »

En outre, les souscripteurs et les non souscripteurs expriment respectivement à hauteur de 11,4% et 30,5% un sentiment de frustration par rapport au programme de construction de logements sociaux. Les propos suivants recueillis auprès de certains souscripteurs ou non le confirme :

252 The 19th AfRES Annual Conference G.K. (37 ans, souscripteur) : « On parle de vaste programme de construction de logements sociaux pour aider quand même les ivoiriens qui ont un revenu faible à pouvoir se loger décemment avec leur famille. Mais on constate que c’est ceux mêmes qui ont les moyens qui achètent ces maisons-là. Finalement on ne sait plus comment faire. On sera obligé de rester dans les quartiers précaires jusqu’à ce que un jour le gouvernement viennent nous chasser de là ».

K.P. (50 ans, non souscripteur) : « Je suis allé me renseigner sur les modalités d’acquisition d’un logement social. Et on m’a dit de verser d’abord un apport initial d’un peu plus d’un million de francs. Où je vais trouver ce montant aussi élevé. C’est pourquoi je n’ai pas souscrit à ce projet. Apparemment, on dit c’est pour aider l’ivoirien lambda à avoir un toit, mais ce n’est pas toujours le cas hein.»

Les investigations sur le terrain ont révélé également un sentiment de déception chez les souscripteurs et les non souscripteurs. En effet, la plupart d’entre eux sont déçus soit du temps que mettent les promoteurs pour livrer les premières maisons soit de leur comportement. Ả ce sujet, voici quelques propos recueillis :

Z.D. (46 ans, souscripteur) : « Tel que les choses se déroulent, il se peut que je ne rentre pas en possession de ma maison maintenant. Parce qu’apparemment les logements qui sont livrés maintenant sont à ceux qui ont payé cash. Et à chaque fois, on nous demande de patienter. Vraiment, c’est décevant… »

B.N. (48 ans, non souscripteur) : « Avec ce programme de construction de logements sociaux, on a pensé que ça allait être une occasion pour nous d’avoir une maison mais après entretien avec les promoteurs, je constate que ce n’est pas le cas (il expire profondément)…»

Contrairement aux souscripteurs et non souscripteurs, la satisfaction est le sentiment le plus exprimé chez l’ensemble des promoteurs immobiliers (100,0%). Les discours suivants en sont fortement révélateurs :

A.T. (44 ans, promoteur immobilier) : « Les travaux dans l’ensemble se déroulent bien sur les différents chantiers de construction. Nous avons même déjà construit sur fond propre, avec le concours de nos partenaires étrangers des logements sociaux prêts à être livrés. »

The 19th AfRES Annual Conference 253 G.M. (48 ans, promoteur immobilier) : « Au début, il y a eu des difficultés dues à des incompréhensions avec les populations. Certains d’entre eux ont cru que les logements étaient gratuits quand d’autres ont pensé à des locations ventes. Toute cette confusion avait quelque peu démotivé les souscripteurs. Mais aujourd’hui, avec la communication et la sensibilisation, je peux dire que tout est rentré dans l’ordre. »

Les investigations sur le terrain montrent que les réactions en rapport avec le programme de construction de logements sociaux qui prédominent sont : le mécontentement, l’indifférence, la déception, et la frustration. Toutefois la satisfaction certes rare chez les souscripteurs, apparaît essentiellement chez les promoteurs.

IV- Conclusion La recherche envisagée est centrée sur les réactions de la population abidjanaise par rapport au programme de construction des logements sociaux. Sous cet angle, il s’est agi moins de partir d’une hypothèse qui serait soumise à l’épreuve du terrain que de mettre l’accent sur les opinions, attitudes et comportements vis-à-vis du vaste programme de construction de logements sociaux annoncé officiellement depuis le 13 mars 2013.

Les résultats de l’étude révèle que les réactions diverses et variées sont les suivantes: Déception – Mécontentement – Indifférence – Satisfaction – Frustration – Plainte. Aussi convient-il de noter que les réactions négatives proviennent plus des souscripteurs et non souscripteurs qui se considèrent pour la plupart comme des victimes. Pour ce qui est des réactions positives, l’étude révèle qu’elles sont prédominantes chez les promoteurs immobiliers.

Ce qu’il faut retenir c’est que le relais des sociétés publiques par des sociétés privées peut dans une certaine mesure relancer la croissance dans le domaine de construction de logements sociaux, mais il n’est pas certain que ces logements soient accessibles à l’ivoirien lambda.

Cette étude essaie donc d’attirer l’attention des autorités ivoiriennes, et partant, de toutes les autorités des pays d’Afrique sur la problématique de la crise de logements et de sa gestion.

254 The 19th AfRES Annual Conference Bibliograhie Banque Mondiale (2015). Bilan du secteur du logement en Afrique subsaharienne : Défis et opportunités. [En ligne]. Disponible sur : documents.worldbank.org

Cans, C. (2003). Crise du logement : Les bamakois ont de plus en plus du mal à trouver un toit. [En ligne]. Disponible sur : www. Jeuneafrique.com (Page consultée le 23 Mai 2019).

Dietrich-Ragon, P. (2013). Qui rêve du logement social ? Sociologie, 1(4), 19- 42.

Gontek, F. (2013). Pénurie de logements en Europe : un problème, plusieurs pistes. [En ligne]. Disponible sur : www.Taurillon.org (Page consultée le 30 Mai 2019).

MHLS (2016). Informations générales sur les engagements des parties. Abidjan : MHLS.

Mieu, B. (2015). Côte d’Ivoire : Programme de construction massive. Abidjan : Jeune Afrique. [En ligne]. Disponible sur : www. Jeuneafrique.com (Page consultée le 25 Mai 2013).

ONU-HABITAT (2018). Logement et amélioration des bidonvilles. [En ligne]. Disponible sur : fr.unhabitat.org (Page consultée le 24 Mai 2019).

The 19th AfRES Annual Conference 255 EMPIRICAL CONCEPTUALISATION OF RESIDENTIAL RENTAL VALUES IN GHANA – UNDERSTANDING LOCATION AND NEIGHBOURHOOD EFFECTS

Emmanuel Kofi GAVU1 Dietwald GRUEHN2 1Faculty of Spatial Planning, TU Dortmund University, Dortmund, Germany and Department of Land Economy, KNUST, Kumasi, Ghana Email: [email protected] 2aFaculty of Spatial Planning, TU Dortmund University, Dortmund, Germany

Abstract Purpose – Based on empirical data, the purpose of this paper is to model the residential rental market in Ghana in order to examine the effects of location and neighbourhood attributes on rental values.

Design/ Methodology/ Approach – To situate the research in its proper context, an overview of the residential rental market dynamics are provided. Empirical testing of submarkets are performed based on a priori delineations. Based on hedonic modelling results, the effects of location and neighbourhood attributes on rental values are analysed.

Findings – The data gives credence tot the fact that in Ghana’s residential rental housing market, structural attributes of properties have the greatest effect on rental value, than location and neighbourhood attributes.

Research limitations/ implications – Provides a macro overview into the determinants of rental value based on empirical data and offers property investors a better understanding of the rental housing to ensure profit maximisation.

Practical implications – The research provides property investors an overview of useful insights to maximise returns on their investments. This is achieved by providing an understanding of price movements based on submarket dynamics. More so the assumption of urban economic models that rental values decrease with increasing distance from the Central Business District (CBD) is tested.

Originality/ value – This research is one of the first attempts to quantify the effects of location and neighbourhood attributes in Ghana’s residential rental housing market.

256 The 19th AfRES Annual Conference Keywords: Submarket; Rental Value; Housing Market; Location; Neighbourhood; Ghana

1. Introduction In housing markets research it has been long established that stuctural, location and neighbourhood characteristics do matter and play a role in determining housing values. This begs the question, ‘what determines the value of a reseidential rental unit?’ The usual mantra is location, location, location (Alonso 1964; Bourassa et al. 2003; Glaeser and Gyourko 2007; Predöhl 1928; Won and Lee 2018). This suggests that real estate goods and services place a premium on location and neighbourhood attributes in determining the value of real property. Although this may be the case, such characteristics are not traded explicitly and their contribution to value cannot be directly observed (Owusu-Ansah 2012). Basically the value of property is determined by market forces of demand and supply. However, the value placed on property is not only related to the physical property but also all the services associated with the property including accessibility, utilities and infrastructure, neighbourhood among others. In other words, the value of a house is made up of a bundle of characteristics that are not explicitly traded.

Neighbourhoods are discreet spatial entities that contain households and housing structures with similar characteristics. The importance of neighbourhood in the operations of housing markets are critical in understanding the market dynamics (See Goodman 1989). The exact location of each house is geographically fixed in space. The process of location choice leads to geographic segmentation of housing stock and markets (Can 1998). The housing market is a set of distinct but interrelated sub-markets encompassing dwellings. The various attributes of sub-market location features are essential ingredients that make up house prices (Adair et al. 1996). To determine the value placed on location and neighbourhoods, Goodman (1978) suggests the formation of house price indices and analysing variations using spatial statistics; whereas Anselin (1998) proposes the kind of infrastructure required to perform spatial analysis of real estate markets using econometrics and multiple regression analysis.

An analysis of the determinants of residential rental values in the housing market, offers various stakeholder groups a better understanding of the dynamics of the market for profit maximisation. An understanding of price

The 19th AfRES Annual Conference 257 movements based on sub(market) dynamics provides useful insights to whether location and neighbourhood characteristics (or attributes) constitutes key explanatory variables in price determination in the rental market. An effective model for adequate housing provision, advocates for market mechanisms to work efficiently, i.e. demand and supply forces interacting to fix prices of various real estate goods and services. This interaction process is however very complex.

In Ghana, a number of studies have analysed the dynamics of property markets in Accra, Kumasi and Tema (Anim-Odame et al. 2010a, 2010b; Owusu-Ansah 2012; Owusu-Ansah et al. 2017; Owusu-Ansah and Abdulai 2014). These studies only focused on residential property values and price dynamics. On the rental market, Gavu and Owusu-Ansah (2019) and Owusu- Ansah et al. (2018) have analysed the empirical conceptualisation of submarket existence and the nature of rental contracts respectively. All these studies have not empirically tested the effects of location and neighbourhood characteristics on housing or rental value. Although anecdotal evidence suggests that location and neighbourhood characteristics determine rental values to a large extent in the Ghanaian housing market, the quantum of these effects have not been empirically confirmed. There is little documented research on this subject in the Ghanaian literature.

We fill this knowledge gap by empirically quantifying the price premium of location and neighbourhood effects on residential rental values in Ghana. This is done using rental housing data collected during fieldwork (primary data collection) in Accra between March and October 2017.

The main aim of this research is to examine the price premium of location and neighbourhood attributes on rental values within the aggregate market and a priori delineated submarket groupings.

The remainder of the paper is structured in the following manner; the next section examines the theoretical framework including research problems and questions. Next, an overview of housing market features in Ghana are examined. Further the methodology, results of the modelling process and conclusions are discussed.

258 The 19th AfRES Annual Conference 2. Theoretical framework – rental value determinants A number of theoretical and econometric studies have examined determinants of house prices (Predöhl 1928; Tse 2002). Heinrich von Thünen’s theory of location of agricultural land uses in his book “Der isolierte Staat” and Alfred Weber’s theory of location of manufacturing industries provide useful insights with regards to the classical theories of location.

The initial focus of the theory of land rent was on agriculture and the value placed on the produce. The discussions as to whether the theory of land rent is still relevant and can be applied in current urban contexts has been examined by a number of scholars (Harvey 1973; Ball 1977; Ball 1985b; Ball 1985a; Lipietz 1985; as cited in Haila 2016). There seems to be no clear end in sight. However, one assumption of urban economic models has been that rents decrease with distance from the city centre. However Haila (2016, 59) posits that, “empirical research has neither verified nor disproved this”. When rents increase with distance it is explained that perhaps the neighbourhood and quality of the environment is superior compared to others.

Ozanne and Thibodeau (1983) posit that the quality of a location has a ripple effect on house prices within that particular neighbourhood. They depict that in a particular neighbourhood, quality of a property can be mimicked or duplicated over a set period. Resulting in every property having similar qualities over time. Vice versa will hold true for low quality properties in a particular neighbourhood. It is worth noting that better quality property could reflect quality of location, which will in turn have a ripple effect to induce more quality housing in that particular neighbourhood or geographical area. Higher income metropolitan areas will generally have more new houses of better quality and a large size. Where there are inter metropolitan variations, it will contribute to house price variations.

A house is composed of characteristics which together affect its rental value. These include physical (structural), locational, neighbourhood and environmental characteristics. There is disagreement as to how much each of these attributes influence rental values (Arimah 1992; De and Vupru 2017; Harrison and Rubinfeld 1978; Roubi and Ghazaly 2007; Sirmans et al. 2005). Ideally in the rental market, the basis of value in an arm’s length transaction should be market rent; defined as, “the estimated amount for

The 19th AfRES Annual Conference 259 which an interest in real property should be leased on the valuation date between a willing lessor and a willing lessee on appropriate lease terms in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion” (International Valuation Standards Council 2017, 21).

The hedonic pricing model (HPM) is the widely used model to analyse the implicit contribution of housing characteristics on value. The HPM tends to utilise all available evidence of transactions in order to model the market. The selection of the appropriate method is dependent on the market structure, the availability and quality data, objectives of the study. The hedonic equation regresses rent (or price) on housing characteristics. The assumption here is that the determinants of these rents are known and can be disaggregated. Rent as a function of housing charcteristics is given by;

푅 = 푓(푆, 푁, 퐿, 퐶, 푇) (1) Where: R – Rent S – Structural characteristics N – Neighbourhood characteristics L – Location characteristics within market C – Contract conditions T – Time value

For convenience sake the S, N, L, C, T characteristics are reduced to a larger X factor. Therefore the equation then becomes:

푅 = 푒푥훽휀 (2)

Equation (2) interprets as:

푙푛푅 = Xβ + ε (3)

Since β and ε are not known, we therefore estimate,

푙푛푅 = Xb + e (4)

260 The 19th AfRES Annual Conference Where b and e are actual estimates. Using properties of logarithms, the predicted rent of a given unit can be computed as R = exb. The value of an individual characteristic can be estimated X1, at a given level of X1 as:

푅 = 푒푥푏 (5)

The price of X1, or any other single attribute varies with the level of X1, as well as with the level of other Xi. The rent of real estate assets therefore are non-linear. The rent model is represented by the equation:

푙푛푅(푥푗) 푛 푛

= 훽0 + ∑ 훽푖 ln (푥푖푗) + ∑ 훽푘 퐷푘푗 + 휀 (6) 푘=1 푖=1 Where lnR (xj) is the natural logarithm of rent, βi and βk are coefficients, lnXij are the natural logarithms of continuous independent variables, Dkj are dummy variables and εj represent random errors.

The log linear model is the most widely used and tested for housing market analysis (Malpezzi 2002). In this work we adopt a modified form of the hedonic equation from Büchel and Hoesli (1995 p.1203). The functional form adopted is the multiplicative form because as in this peculiar circumstance, several variables are non-normal and also because of heteroscedasticity.

The adopted model is: 푅 훽1 훽2 = 훼1 푆 퐿 (7)

Where R is a vector of rental values; S is a vector of structural characteristics and L is a vector of locational and neighbourhood characteristics. Some variables are dummy which do not transform because the natural logarithm of 0 is not defined. 1 is used to represent when a dummy characteristic is present and 0 when the characteristic is not. Therefore the model to be estimated is:

푙푛푅 = 훽0 + 훽1푙푛푆1 + 훽2 푙푛푆2 + 훽3 푙푛퐿1 + 훽4 푙푛퐿2 + ε (8)

The 19th AfRES Annual Conference 261 Where S1 is a vector of continuous structural variables; S2 is a vector of structural dummy variables; L1 is a vector of continuous locational and neighbourhood variables; L2 is a vector of locational and neighbourhood dummy variables and ε is an error term.

Estimated vectors of coefficients of transformed continuous variables (i.e., β1 and β3) represent the relative variation of rent after a 1 per cent change in the quality of the characteristic, which represents elasticities. β2 and β4 are semi-elasiticities where ecoefficient represents the percentage change in rent after the dummy changes its state (ie from 0 to 1 or vice versa). The intercept in this case could be defined as the mean effect of all excluded explanatory variables.

3. Overview of the residential housing market in Ghana The housing market in Ghana has similar features compared to others within the Sub-Saharan Africa (SSA) region. These markets are mostly characterised by demand excesses over supply. In Ghana, the policy focus of the government has been on home ownership with less attention given to rental housing. This seems to be a paradox as majority of the population are within the low income bracket. They cannot affort to buy homes, but may be able to rent one within their life time. The UNESCAP and UN- HABITAT (2008) make the point that not everyone can own property when they argue that, “it is a common misperception that everyone wants to own a house. For many people, rental housing is a better option” (2008, 1). The housing market in Ghana can be described as a free-market model with the main suppliers of new buildings being the private sector (Arku 2009a, 2009b; Tipple and Korboe 1998).

Ghana’s housing policy aims at ‘creating viable and sustainable communities through the provision of adequate, decent and affordable housing that is accessible and sustainable to satisfy the needs of Ghanaians’ (Government of Ghana, 2015, 14). The government’s main approach in reducing the over 1.7 million housing deficit (Salifu Osumanu et al. 2018) is to provide an enabling environment (in terms of extension of key infrastructure) for the private sector to lead the way in housing supply.

The residential housing market is made up of the formal and informal markets (see figure 1). The formal market (modern housing) is more structured and consists of gated communities, apartments and estate buildings. These properties have better access to basic infrastructure and

262 The 19th AfRES Annual Conference the buildings conform to planning and building standards. Anecdotal evidence suggests that majority of properties within the formal market are for sale (Arku et al. 2012) and priced in foreign currency (the United States Dollar).

The informal market (traditional housing) is typified by the phenomenon of urban sprawl. This market consists of a fair mix of all types of properties (in terms of good and bad access to basic infrastructure). Those who patronise this market are predominantly low income earners who also form the majority of the population. The properties here generally are of low quality and lack basic amenities (like good access to water, good roads, drainage among others). The usual trend is that development always precedes planning. Most landlords are believed to exploit tenants because of housing shortages. Thus tenants are made to pay between one and three years rent in advance. Further, most of these houses are overcrowded, without the requisite planning permits, poorly cited and do not have access for emergency services because of crowding (Arku et al. 2012). The informal market is dominated by compound houses (see figure 2); which is a single or multi-storey semi-detached building, where occupants share a common compound. Two main types of houses are available for low-income earners in compound houses; ‘single rooms’ and ‘hall-and-chamber units’. The ‘single rooms’ consist of one room that serves as both a living area and bedroom for an occupant. ‘Hall-and- chamber’ units have two rooms, one used as a living room (which can be converted to a bedroom based on family size) and the other as a bedroom.

The 19th AfRES Annual Conference 263 Types of Residential Accommodation in Ghana

Traditional Modern Mostly informal Both formal & property transactions informal transactions

Compound Detached/Semi-detached/ Self-contained Houses Houses/Gated communities

Single Room Hall and Apartments/ Flats/ Chamber Townhouses -most affordable -middle to high-income -readily available -low-income earners -low-income earners/ -1, 2, 3 or more-bedroom earners/ young young house families families -RE Companies provide a variety of facilities (for increased comfort) -usually walled and gated -other name: Single

Self- Shared/C Self- Shared/Co containe ommunal contained mmunal d facilities facilities -has toilet -shared i.e. variant of -shared -small bath, toilet 1bedroom bath, toilet kitchenett & kitchen apartment & kitchen e may be may be available Nuclear family available system shift – more families prefer houses that provide Figure 1: Residential Rental Accommodation Types in Ghana Source: (Gavu and Owusu-Ansah 2019)

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Figure 2: Compound houses in Ghana

4. Data and Methodology Rental housing data were collected for all neighbourhood classes within Accra. A priori delineations of submarkets are defined theoretically and empirically tested based on spatial, structural and nested segmentations of the market. By spatial segmentation we test whether rental values are significantly different for the three neighbourhood groups (i.e. low-income, middle-income and high-income neighbourhoods). By structural segmentation, we test whether rental values are significantly different based on real estate type (i.e. single room; chamber and hall; and apartment, flat, house and town house). Finally, by a nested segmentation of the rental market, we test whether submarket exists based on a combined definition based on spatial and structural characteristics (i.e. low- income neighbourhood single rooms, middle-income neighbourhood apartments, high income neighbourhood apartments among others). Four administrative districts within the Greater Accra region were selected as study areas based on discussions with real estate experts. These are; (1) La-Nkwantanang-Madina Municipal Assembly; (2) Adentan Municipal Assembly; (3) La-Dadekotopon Municipal Assembly; and (4) Ayawaso West Submetropolitan District Assembly under the Accra Metropolitan Assembly.

The 19th AfRES Annual Conference 265 These districts encompass all neighbourhood classes to make the study thorough. Accra was chosen as study area for a number of reasons – it is the capital and has the most vibrant real estate market in Ghana (Baffour Awuah et al. 2014; Viruly and Hopkins 2014); has an active residential rental market; Accra’s population represents a cosmopolitan mix from all parts of the country making it suitable for these studies; and the region provides a true mix of different socio-economic conditions that can effectively mimic other cities within Sub Saharan Africa (SSA).

The data consisted of 536 rental transaction data collected during fieldwork in Accra between March and October 2017. Such data is not readily available, as Ghana’s housing market lacks the existence of an established data bank where such information could be obtained even at a fee (Baffour Awuah et al. 2016). Some institutions may have some of the information (i.e. the Lands Commission), but such databases do not have all the required variables to model the market comprehensively as was attempted in this research. Moreover, there is no list of residential rental houses sample frame to draw sub-samples from. So the snowball technique served as the most practical means to select rental houses within each district during the field work.

Table 1 provides the number of observations for the aggregate market as well as for a priori submarket groups theoretically identified. It can be observed that among the spatial submarkets identified, LIN and HIN dominate observations with about 86% of observations. MIN are more of transition zones between LIN and HIN, and has characteristics of both neighbourhoods.

Table 1: Aggregate market and submarket classifications Market Submarket Definition N % type Aggregate Aggregate market 536 100.0 Spatial LIN Low Income Neighbourhood 211 39.4 MIN Middle Income 77 14.4 Neighbourhood HIN High Income Neighbourhood 248 46.3 Structural SR Single Rooms 73 13.6 HC Hall and Chamber 85 15.8

266 The 19th AfRES Annual Conference Market Submarket Definition N % type AFTH Apartment, Flat and Town 378 70.5 Houses Nested LIN.SR Single Rooms within Low 71 13.2 Income Neighbourhoods LIN.HC Hall and Chamber units within 81 15.1 Low Income Neighbourhoods LIN.AFTH Apartment, Flat and Town 59 11.0 Houses within Low Income Neighbourhoods MIN.SR Single Rooms within Middle 0 0.0 Income Neighbourhoods MIN.HC Hall and Chamber units within 4 0.7 Middle Income Neighbourhoods MIN.AFTH Apartment, Flat and Town 73 13.6 Houses within Middle Income Neighbourhoods HIN.SR Single Rooms within High 2 0.4 Income Neighbourhoods HIN.HC Hall and Chamber units within 0 0.0 High Income Neighbourhoods HIN.AFTH Apartment, Flat and Town 246 45.9 Houses within High Income Neighbourhoods Source: Field work in Accra, 2017

More so, AFTH also dominates observations within the structural submarket with 71% of observations. In the structural submarket for instance, most of the properties are within compound houses (which may comprise more than 5 units), as such the attribute data for one unit is similar or the same for all other units within the compound. And finally, HIN.AFTH dominates observations within the nested submarkets with 46% of observations. It must be noted that the transaction frequency of properties within the LIN, HIN and AFTH markets are generally high and that accounts for availability of such observations collected.

The 19th AfRES Annual Conference 267 Table 2 shows that the mean rent paid per month is USD 1,450 over the period, with the median, minimum and maximum rental values given as USD 341, USD 8 and USD 7,091 respectively. The wide range between the minimum and maximum rental values (USD 8 to USD 7,091)) shows the diverse property types available for rent in the market. The median floor area, number of bedrooms, number of wc, number of bathrooms and number of floors are 105, 2, 2, 2, and 1 respectively.

Table 2: Descriptive statistics of rental observations in aggregate market Rent paid Total floor area Number Number Number of per month (of rental unit) - of of wc/ Number of floors/ (USD) sq.m bedrooms toilet bathrooms storeys N Valid 536 536 536 536 536 536 Missing 0 0 0 0 0 0 Mean 1,450.25 133.32 2.38 2.51 2.24 1.46 Median 340.91 105.00 2.00 2.00 2.00 1.00 Mode 3,500.00 100.00 1 1 1 1 Std. Deviation 1,692.62 108.17 1.44 1.60 1.28 1.21 Minimum 8.00 9.00 1 0 0 1 Maximum 7,091.00 652.00 10 11 10 19 Source: Field work in Accra, 2017

Figure 3, shows the study area and the specific locations of rental data collected during the fieldwork. This was generated by plotting the XY locations (geographic coordinates) of various rental units.

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Figure 3: Study area Source: Field work in Accra, 2017

The hedonic modelling technique is used to empirically test for submarket existence as well as effects of location and neighbourhood characteristics. Table 3 provides the list of all variables used in the modeling process.

The 19th AfRES Annual Conference 269 Table 3: Variable names and definitions Category Variable Definition Dependent variable; Natural log of Rental lnRENT value per month in US Dollars Natural log of total floor area of property Structural lnAREA (compound excluded) Natural log of number of floors or storeys of lnNoFl property lnBRM Natural log of number of bedrooms Natural log of number of WC or toilet lnWC available lnBATH Natural log of number of bathrooms TBATH Type of bathroom – i.e., shared or separate Dummy equal to 1 if kitchen available, 0 if KIT otherwise TKIT Type of kitchen - i.e., shared or separate Dummy equal to 1 if storeroom available, 0 if STO otherwise Floor finish (dominant) - i.e., cement sand FLO screed, terazzo, tiled Dummy equal to 1 if fence wall available, 0 if FEN otherwise Dummy equal to 1 if parking space (garage PAR or outhouse) available, 0 if otherwise Dummy equal to 1 if construction quality is CQual good, 0 if bad Dummy equal to 1 if landscaping is available, LQual 0 if otherwise Dummy equal to 1 if physical condition of DET property is good, 0 if otherwise RET_1 Dummy equal to 1 if property is Single Room Dummy equal to 1 if property is Hall and RET_2 Chamber Dummy equal to 1 if property is Apartment, RET_3 Flat or Town house Dummy equal to 1 if property has suitable Locational ACC vehicular access available, 0 if otherwise

270 The 19th AfRES Annual Conference Category Variable Definition Dependent variable; Natural log of Rental lnRENT value per month in US Dollars Dummy equal to 1 if property is close to TRFC traffic congestion area, 0 if otherwise Dummy equal to 1 if waste disposal or GAB garbage collection is available, 0 if otherwise Dummy equal to 1 if property is close to market or shopping centre (within 1km), 0 if MKT otherwise Dummy equal to 1 if property is near to the CBD CBD (within 1km), 0 if otherwise Dummy equal to 1 if property is near job JOB opportunities, 0 if otherwise Dummy equal to 1 if property is near EDU educational facilities, 0 if otherwise Dummy equal to 1 if property is near to HLTH health facilities, 0 if otherwise Dummy equal to 1 if property is near REC recreational facilities, 0 if otherwise Dummy equal to 1 if property is near squatter or informal settlements, 0 if INF otherwise Dummy equal to 1 if property is near police SEC station or police post, 0 if otherwise Dummy equal to 1 if property is near place WOR of worship, 0 if otherwise Dummy equal to 1 if property is near bus BUS stop, 0 if otherwise Dummy equal to 1 if quality of property view VQual is good, 0 if otherwise Dummy equal to 1 if property has electricity Neighbourhood ELEC available, 0 if otherwise Dummy equal to 1 if property has pipe or WAT well available, 0 if otherwise Dummy equal to 1 if streetlighting available, SLT 0 if otherwise Dummy equal to 1 if suitable surface DRN drainange available, 0 if otherwise

The 19th AfRES Annual Conference 271 Category Variable Definition Dependent variable; Natural log of Rental lnRENT value per month in US Dollars Dummy equal to 1 if property is in low LOC_1 income neighbourhood Dummy equal to 1 if property is in middle LOC_2 income neighbourhood Dummy equal to 1 if property is in high LOC_3 income neighbourhood Source: Field work in Accra, 2017

Modelling process 49 different variables comprising structural, location and neighbourhood characteristics are utilised. For variable inclusion into the aggregate market model, a step-wise regression to determine statistically significant variables at an α level of 0.10 are run. Out of these variables, a total of 16 better explains the data (see table 4).

A market-wide residential rental market model based on equation 8 is estimated. To capture non-linearity continuous variables are expressed as natural logarithms (Colwell 1990). The model is fairly consistent with similar results presented in the literature (see Anim-Odame et al., 2010a, 2010b). The explanatory power of the model is similar to other models used in the Ghanaian market (ibid). The strongest effect is when rental unit is located in a high income area (LOC_3). This is followed by the total floor area of the property (lnAREA). The estimated coefficients of transformed variables represent the relative variation of rent after a 1 per cent change in the quality of the characteristic. Dichotomous variables represent percentage change in rent after the dummy changes its state (from say 0 to 1). The intercept represents the value of all exluded variables.

To ensure that variable coefficients are robust, a multicollinearity test is performed. The rule of thumb is that when the tolerance statistic is less than 0.10 or the variance inflation factor (VIF) is greater than 5, it indicates high multicollinearity (Mansfield and Helms 1982). For the aggregate model, the tolerance statistic ranges from 0.172 to 0.901, and VIFs are all below 5. Hence, based on the VIFs of independent variables used in this model, multicollinearity is not present.

272 The 19th AfRES Annual Conference Table 4: Hedonic price estimate for Accra (aggregate rental market) Variables Coefficients t-values Constant 0.272 0.786 LOC_3 1.53 15.428* lnAREA 0.401 6.002* LQual 0.677 7.41* MKT 0.364 4.952* FEN 0.274 3.362* STO 0.229 3.029* FLO_4 0.195 1.888*** lnNoFl 0.277 4.424* REC 0.261 3.751* LOC_2 0.34 3.349* CBD 0.332 3.723* BUS 0.53 3.504* lnBATH 0.385 4.871* RET_1 -0.367 -3.484* TBATH_2 0.382 3.601* CQual 0.674 2.997*

Standard error 0.5817 R2 0.9220 Adjusted R2 0.9190 F-value 364.2400 Sample size 532

Note: 1% (*), 5% (**) and 10% (***) levels of significance. Variable definitions are given in table 3 (includes all variables collected during fieldwork). Source: Field work in Accra, 2017

The modelling procedure is repeated for the spatial, structural and nested submarkets. The basis is grounded in the assumptions that: . [. . .] all dwellings within a submarket are relatively close substitutes and are within the same market; and

The 19th AfRES Annual Conference 273 . [. . .] if differential prices exists then there is good reason to believe that [. . ] these operate in different submarkets (Watkins, 2001, p.2241).

Submarket analysis reflects the spatial heterogeneity of housing prices, improves predictive accuracy of house price models, and increases the understanding of location and neighbourhood effects (Wu et al. 2018). The most common procedure to test submarket existence at a static point in time was adopted (Dale-Johnson 1982; Schnare and Struyk 1976; Watkins 2001). The existence of submarkets within the aggregate market involves these steps. First the hedonic function for each of the a priori submarkets were computed. further a chow test to determine significant differences between pair-wise comparisons of hedonic estimates were also computed. Finally, a weighted standard error test was computed to examine the significance of price differentials within the submarkets. For a more detailed discussion on how the submarket existence were empirically tested and analysed, see Gavu and Owusu-Ansah (2019).

The results of each of the submarkets modelled suggested that when pairwise comparisons are analysed based on the three-step procedure (as already explained), distinct submarkets existed within the aggregate market. Submarkets exists for all theoretical submarket constructs apart from between ‘single rooms’ and ‘hall and chamber units’ (table 5). Table 5: Modelling results of submarkets existence Chow Submarket Submarket N Test existence Spatial Submarkets Omnibus test – all 3 spatial submarkets 536 - - LIN with MIN 288 3.93* Yes LIN with HIN 459 35.17* Yes MIN with HIN 325 17.38* Yes Structural submarkets Omnibus test – all 3 structural submarkets 536 - - SR with HC 158 1.64 No SR with AFTH 451 4.31* Yes HC with AFTH 463 3.12* Yes Nested Submarkets Omnibus test – all 5 nested submarkets 530 - - LIN.SR with LIN.HC 152 2.14** Yes

274 The 19th AfRES Annual Conference Chow Submarket Submarket N Test existence LIN.SR with LIN.AFTH 130 7.12* Yes LIN.SR with MIN.AFTH 144 2.46** Yes LIN.SR with HIN.AFTH 317 24.60* Yes LIN.HC with LIN.AFTH 140 1.77*** Yes LIN.HC with MIN.AFTH 154 2.25** Yes LIN.HC with HIN.AFTH 327 11.37* Yes LIN.AFTH with MIN.AFTH 132 3.56* Yes LIN.AFTH with HIN.AFTH 305 32.44* Yes MIN.AFTH with HIN.AFTH 319 18.29* Yes Source: Field work in Accra, 2017

Table 6 shows statistically significant variables (at an α of ≤10%) within the aggregate market and submarkets. This provides an overview of statistically significant variables utilised in quantifying location and neighbourhood effects on rental values.

In the next section, the percentage contribution of variables are computed for the aggregate market as well as for submarket constructs. The aggregate market model provides statistically significant variables to use for submarket modelling. Each of these variables contribute to model fit and give an indication as to which variables determine rental values in these submarkets.

The 19th AfRES Annual Conference 275 Table 6: Statistically significant variables within aggregate market and submarkets

Submarket category Submarket

LOC_3 lnAREA LQual MKT FEN STO FLO_4 lnNoFl REC LOC_2 CBD BUS lnBATH RET_1 TBATH_2 CQual Aggregate market * * * * * * * * * * * * * * * * Spatial LIN * * * * * * * * * * * MIN * * * * * HIN * * * * * * * * * * LIN+MIN * * * * * * * * * * * * * MIN+HIN * * * * * * * * * Structural SR * * * * * HC * * * * * * * * AFTH * * * * * * * * * * * * * * SR+HC * * * * * * * * HC+AFTH * * * * * * * * * * * * * * * Nested LIN.SR * * * LIN.HC * * * * * * * LIN.AFTH * * * * * * MIN.AFTH * * * * * *

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Submarket category Submarket

LOC_3 lnAREA LQual MKT FEN STO FLO_4 lnNoFl REC LOC_2 CBD BUS lnBATH RET_1 TBATH_2 CQual HIN.AFTH * * * * * * * * * LIN.SR+LIN.HC * * * * * * * LIN.HC+LIN.AFTH * * * * * * * * * * LIN.AFTH+MIN.A FTH * * * * * * * * MIN.AFTH+HIN. AFTH * * * * * * * * * Total 4 15 11 13 13 8 12 17 12 4 14 9 17 4 14 12 N.B. – * represents statistically significant variable and within which (sub)market construct it occurs. Source: Field work in Accra, 2017

5. Quantifying effects of location and neighbourhood variables on rental values The hedonic equation for the aggregate as well as for each of the submarket constructs helps to identify the utility- bearing attributes (variables) inherent in the rental values which are implicitly priced. The utility-bearing attributes subsists of structural characteristics of the property (including size, number of bathrooms, type of real estate, among others), location characteristics of the property that relates to access and proximity to services, and neighbourhood characteristics related to presence of amenities or dis-amenities. The details of the various models are the focus for the next set of analysis.

The 19th AfRES Annual Conference 277 The percentage contribution of each variable to rental value is computed as follows:

푐표푒푓푓푖푐푖푒푛푡 Xi 2 % contribution Xi = 푛 * adj. 푅 ∗ 100% (9) ∑푘=1 푐표푒푓푓푖푐푖푒푛푡 Xi‐n

Where; - Coefficient Xi represents variable coefficient; - % contribution Xi, represents the percentage contribution of variable Xi to rental value; 푛 - ∑푘=1 푐표푒푓푓푖푐푖푒푛푡 Xi‐n , represents the summation of all coefficients in a particular submarket including the constant; and - adj. R2 represents the adjusted R2 value in that particular submarket.

The percentage contribution of variable Xi is computed by dividing variable Xi by the sum of all coefficients in a particular (sub)market (including the constant term), then multiply by the adjusted R2 value and then multiply the result by 100 per cent. This represents the percentage impact of that particular variale on rental value in a particular (sub)market.

To interpret results of the percentage contribution of variables, 3 factors are important to enable proper interpretation. The first is the statistical significance of the variable. It must be noted that only variables that are statistically significant were interpreted (although the percentage contribution for all variables are provided). In this case variables that are significant to the 10% significant level and below are considered. The second is to consider the sign of the variable (ie, positive or negative). The dependent variable (RENTusd) is a continuous variable and as such a positive independent variable sign will have a positive effect or impact on monthly rent and a negative variable sign will likewise have a negative impact on monthly rent. The last factor to consider in the interpretation is the magnitude of the variable. A larger value indicates a large effect on rental value and vice versa for a smaller value.

Since the interpretation of results follow similar procedure, only the results of the aggregate market and spatial submarkets will be discused here (table 7a). The results of the structural and nested submarket groups are provided but not discussed (table 7b and 7c). Tables 7a – c shows the model coefficients, the p-values (in asterisk – *) and the corresponding percentage contribution of variables. Aggregate Market

278 The 19th AfRES Annual Conference Results from table 7a suggests that a rental unit located in neighbourhood type LOC_3 and LOC_2 contributes 21% and 5% respectively to rental value in the aggregate market. This supports the assertion that such neighbourhoods attract a rent premium because of superior neighbourhood and quality of the built environment as compared to other areas. Proximity to locations such as market, recreational facilities, CBD and bus stops together contribute 20% to rental value. All structural variables contribute 43% to rental value.

The aggregate market model although useful in market analysis, hides the differences within various submarket groups and treats the market as if all rental units are homogeneous. This is clearly illustrated by the percentage contribution of variables within each submarket construct.

Spatial submarkets and percentage contribution of variables to rental value LIN The assumption with the LIN submarket is that all properties irrespective of the property type found in low income areas belong to this submarket group. From table 7a it can be observed that the greatest contribution to rental value are construction quality (CQual, 11%), nearness to the CBD (CBD, 10%), number of floors (lnNoFl, 10%) and the size of the rental unit (lnAREA, 8%). This suggests the better the construction quality, the higher the rental value will be and vice versa. Also of importance is the size of the rental unit which translates to value. It was striking to note that if the real estate type was a single room (-5%) it contributed negatively to rent. In most LIN, the quality of single room type of accommodation mostly with shared facilities attract low rents. It is this trend that has been confirmed in this modelling result. The least contributor to rental value is nearness to a bus stop (BUS, 3%). This is to be expected as properties mostly found in this submarket do not normally have good transportation routes. In terms of aggregate contribution to rent, it can be seen that structural characteristics of the properties within this submarket contribute 49%, whereas location variables contribute 24%. This suggests that almost half of the value of a rental unit within this submarket is determined based on structural characteristics of the property. Although location attributes contribute about one-fourth of total rent. Neighbourhood variables are not present here as they are control variables identifying submarket groups.

The 19th AfRES Annual Conference 279 Table 7a: Spatial submarket coefficients and percentage contribution of hedonic model regressors (variables) Variables % % % % LIN + % MIN + % Aggr. Contr. LIN Contribution MIN Contribution HIN Contribution MIN Contribution HIN Contribution

Constant 0.27 3.70 0.57 9.63 1.865 11.41 3.31* 43.45* 0.03 0.53 0.59 6.06

LOC_3 1.53* 20.81*

lnAREA 0.40* 5.45* 0.47* 8.05* 0.10 0.58 0.17*** 2.19*** 0.54* 9.27* 0.14 1.42

LQual 0.68* 9.21* 0.04 0.63 0.64** 3.93** 0.77* 10.12* 0.48* 8.24* 1.28* 13.08*

MKT 0.36* 4.95* 0.24* 4.00* 0.28 1.71 0.44* 5.79* 0.28* 4.88* 0.24*** 2.40***

FEN 0.27* 3.73* 0.09 1.55 0.40 2.47 1.38* 18.15* 0.18*** 3.01*** 0.87* 8.82*

STO 0.23* 3.12* 0.47* 7.91* 0.38 2.29 0.19* 2.53* 0.38* 6.60* 0.13 1.35

FLO_4 0.20*** 2.65*** 0.28* 4.78* 0.23 1.41 0.07 0.95 0.35* 6.04* 0.39 3.96

lnNoFl 0.28* 3.77* 0.56* 9.58* 0.93** 5.67** 0.10*** 1.35*** 0.43* 7.43* 0.34* 3.46* - REC 0.26* 3.55* 0.34* 5.84* 0.56*** -3.44*** 0.39* 5.13* -0.05 -0.81 0.38* 3.86*

LOC_2 0.34* 4.62*

CBD 0.33* 4.52* 0.61* 10.31* 1.47 8.99 0.15** 2.02** 0.57* 9.73* 0.48* 4.93*

BUS 0.53* 7.21* 0.20 3.37 0.83 5.08 0.07 0.87 0.53* 9.06* 1.06* 10.81*

lnBATH 0.39* 5.24* 0.32* 5.39* 0.72*** 4.42*** 0.52* 6.80* 0.28* 4.81* 0.66* 6.70*

RET_1 -0.37* -4.99* -0.31* -5.29* -1.62 -21.25* -0.33* -5.67 -0.73 -7.49

TBATH_2 0.38* 5.20* 0.36* 6.07* 0.83 5.07 0.31* 5.35* 1.41* 14.35*

CQual 0.67* 9.17* 0.62* 10.48* 0.61* 10.52*

280 The 19th AfRES Annual Conference Variables % % % % LIN + % MIN + % Aggr. Contr. LIN Contribution MIN Contribution HIN Contribution MIN Contribution HIN Contribution

Standard error 0.5817 0.4875 0.87 0.40 0.64 0.68

R2 0.922 0.835 0.58 0.79 0.80 0.75

Adjusted R2 0.919 0.823 0.50 0.78 0.79 0.74

N 532 209 75 248 284 323

25.84 20.84 55.60 45.65 Structural (42.54) 49.16 (46.98) (14.42) (19.89) ((55.60) (46.41)

Neighbourhood (25.44) 12.35 (- 13.81 22.87 21.99 Location (20.23) 23.51 (20.14) 3.44) (12.94) (23.67) (21.99) Note: 1% (*), 5% (**) and 10% (***) levels of significance. Statistically significant contributions per group are in brackets Source: Fieldwork data 2017

The 19th AfRES Annual Conference 281 Table 7b: Structural submarket coefficients and percentage contribution of hedonic model regressors (variables) % % % SR + % HC + % Variables SR Contribution HC Contribution AFTH Contribution HC Contribution AFTH Contribution Constant 1.28* 17.79* -0.35 -6.26 0.19 2.13 0.32 5.93 0.20 2.56 0.61** LOC_3 * 8.41*** 1.51* 16.65* 0.45 8.24 1.49* 18.77* lnAREA 0.35* 4.82* 0.74* 13.26* 0.33* 3.59* 0.62* 11.48* 0.40* 5.07* LQual 0.26 3.53 0.56* 6.15* 0.05 0.88 0.69* 8.69* MKT -0.04 -0.50 0.22** 3.86** 0.51* 5.65* 0.11 1.99 0.40* 5.02* FEN 0.28** 3.81** 0.08 1.39 0.69* 7.60* 0.20* 3.68* 0.31* 3.92* STO 0.16** 1.78** 0.21* 2.67* 0.31** 0.25** FLO_4 0.18 2.42 * 5.55*** * 2.71*** 0.27** 4.96** 0.28** 3.55** lnNoFl 0.53** 9.51** 0.26* 2.89* 0.51** 9.45** 0.27* 3.35* REC -0.36 -4.93 -0.06 -0.98 0.26* 2.88* -0.15 -2.67 0.27* 3.35* - LOC_2 0.68** -12.15** 0.39* 4.36* -0.60** -11.00** 0.31* 3.93* CBD -0.02 -0.28 0.41* 4.57* -0.16 -2.93 0.42* 5.36* BUS 0.30 5.39 0.56* 6.14* 0.17 3.04 0.54* 6.85* 0.30** lnBATH -0.01 -0.08 * 5.26*** 0.41* 4.50* 0.19*** 3.48*** 0.37* 4.71* RET_1 0.25** TBATH_2 0.41* 5.64* * 4.41*** 0.42 4.69 0.28* 5.07* 0.33* 4.18*

282 The 19th AfRES Annual Conference % % % SR + % HC + % Variables SR Contribution HC Contribution AFTH Contribution HC Contribution AFTH Contribution 0.49** 0.66** CQual * 6.77*** 0.56** 10.07** * 7.32*** 0.43* 8.00* 0.68* 8.64*

Standard error 0.39 0.42 0.59 0.41 0.58

R2 0.56 0.47 0.84 0.54 0.91

Adjusted R2 0.47 0.39 0.84 0.50 0.91

N 72 85 375 157 460

Structural 26.91 (21.04) 49.46 (48.07) 41.22 (36.53) 47.00 (46.12) 44.77 (44.77) Neighbourho -12.15 (- od 8.41 (8.41) 12.15) 21.01 (21.01) -2.76 (-11.00) 22.70 (22.70)

Location -5.71 (0.00) 8.26 (3.86) 19.23 (19.23) -0.57 (0.00) 20.57 (20.57) Note: 1% (*), 5% (**) and 10% (***) levels of significance. Statistically significant contributions per group are in brackets Source: Fieldwork data 2017

The 19th AfRES Annual Conference 283 Table 7c: Nested submarket coefficients and percentage contribution of hedonic model regressors (variables)

Variables LIN.SR % Contribution LIN.HC % Contribution LIN.AFTH % Contribution MIN.AFTH % Contribution HIN.AFTH % Contribution

Constant 1.29* 15.93* -1.01 -21.20 1.34 14.96 2.01*** 12.30*** 3.31* 32.93*

LOC_3

lnAREA 0.35* 4.31* 0.92* 19.34* 0.17 1.94 -0.01 -0.07 0.17*** 1.66***

LQual 0.26 3.16 -0.29 -3.21 0.56** 3.40** 0.77* 7.67*

MKT -0.04 -0.45 0.22** 4.53** 0.24 2.70 0.38 2.32 0.44* 4.39*

FEN 0.28** 3.41** 0.09 1.87 0.03 0.35 0.67** 4.12** 1.38* 13.76*

STO 0.26 2.91 0.30 1.86 0.19* 1.93*

FLO_4 0.18 2.17 0.30** 6.36** 0.33*** 3.65*** 0.19 1.15 0.07 0.72

lnNoFl 0.53** 11.21** 0.52* 5.74* 0.86** 5.24** 0.10*** 1.02***

REC -0.36 -4.41 -0.04 -0.92 0.53*** 5.93*** -0.65** -4.00** 0.39* 3.89*

LOC_2

CBD -0.02 -0.25 1.63* 18.20* 1.54*** 9.41*** 0.15** 1.53**

BUS 0.33 7.01 0.19 2.09 0.88*** 5.38*** 0.07 0.66

lnBATH -0.01 -0.07 0.29** 5.98** 0.73* 8.09* 0.59 3.63 0.52* 5.15*

RET_1

TBATH_2 0.41* 5.04* 0.21*** 4.39*** 1.10* 12.24* 1.19 7.28

CQual 0.49*** 6.06*** 0.58* 12.13* 0.48 5.32

284 The 19th AfRES Annual Conference Variables LIN.SR % Contribution LIN.HC % Contribution LIN.AFTH % Contribution MIN.AFTH % Contribution HIN.AFTH % Contribution

Standard error 0.39 0.37 0.50 0.80 0.40

R2 0.44 0.57 0.85 0.60 0.76

Adjusted R2 0.35 0.51 0.81 0.52 0.75

N 70.00 81.00 58.00 71.00 246.00

Structural 24.08 (18.82) 61.28 (59.41) 37.02 (29.72) 26.60 (12.76) 31.91 (31.19)

Neighbourhood

Location -5.11 (0.00) 10.62 (4.53) 28.92 (24.13) 13.10 (10.79) 10.46 (9.81) Note: 1% (*), 5% (**) and 10% (***) levels of significance. Statistically significant contributions per group are in brackets Source: Fieldwork data 2017

The 19th AfRES Annual Conference 285 Table 7c (continuation): Nested submarket coefficients and percentage contribution of hedonic model regressors (variables) LIN.SR + % LIN.HC + % LIN.AFTH + % MIN.AFTH + Variables LIN.HC Contribution LIN.AFTH Contribution MIN.AFTH Contribution HIN.AFTH % Contribution

Constant 0.20 3.63 0.49 7.30 0.91 7.88 0.60 5.42 LOC_3 lnAREA 0.66* 12.23* 0.50* 7.34* 0.34*** 2.97*** 0.12 1.10 LQual 0.05 0.84 -0.01 -0.13 0.37** 3.18** 1.15* 10.37* MKT 0.11 2.07 0.22** 3.24** 0.51** 4.41** 0.29** 2.60** FEN 0.20* 3.71* 0.02 0.31 0.42** 3.61** 1.05* 9.54* STO 0.23*** 3.46*** 0.22 1.86 0.10 0.92 FLO_4 0.27** 4.97** 0.28** 4.09** 0.43** 3.69** 0.37 3.35 lnNoFl 0.51** 9.40** 0.45* 6.65* 0.27 2.33 0.34* 3.09* REC -0.15 -2.72 0.29* 4.21* -0.21 -1.82 0.34* 3.10* LOC_2 CBD -0.15 -2.83 1.70* 25.12* 1.50* 12.92* 0.48* 4.30* BUS 0.18*** 3.37*** 0.22 3.31 0.58** 5.02** 1.06* 9.62* lnBATH 0.19 3.48 0.46* 6.83* 0.45** 3.92** 0.62* 5.58* RET_1 TBATH_2 0.27* 4.99* 0.45* 6.59* 0.27 2.31 1.50* 13.61*

286 The 19th AfRES Annual Conference LIN.SR + % LIN.HC + % LIN.AFTH + % MIN.AFTH + Variables LIN.HC Contribution LIN.AFTH Contribution MIN.AFTH Contribution HIN.AFTH % Contribution

CQual 0.43* 8.06* 0.55* 8.08* 0.35 3.02

Standard error 0.39 0.44 0.78 0.66

R2 0.55 0.88 0.60 0.74

Adjusted R2 0.51 0.86 0.55 0.73

N 151.00 139.00 129.00 317.00

47.68 Structural (43.36) 43.22 (43.04) 26.88 (17.37) 47.56 (42.19)

Neighbourhood

Location -0.11 (3.37) 35.88 (32.57) 20.54 (22.35) 19.62 (19.62) Note: 1% (*), 5% (**) and 10% (***) levels of significance. Statistically significant contributions per group are in brackets Source: Fieldwork data 2017

The 19th AfRES Annual Conference 287 MIN The Middle Income Neighbourhood (MIN) submarket relates to a submarket that is more of a transition zone between high and low income neighbourhoods. It is a transition zone in the sense that low income earners want to move to these areas when they can afford, and higher income earners want to move out to ‘better’ accommodation when financial conditions permit and housing is available. In other words, it is an area ‘supposed to be’ predominantly dominated by middle income earners (working class). The modelling results explains 50% of the variability of the data. The results present a different picture as only 4 variables are statistically significant. LQual contributes 4% to rental value, whereas lnNoFl and number of bathrooms (lnBATH) contributes 6% and 4% respectively. The magnitude of contribution suggests that these variables do not contribute much to rental value.

It should be noted that property near to a recreation facility (REC, -3%) attracts a negative contribution to rent. This is quite a deviation from the norm, as it is expected that nearness to a recreational facility should rather have a positive contribution to rental value. The variables lnAREA, MKT, FEN, STO, FLO_4, CBD, BUS and TBATH_2 were not significant.

HIN The justification for this submarket classification is that all properties irrespective of type of rental unit, belong to one submarket. It should be noted that properties available here are predominantly apartments, flats and town houses (AFTH). The greatest variable effect on rental value is when the real estate type is a single room (RET_1). This contributes negatively (-21%) to rental value. In these HIN, single room type of rental apartments are perceived to be of low standard, especially if toilet, bathroom and kitchen facilities are not for exclusive use but a shared facility. This could be the possible reason why it has a large negative effect on rental value. Also, the availability of a fence wall (FEN) and the landscape quality (LQual) contribute 18% and 10% respectively to rental value. This is quite significant because the fence wall provides some sort of security and landscape quality in Ghana connotes the ‘luxury’ status of the occupant. Hence the presence of these, invariably should contribute positively to rental value as has been confirmed in this instance. It must be noted that the variables number of bathrooms (lnBATH) and and property near a recreational facility (REC) also has a relatively large contribution to rental

288 The 19th AfRES Annual Conference value; contributing 7% and 5% respectively. Especially if a property is close to a REC, it makes that neighbourhood attractive for relaxation and as such contribute to rental pricing either explicitly or implicitly. This assertion is confirmed for the HIN submarket. Other variables which also have a positive contribution to rental value include lnAREA, STO, lnNoFl and CBD; which contribute 2%, 3%, 1% and 2% respectively. It is quite surprising that the size of the property only contributes 2% to the value. This could be as a results of the assumption used for this submarket formulation. However although it seems to have a small effect on rent it is statistically significant. It is interesting to note that the variable, property near to bus stop (BUS) is not significant. It is perceived that residents of HIN have a high car (or vehicle) ownership rate and would rather prefer to drive their own vehicles than to be in public transport. HIN are mostly not the focus of public transportation and as such this result reinforces that assumption.

Aside these spatial submarket combinations, this research also explored other plausible pairwise comparisons and analyse results. These pairwise combinations are LIN+MIN, which assume that the LIN and MIN submarkets are indeed one and of the same market and should not be separated. The other is the MIN+HIN submarket which also assume that these 2 should be captured within the same submarket. The modelled LIN+MIN submarket has an adjusted R2 of 0.79 whereas the adjusted R2 of the MIN+HIN submarket is 0.74. By comparing the modelling results and adjusted R2 the LIN+MIN and MIN+HIN submarkets are a much improvement of the results of the MIN submarket.

LIN+MIN The greatest contributor to rent in this submarket is the quality of construction (CQual), which contributes about 11% to rental value. This could be because it combines all rental properties in both LIN and MIN areas and what should intuitively make the biggest impression on how much rent to pay will be the CQual. Nearness to the CBD also contributes about 10% to rental value. It can be appreciated that with a combined submarket like this, many low income households and those at the lower end of the middle income class may prefer to live closer to the CBD to ensure easy access to work related activities. The reason will be to save same time and cost in commuting daily to the CBD and back. The variables BUS and lnAREA also has a large effect on rental value, contributing about 9% each to rental value. LQual, STO, tiled floor (FLO_4), lnNoFl, lnBATH, FEN, MKT and

The 19th AfRES Annual Conference 289 separate bathroom (TBATH_2) all make a relatively large and positive contribution to rental value. However it is still striking to note that the variable RET_1 has a negative effect on rental value, contributing -6% to rental value. Moreover the variable REC is not statistically significant. The reason could be that within the LIN+MIN submarket green areas, or recreational areas are not the focus of property developers (whether private or institutional) and as such the few properties which may be closer to these areas could attract a premium value. But in the generality of cases, these REC are non-existent or far from these areas because of pressure on available open spaces to be used for accommodation purposes. Recreational/ green areas are easily encroached for residential accommodation as building codes are regulations are hardly enforced; thus resulting in uncontrolled developments.

MIN+HIN This submarket combines middle and high income neighbourhoods as one subgroup. It should be noted that at the lower end of the market may have characteristics of LIN and at the other end will be characteristic of HIN. As a result of this, it is realised that the greatest contributors to rental value are TBATH_2, LQual and BUS; contributing 14%, 13% and 11% respectively. Having a separate bathroom not shared with other tenants is critical for many middle to high income earners. It is perceived as an improvement in standard of living and as such may attract some premium on rent paid. Same with the quality of landscape which cost is passed on to tenants. The availability of a FEN is a common feature in this combined submarket. Renting a property with or without a fence wall in Accra attracts different pricing in both scenarios; which is a confirmation of what is already known in practice. Other variables like lnBATH, CBD, REC, lnNoFl and MKT all have the expected signs and contributes positively to rental value. It should be noted that RET_1, FLO_4, STO and lnAREA are all not statistically significant. In terms of the size of the rental unit, the reason could be that similar types of accommodation may have standard sizes and that is captured here as well. It is also not surprising that single rooms (RET_1) type of accommodation and tiled floors (FLO_4) are not statistically significant. RET_1 is rather predominant in LIN submarkets and not in this particular one. Also FLO_4 are a common feature of properties within MIN and HIN submarkets.

290 The 19th AfRES Annual Conference Table 8 provides a summary of the percentage contribution of statistically significant variables based on an aggregate measure of structural, neighbourhood and location variables. As has been discussed for the spatial submarkets, similar computations have been done for the structural and nested submarket constructs (tables 7b and 7c). The aggregated results are summarised in table 8. When read together with table 6, the specific variables that are statistically significant can be identified for further analysis. As can be observed from table 8, it was only in four instances that the constants were statistically significant and as such reported. Basically the constant represents the combined effects of all omitted variables. The results suggest that structural variables are the main determinants of value in the rental market followed by location variables. This could be attributable to the fact that majority of properties for rent are within the informal market. Therefore resulting in landlords or lessors implicitly placing a higher premium on structural attributes than location and neighbourhood attributes. This could also imply that submarkets within Ghana’s housing market may be homogeneous an thus the differences in rental value predominantly stem from structural attributes. The only exception to this observed trend is within the LIN.AFTH+MIN.AFTH submarket where location variables contribute more to rental values than structural variables.

To sum up, it can be realised that identifying relevant variables and quantifying effects of statistically significant variables are a daunting task. The analysis shows that within the aggregate market and submarket constructs, statistically significant variables modelled are consistent apart from LOC_3 and LOC_2 (which are neighbourhood related). As such their effects are better envisaged within the structural submarkets only. This is because they are controlled for in the other submarket groupings. The same is for RET_1, representing rental units that are single rooms. Here too the effects are seen within the spatial submarkets only and controlled for in the other submarkets.

6. Conclusion The research analysed the the price premium of value determinants, but focusing on location and neighbourhood attributes and its effect on residential rental values in Ghana. The main aim was to test the hypothesis that differential rental values observed within submarket constructs are mainly due to location and neighbourhood variables or otherwise. Due to

The 19th AfRES Annual Conference 291 the lack of a consistent dataset, this research seldom receives the attention of resesarchers. This research fills the literature gap by providing empirical evidence to test the hypothesis and make far reaching conclusions.

The analysis is based on 536 rental transaction data collected during field study in Accra. A priori submarkets are selected based on theoretical definitions and empirically tested to examine the existence of same based on hedonic modelling techniques. Separate hedonic models are run for both the aggregate market and submarket constructs. Using statistically significant model coefficients and the adjusted R2, the effects of location and and neighbourhood are specifically analysed.

The empirical results suggests that generally within the aggregate market and submarket constructs, structural variables consistently contribute more to rental values than location and neighbourhood variables. In terms of percentage contribution of variables within the aggregate market and submarket constructs, there is a consistent trend. Within the aggregate market, statistically significant structural attributes contribute 43% to rental values, whereas location and neighbourhood attributes contribute 20% and 25% respectively. Followed by location and then neighbourhood variables. In this research it is confirmed that although location and neighbourhood variables are important in determining rental values, structural variables contribute the most (see the summary table 8). The paper finds that the explanatory power of location and neighbourhood variables are improved when separate hedonic equations (models) are estimated based on submarket constructs in Accra.

292 The 19th AfRES Annual Conference Table 8: Percentage contribution of statistically significant variables (aggregate effect) Structural Neighbourhood Location Submarket category Submarket Constant variables variables variables Total Aggregate market 42.54 25.44 20.23 88.21 Spatial LIN 46.98 20.14 67.12 MIN 14.42 -3.44 10.98 HIN 19.89 12.94 32.83 LIN+MIN 55.60 23.67 79.27 MIN+HIN 46.41 21.99 68.40 Structural SR 17.79 21.04 8.41 0,00 29.45 HC 48.07 -12.15 3.86 39.78 AFTH 36.53 21.01 19.23 76.77 SR+HC 46.12 -11.00 0,00 35.12 HC+AFTH 44.77 22.70 20.57 88.04 Nested LIN.SR 15.93 18.82 0,00 34.75 LIN.HC 59.41 4.53 63.94 LIN.AFTH 29.72 24.13 53.85 MIN.AFTH 12.30 12.76 10.79 35.85 HIN.AFTH 32.93 31.19 9.81 73.93 LIN.SR+LIN.HC 43.36 3.37 46.73

The 19th AfRES Annual Conference 293 Structural Neighbourhood Location Submarket category Submarket Constant variables variables variables Total Aggregate market 42.54 25.44 20.23 88.21 LIN.HC+LIN.AFTH 43.04 32.57 75.61 LIN.AFTH+MIN.AFTH 17.37 22.35 39.72 MIN.AFTH+HIN.AFTH 42.19 19.62 61.81 Source: Field work in Accra, 2017

294 The 19th AfRES Annual Conference This research is relevant to various stakeholders in a number of ways. It provides investors within the rental housing space empirical evidence to support the drivers of value to ensure profit maximisation. It also provides a macro overview of rental value determinants based on submarket analysis. It further provides useful insights in the understanding of price movements based on submarket dynamics.

Future research can consider expanding the spatial extent in terms of administrative districts used for these analyses. This will ensure more robust generalisations to be made in terms of understanding the effects of location and neighbourhood characteristics on value. This research is however an important step in this direction and makes significant contribution to the housing market literature in Ghana.

Funding – This research did not receive any specific grant from funding agencies in the public, commercial, or not-for-profit sectors.

Acknowledgement – Authors want to thank anonymous reviewers for their comments and suggestions that have significantly improved earlier drafts of the paper. Authors are also grateful to the Government of Ghana and the German Academic Exchange Services (DAAD) for providing the scholarship for the doctoral programme on which this article is based.

Disclosure statement – No potential conflict of interest was reported by the authors.

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case study on the rental apartment market in Greater Cairo. Property Management, 25(1), 68–79. doi:10.1108/02637470710723263 Salifu Osumanu, I., Aigbavboa, C. O., & Thwala, D. W. (2018). Examining the Relationship Between Lean Adopotion and Housing Finance in Ghana. In S. Fukuda (Ed.), Proceedings of the AHFE 2018 International Conference on Affective and Pleasurable Design, July 21-25 2018 (pp. 301–311). Orlando Florida: Springer. doi:10.1007/978-3-319-94944-4_33 Schnare, A. B., & Struyk, R. J. (1976). Segmentation in urban housing markets. Journal of Urban Economics, 3(2), 146–166. doi:10.1016/0094-1190(76)90050-4 Sirmans, G. S., Macpherson, D. A., & Zietz, E. N. (2005). The Composition of Hedonic Pricing Models. Journal of Real Estate Literature, 13(1), 1– 44. doi:Article Tipple, G. A., & Korboe, D. (1998). Housing policy in Ghana: towards a supply-oriented future. Habitat International, 22(3), 245–257. doi:10.1016/S0197-3975(98)00009-5 Tse, R. Y. C. (2002). Estimating Neighbourhood Effects in House Prices: Towards a New Hedonic Model Approach. Urban Studies, 39(7), 1165–1180. doi:10.1080/00420980220135545 UNESCAP, & UN-HABITAT. (2008). Housing the poor in Asian cities, Quick Guides for Policy Makers 7. Bangkok and Kenya. http://www.iut.nu/Literature/Asia/HousingThePoorAsia_UNHabit at_2008.pdf Viruly, F., & Hopkins, N. (2014). Unleashing Sub Sahran africa Property Market. London. Watkins, C. A. (2001). The definition and identification of housing submarkets. Environment and Planning A, 33, 2235–2253. doi:10.1068/a34162 Won, J., & Lee, J.-S. (2018). Investigating How the Rents of Small Urban Houses are Determined: Using Spatial Hedonic Modeling for Urban Residential Housing in Seoul. Sustainability, 10(31), 1–15. doi:10.3390/su10010031 Wu, C., Ye, X., Ren, F., & Du, Q. (2018). Modified Data-Driven Framework for Housing Market Segmentation. Journal of Urban Planning and Development, 144(4 (December 2018)), 1–15. doi:10.1061/(asce)up.1943-5444.0000473

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NUANCES OF COMPULSORY LAND ACQUISITION AND COMPENSATION IN BOTSWANA: THE CASE OF THE PITSANE-TLHARESELEELE ROAD PROJECT

Lekgori, N7., Paradza, P8. and Chirisa, I9. ¹̄²Department of Real Estate, BA ISAGO University, 11 Koi street, Peolwane (Block 7), Gaborone, Botswana. ³Department of Rural and Urban Planning, University of Zimbabwe, Harare, Zimbabwe.

Abstract Purpose: There is a general consensus, within previous researches, that internationally, major challenges caused by compulsory acquisition include lack of compensation or inadequate or delayed compensation, where it is offered. The purpose of this study is therefore to contribute to the existing academic debate on issues related to land acquisition and compensation by establishing if there is consistency in compulsory acquisition and expropriation policy and practice in Botswana.

Approach/Design: A case study approach was adopted based on the Pitsane-Tlhareseleele road project. A total of twenty-two (22) displaced people and eight (8) Planning Officers, four (4) from Rolong Land Board and four (4) from Good Hope Council were interviewed. The coding of interview results was done manually. The interpretation, analysis and presentation of data were facilitated by the use of SPSS.

Results/Findings: The results of this study revealed policy-practice gaps in the calculation of compensation in Botswana. The statutory and policy frameworks provide for a consensus-based compensation approach but the displaced people lamented that the valuation method which was used by compensation authority was not transparent.

Practical Limitation: The major limitation of this study is that it was based on a single case study with a limited number of affected people.

7 [email protected] 8 [email protected] 9 [email protected]

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Practical Implication: The results of this study could inform policy and practice on compulsory land acquisition in Botswana.

Originality/Value of Work: This study is one of the few works relating to the existing debate on compulsory land acquisition in Botswana.

Keywords: Compulsory acquisition, consistency, expropriation policy, fair compensation, public use, property valuation.

Introduction Botswana is one of the fast-growing economies in Southern Africa (Lewin, 2011, African Development Bank, 2019), as indicated by a high per capita income increase “from USD 80 at the time of its independence in 1966 to USD 6 924 in 2016” (Honde & Abraha, 2017:02). In its quest to be a competitive investment destination, Botswana has been developing most of its road infrastructure and this development has been characterised by expropriation of land. Spatial development is sometimes associated with compulsory acquisition of land (Food and Agriculture Organisation (FAO), 2008). The Botswana Government has used its eminent domain powers in a number of cases when land was needed for projects which are of public importance. Eminent domain is the power given to government by law to take private property without the owners’ consent as long as the proposed use will benefit the public and fair compensation is paid to the displaced parties (Ambaye, 2014; Iyanda, 2014; Odiase-Alegimenlen & Garuba, 2015). Expropriation has been widely criticised because in most cases, the compensation offered fails to pass the equity and equivalence test (Tagliarino, 2017). This problem becomes more complex when customary land is involved since people do not formal tenure rights and property boundaries are not well defined (Food and Agriculture Organisation, 2017; Kabanga & Mooya, 2018). Most countries have adopted market value as a representative of fair compensation. However, Kabanga and Mooya (2018) have pointed out that market value does not take into account social, cultural, religious, spiritual and environmental values, which are crucial in customary land holding systems. FAO (2017) and Kabanga and Mooya (2018) have emphasised that any valuation for compensation when customary land is acquired is not fair if it leaves out the above-mentioned non-market values.

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In Botswana, the state is empowered by Section 8 of the Constitution and the Land Acquisition Act (Cap 32:10) to take private property or property rights without the owner’s consent. Existing laws stipulate that private land can only be expropriated for public purposes and that fair compensation must be paid for expropriates. Pitsane-Tlhareseleele road which stretches for 5. 25 kilometres has resulted in the expropriation of tribal land. Tribal land in Botswana in owned by the community and administered by Chiefs in line with the customs of that tribe as provided for by the Tribal Land Act. All members of that tribe have usufruct rights whereby they can only use the land but they cannot sell it. When tribal land is expropriated, affected persons are entitled to compensation for their improvements in terms of the Tribal Land Act read together with the Land Acquisition Act. In the case of the Pitsane-Tlhareseleele road project, 22 households lost portions of their land to pave way for this project. This paper seeks to establish the perceptions of affected people and the expropriating authorities about the compensation offered when customary land rights are expropriated. A case study approach was adopted based on the Pitsane-Tlhareseleele road project.

Background and Overview There is a general consensus that when real estate is expropriated, a fair or just compensation should be paid as restitution to the affected persons (Sellke, 2012; Ambeya, 2009, Nikiema, 2013; Pilmmer, 2010; Alemu, 2012). However, in as much as legal provisions stipulate that fair compensation has to be paid, it is noted that inadequate compensation is among the chief causes of compensation disputes (Ambaye, 2009; Alemu, 2012). Nikiema (2013) has pointed out that the method of valuation has a significant impact on the compensation value. Moreover, inadequate compensation of expropriated properties is identified as one of the main causes of destitution and informal settlements globally (UN-Habitat, 2008, 05 in Kavanagh and Plimmer (2010). Langford and Halim (2008) have concluded that “forced evictions through expropriation continue to grow, millions of people are evicted each year, bringing severe and traumatic consequences for families and communities”. Moreover, property valuation and adequate compensation are therefore considered to be crucial in protecting property rights and investor confidence (Ambeya, 2009).

Major challenges associated with compensation for expropriated real estate especially in Africa include inadequacy of compensation, delays in

302 The 19th AfRES Annual Conference payment of compensation, and lack of professional valuers (Alemu, 2012; Chimbetete, 2016; Mutema, 2019). Given the scarcity of professional property valuers, chances are that most people undertaking property valuation for expropriation are not accredited by local professional bodies. The other challenge most likely to be posed by the scarcity of professional property valuers is that when dispossessed people are not satisfied with the compensation offered, they might not have the means to engage the services of a professional valuer for advice. As a result, they end up just accepting whatever is offered by the expropriating authority.

Furthermore, in Africa, customary land is one of the key land tenure systems (Kabanga & Mooya, 2018) hence market-based compensation might not result in fair compensation for customary land since there is no formal market for communal land (Mengwe, 2019; Kabanga & Mooya 2018). This means that for affected people, the value of land is not derived from the market but rather from non-market attributes of the expropriated piece of land, which may include access to natural resources such as water, grazing pastures and social capital.

According to Ng’ong’ola (1989), “in Botswana, as elsewhere, the assessment of compensation is potentially the most contentious aspect of this branch of the law.” Mengwe (2019) has also concluded that compensation for expropriated customary land in Botswana has been characterised by disputes as the affected people are dissatisfied with what they are offered by the state (expropriating authority). Pitsane- Tlhareseleele road project is one of the projects that falls under the 10-year Botswana integrated transport project (BITP), which started in 2009.The primary aim of the project is to enhance the efficiency of the transport system by building modern business management capacity and improving the strategic planning aspects of inter-regional transport and critical transport infrastructure. This study seeks to assess the fairness of the compensation offered to people affected by the Pitsane-Tlhareseleele road project in a bid to contribute to the existing academic debate on compensation for expropriation.

Theoretical Framework Compensation for expropriation is based on the theory of equity and equivalence, which states that affected owners and occupants should be neither enriched nor impoverished as a result of the compulsory acquisition

The 19th AfRES Annual Conference 303 of their property (Viitanen, 2002; Asian Development Bank, 2007; Keith et al, 2008; FAO, 2009; Viitanen et al, 2010; Deeyah, & Akujuru, 2017). The main principle of indemnification is to place the affected person in the same position as he/she was before the property was compulsorily acquired (Ambaye, 2009; Keith et al, 2008; Pai & Eves, 2016). In this case, the expropriating authority must that the living standards of the affected persons remain as they were prior to the compulsory acquisition. In other words, no one is supposed to benefit from the government’s quest to take property for public benefit, but in the same vein, no private individual should be disadvantaged simply because the government needs property for public the benefit. Johnson and Chakravarty (2013:280) have noted that “compensation serves to rectify the losses incurred as a result of expropriation and displacement, often on the basis of cost-benefit analysis and to incorporate actual and potential opponents of land acquisition into the process, thereby facilitating the social and political conditions under which land acquisition can occur.” In this case, the theory of equity and equivalence is aimed at providing dispossessed groups with adequate financial compensation (Mahalingam & Vyas, 2011).

Property valuation for expropriation purposes is done in terms of the guidelines provided by existing statutes. In Botswana, private property rights are protected by the supreme law of the land (Ng’ong’ola, 1989). Mengwe (2018) has noted that Section 8 of the same Constitution together with the Land Acquisition Act (cap 32:10), the Acquisition of Property Act of 1955, the Tribal Land Act of 1968 and the Tribal Land (Amendment) Act of 1993 gives the State the power to interfere with private property rights. Bayo (2006) has explained that eminent domain power in Botswana is conditional, which means that it can only be exercised when the expropriated land is to be used for public purposes (including, but not limited to, defence, public safety, public order, public health, town and country planning) and that prompt and adequate compensation must be paid. However, Ng’ong’ola, (1989) and Mengwe, (2018) have noted that the Constitution of Botswana does not provide a detailed definition of the meaning of prompt and adequate compensation. This has resulted in subjectivity in practice, which has in turn resulted in wide disparities in estimated compensation values.

Property valuation for compensation for tribal land in Botswana is guided by Section 33 of the Tribal Land Act of 1968 (amended 1993). Mengwe,

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(2019) has pointed out that property valuation for compensation include the depreciated replacement cost (DRC) value of improvements, a market- derived value for standing crops and ten per cent (10%) of the aggregate of DRC and the standard value. Using DRC as the basis for compensation has been criticised when compensating rural properties because some of the materials used by rural communities are difficult to quantify in monetary terms (Iyanda, 2014).

Measuring fairness in compulsory land acquisition and compensation: A Review What is the yardstick used to measure fairness in compensation for expropriation? A number of factors are considered when assessing the fairness of expropriation and compensation. Market value is widely accepted as a true measure of fairness in compensation. This means that if the estimated property value for compensation is within an acceptable margin (usually 10%) with the market value, then it is considered to be fair (Lin, 2009; Tzu-Chin, 2009; Holtslag-Broekhof, et al, 2018). Market value can be defined as the amount for which a property can exchange hands between an informed willing buyer and an informed willing seller at a given date of transaction, where each acts willingly and prudently without compulsion (International Valuation Standards Council (IVSC), 2016). It is also worth noting that in as much as the market value can be used as a benchmark for fairness in compensation value, there is a difference between market value and fair value. Market value is determined by the market (demand and supply) and it disregards any special benefits of the property to the seller or buyer. Fair value, on the other hand, is mainly a product of negotiations between the buyer and the seller, which takes into account special benefits accruing to any of the negotiating parties (IVSC, 2016).

Ambaye (2014) and Tomson (2009) have pointed out that some scholars have challenged the notion that compensation based on market value is fair. Market value is not equivalent to fair value since it does not take into consideration things like the cost of relocation and disturbance (Tzu-Chin, 2009; Walters, 2019; Beale 2019). In this regard, compensation which is based on market value is not sufficient to enable dispossessed people to maintain their economic status after expropriation (Zrobek and Zrobek, 2008a; Kucharska-Stasiak, 2008). Kabanga and Mooya (2018) argue that market value is not equivalent to fair compensation for customary land

The 19th AfRES Annual Conference 305 since it is not sold in the open market. Market-based compensation value is less than fair compensation when customary land is expropriated since the market approach relies on market evidence whereas there are limited transactions, if any, under customary land rights (Asian Development Bank, 2007; Kabanga and Mooya, 2018). Under the customary land tenure system (also known as tribal or communal land tenure system), the land is, in principle, owned by the community and traditional leaders allocate the land to beneficiaries free of charge. Given that land is given without charge by traditional leaders, one might be justified in concluding that there is no market to talk about. The World Bank (2004) has recommended the use of the replacement method of valuation in the event that there is no market evidence to rely on. However, Nuhu (2008) and Alemu (2012) has criticised the use of the replacement method of valuation when estimating compensation for customary land since the materials used to build some rural properties cannot be found on the market, thereby making it difficult to attach monetary value to such properties.

Another factor to be considered when assessing whether the compensation for compulsory land acquisition is fair is whether the whole process was transparent and whether affected people were consulted and given access to professional advice and/or representation (Zrobek & Chan 2003; Zrobek & Zrobek, 2008a; Zrobek, 2008b; Johnson & Chakraarty, 2013; FAO, 2017). The expropriating authority need to identify all affected people, seek their consent and understand their customs and traditions (FAO, 2017). The affected people must also be given access to independent valuers and lawyers in the case they are not happy with the compensation offered. The cost of engaging these professionals must be met by the expropriating authority (FAO, 2008; Zrobek & Zrobek, 2008b; Arul Vikram & Murali, 2015; FAO, 2017). If the affected parties are consulted at every stage of the expropriation process, chances are that there will be less resistance and delays. Another important consideration to ensure inclusive development is the establishment of dispute resolution procedures. “Affected parties should be made aware of the compensation guidelines, preliminary compensation figures and their right to object if they feel that the amounts offered are not fair” (FAO, 2017).

The requirement to understand the culture and traditions of affected peoples when calculating the compensation values resonates very well with the views of Chambers (1995) that in most cases professionals and

306 The 19th AfRES Annual Conference institutions which deal with development economics come with their own “realities” that are not in line with what the values of the intended (mostly rural) beneficiaries. A yardstick to be used to measure whether or not the compensation offered was fair should ideally come from the dispossessed people and not from the expropriating authority.

On the other hand, the fact that human beings by nature are selfish must not be over emphasised. In this regard in as much as the realities of the affected people should be prioritised and their compensation should be guided by a legislative framework. In other words, it is also important for them to be well versed with the provisions of the law in terms of how compensation is calculated.

Fairness in compulsory acquisition and compensation can therefore also be assessed based on whether or not the whole process was done in terms of the provisions of the law. If the practice deviates from the provisions of the law, then the compensation cannot be classified as having been fair (FAO, 2008). However, there are also cases when the legal provisions are ambiguous which can adversely affect the fairness of the compensation process. The World Bank (2004) and FAO (2008) have provided guidelines which can be used as a benchmark when assessing the fairness of the compensation value. Box 1 is a summary of property valuation for expropriation guidelines provided by the above-mentioned institutions.

Box 1: Guidelines for calculating fair compensation value The total compensation may be based on:  Replacement value of the land: Where markets are active, the replacement cost of affected land, in either rural or urban areas, is based on fair market value (plus transaction costs and, in rural areas, any preparation costs). Alternatively, where markets are weak, the replacement cost is calculated from the productive potential of agricultural or commercial land of equivalent size.

 Replacement value of improvements to the land: Where markets provide adequate information about the supply and cost of comparable substitutes, any replacement structure of equivalent market value, plus any transaction and relocation costs, may be appropriate. Where such market signals are absent or inadequate, replacement cost is equivalent to the delivered cost of all building

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materials, labour costs for construction, and any transaction or relocation costs (the cost of the land under the structure is considered in “Replacement Cost for Land,” above). Replacement cost can be calculated using the infrastructure schedule or contractors’ quotes.

 Replacement value of crops: When arrangements cannot be made to allow for harvest, the market value for lost cash crops is paid. In some countries, the value of the harvest is determined by the average market value of crops for the previous three years. In areas of predominantly subsistence production, good practice recommends that in-kind compensation be made for subsistence crops.

 Replacement value of trees: Where markets exist, the value of a tree of a specified age and use can be used to determine compensation rates. Where markets do not exist, surrogate values must be determined. For timber trees, the value of a tree equals that of the lumber. For fruit or fodder trees, the value is equal to the cumulative value of the fruit crop for its productive life (and any timber value). If replacement trees are provided, good practice indicates that compensation be based on the value of the harvests lost until the replacement trees come into full production (typically, 7–10 years). In the case of immature trees, a less costly alternative may be to directly supply seedlings as a replacement and provide compensation for the resulting delay in the trees reaching fruit- bearing capacity.

 The value of any financial advantage other than market value that the person may enjoy by virtue of owning or occupying the land in question.

 Interest on unpaid compensation from the date of possession: Replacement cost includes a provision for inflation if payments are delayed.

 Expenses incurred as a direct and reasonable consequence of the acquisition.

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 Loss in value to other land owned by the affected owner due to the project: In some countries, the compensation will be reduced if the retained land increases in value as a result of the project, a condition sometimes referred to as “betterment”.

 Legal or professional costs, including the costs of obtaining advice, and of preparing and submitting documents: Any administrative charges, title fees, or other legal transaction costs must be paid by the project or waived.

 Costs of moving and costs of acquiring alternative accommodation.

 Costs associated with the reorganisation of farming operations when only a part of a parcel is acquired.

 Loss in value of a business displaced by the acquisition, or if the business is permanently closed because of the acquisition.

 Temporary loss of earnings.

 Personal hardship.

 Other losses or damages suffered. Source: FAO (2008 pp31) and World Bank (2004)

The valuation guidelines in Box 1 reveal that fair compensation must include compensation for land, improvements on land, business loss, crops, professional fees, disturbance allowance as well as interest when compensation is not paid immediately. Estimation of the amount of interest payable when the expropriating authority delays in paying compensation has also been a subject of debate (Hiironen, Niukkanen, Ohrankämmen & Laitala, 2014). From the literature reviewed, it can be noted that the assessment of the fairness of the compensation value for expropriated properties can be done in several ways, which include evaluating the assessment process using the available legal provisions or set guidelines. The fairness of compensation for expropriation can also be measured by comparing the compensation offered with open market value or by seeking the views of the expropriating authority and the displaced people.

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This paper is not the first study on compulsory acquisition and compensation in Botswana. Ng’ong’ola (1989) used the case study approach when he did a undertook a comprehensive analysis of property valuation for expropriation in Botswana He observed inconsistencies in property valuation for compensation purposes in Botswana. Based on these inconsistencies, he concluded that chances are that most compensation figures offered are either undervalued or overvalued. This goes against the principle of equity and equivalence, which is the foundation of compensation. His study recommended that both practising property valuers and the judiciary revise the current practice, in order to ensure more realistic compensation values. Mengwe (2019) also reviewed relevant laws guiding compensation for expropriation in Botswana and concluded that the law was biased towards formal property rights at the expense of vulnerable groups. He recommended the review of the existing compensation framework to make it more flexible and ensure that it takes non-market value into account.

Methodology Because of the nature of the problem under study, this paper followed a qualitative research methodology. A case study approach was adopted based on the Pitsane-Tlhareseleele road project. Pitsane-Tlhareseleele road is one of the recently constructed roads which stretches for 5. 25 kilometres. This project was chosen because it is one of the recent developments associated with compulsory acquisition projects in Botswana. A census survey was adopted and a total of 30 respondents were interviewed from displaced persons and government officials. When the road project was implemented, a total of twenty-two (12 from Tlhareseleele and 10 from Pitsane) households were displaced therefore all of the 22 who were available were interviewed. Also, eight government officials four (4) from Rolong Land Board and four (4) from Good Hope Council were interviewed as key informants. These eight were chosen because they were the ones who were directly involved in the project under study. Primary data was collected through interviews with respondents and an interview guide was used. Face to face interviews were preferred because they allowed the researcher to probe further as a way of seeking clarity on the responses given to the research questions. The interviews were based on a 20 question interview guide which was structured into four sections. Section one was dominated by short and closed demographic questions. The second section of the interview guide focused on the existing policy and

310 The 19th AfRES Annual Conference practice in Botswana. Questions about challenges of weaknesses of the existing expropriation process dominated Section three. In the last section of the interview guide focused areas of improvement on the existing compensation for expropriation policy and practice in Botswana. Coding of interview results was done manually and data was processed using Statistical Package for Social Sciences (SPSS), which facilitated data interpretation and analysis.

Results and Discussion Perceptions of government officials The expropriated land was tribal land which is owned by the community in terms of the Tribal Land Act. With the tribal land tenure system, land is owned by members of the clan and can be inherited from one generation to the other but it cannot be sold. Individual members of a clan have use rights and are entitled to compensation when their land is expropriated as prescribed by of the Tribal Land Act and the Compensation Guidelines. However, it is important to note that most of the tribal land in Botswana is not registered. Botswana is currently working on title survey so that all land within its borders are registered with the Deeds Registry Office.

Key informants from the expropriating authorities were satisfied that the compulsory acquisition and compensation for this project had been carried out in terms of the requirements of the Tribal Land Act and the Compensation Guidelines. The Tribal Land Act prescribes that when tribal land is expropriated, the acquiring authority with the assistance of the planning authority, must make reasonable efforts to identify, contact and notify all affected people about its intention to expropriate the land. In terms of the compensation guidelines, the expropriating authority, which in this case is the Department of Roads, should inform the responsible planning authority of its intention at least six months before the commencement of the project. Both of them (the expropriating and planning authorities) should consult the affected parties appropriately and as specified in the guidelines. This study established that the affected people were notified about the government’s intention to expropriate part of their land through a customary meeting presided over by Chiefs and a council of elders known as a kgotla. All key respondents were of the view that the land acquisition process was carried out in accordance with the provisions of the law. One key informant said that:

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“When the land in question was taken, compensation was paid in terms Section 32 of the Tribal Land Act”.

Another key informant highlighted that in this project, there were consultations between land board, the community and other stakeholders through meetings that held at Pitsane kgotla and Tlhareseleele kgotla on various dates. The land board requested for a kgotla meeting to advise the people of the expropriation and their rights. The views of the affected communities were documented and were taken into consideration prior to the expropriation phase.

One key informant also said that the acquiring authority with the assistance of the land board, made reasonable effort to identify and contact all occupiers with the assistance of the land board within all zoned land. However, a few individuals who did not live on their land and do not have relatives in the area, were not aware their land had been acquired. The ongoing land registration exercise is most likely going to help alleviate this challenge. This goes against the principle of transparency which was stressed by FAO (2008; 2017) which require the expropriating authority to do everything within its powers to inform and engage all affected persons. In order to protect the affected people, especially the vulnerable members of the community, the expropriating authority should have identified all people with interests in the subject properties and seek their views during the planning stage.

It was also established from key informant interviews that when it was decided to proceed with the project, the compensation assessment committee conducted a physical inspection of the affected properties, recording all the details of all improvements to the land and any other fixed assets affected within the zoned area. After that, the assessment committee invited the any interested parties any queries or objections to the expropriating authority. The Department of Lands then advised the acquiring authority of the approved compensation assessment report. The acquiring authority then immediately released payment for compensation directly to claimants.

Perceptions of displaced persons Whilst key informants from the planning authorities were confident that the expropriation and compensation project had been successfully planned and

312 The 19th AfRES Annual Conference implemented in terms of the provisions of the law, the affected people did not share this view. They felt that same issues that were important to them had not been considered when the compensation value was calculated. For example, more than half of the affected people felt that they should have been compensated for disturbances experienced during the implementation of the project, which include disruptions in electricity and water services, widespread dust and smoke as well as disruptions in the irrigation and drainage system. Existing compensation legislation prescribes that disturbance allowance should be just ten per cent (10%) of the aggregate of depreciated replacement cost and the standard value. However, this deviates from the principle of fairness because one might be tempted, in this case, to conclude that it was possible to quantify the disturbances experienced by the affected people. Even if the compensation for disturbance was more than the prescribed 10%, for the sake of transparency the responsible authorities should have quantified the disturbance and negotiated for compensation that can be acceptable to affected people.

It was also established that the landowners were made to sign papers indicating the compensation they were going to receive. They were later told that an error had been made when compensation amount was calculated and therefore had to sign other papers indicating a lower compensation amount than the one they were promised before. As a result, 77% of the affected people felt that the compensation process had been neither transparent nor adequate. Property valuation for expropriation for this project was shrouded in obscurity as affected people claimed that they were not informed about how the compensation amount was calculated. Moreover, all of the affected people confessed that they were not familiar with statutes guiding compulsory acquisition and compensation in Botswana. This was also compounded by the relative lack of professional valuers who could have given independent advice to the dispossessed people. As noted by Mutema (2019), property valuers in the SADC region are so scarce that the costs of valuation services are likely to be beyond the reach of most rural subsistence farmers.

Although most of the affected people were not satisfied with the compensation offered, only one person challenged it. It is likely that most of the respondents were not aware about their right to object if they were not satisfied with the compulsory acquisition and compensation. Even if

The 19th AfRES Annual Conference 313 they had known that they could challenge the process, they might have been reluctant to do so for fear of being labelled as enemies of progress working against government-initiated development. Table 1 summarises major views from different interviewees

Table 1: A Matrix Indicating Major Views from Various Organisations Respondent Major view(s) Displaced The compensation which was offered was not persons adequate and we were not part of the assessment process. Critical issues were not taken into consideration when the compensation value was computed. There was no disturbance allowance and what the actual compensation paid was different from the initial compensation which was offered. Government The expropriation was done in line with the officials provisions of the law. People were consulted prior and during the expropriation and compensation process. Objections were considered and the government did everything within its powers to identify and engage all relevant stakeholders.

Conclusion, Policy Options and Recommendations In view of the forgoing discussion, one is tempted to conclude that affected people and government officials have different views about the adequacy of the compensation offered. Key informants who were government officers were of the view that the expropriation and compensation process was done as prescribed by the law. However, displaced persons were ‘singing a different hymn’, to them even if the compensation was done in terms of the provisions of the law, it falls short for it to be classified as adequate. The results of this study revealed policy-practice gaps in the calculation of compensation in Botswana. The statutory and policy frameworks provide for a consensus-based compensation approach but the displaced people lamented that the valuation method which was used by compensation authority was not transparent.

This study supports the findings of Ng’ong’ola (1989) and Mengwe (2018) that there are gaps in the legislative framework guiding property valuation for expropriation in Botswana. These gaps are primarily the result of using the depreciated replacement cost method as the basis for calculating the

314 The 19th AfRES Annual Conference compensation value and the adoption of a 10% disturbance allowance. The entire process is also sufficiently flexible to accommodate the views of the affected people especially when calculating the compensation value. It is therefore concluded that the DRC method is not the most appropriate method of calculating compensation for customary land. It was also noted by Alemu (2013) and by Kabanga and Mooya, (2018) market-related approaches are not appropriate for valuing customary land which is rarely sold in the market and where some of the properties are constructed using local resources and local technology, which is difficult to quantify in monetary terms.

From the findings of this study, it is evident that the affected people and the professionals leading the expropriation process are not reading from the same page. The success of a compensation programme in the eyes of the professionals lies in the legality of the process, whereas in the eyes of the affected people, its success depends on whether the relevant authorities have taken their views into consideration. It can be concluded that this divergence of views is most likely rooted in the lack of transparency in the planning and implementation of the expropriation system. This challenge is compounded by the fact that the parties concerned are coming from “different worlds”. On the one hand, the professionals are armed with their knowledge of laws and regulations that the affected people are not aware of. On the other hand, the affected people have their own customs and values with which the professionals are not well versed. There is need to bridge this gap through more flexible and transparent compensation systems. Table 2 is therefore a summary of the recommendations of this study.

Table 2: Recommendations of the study Action Player Expected outcome Review of laws which Government of A flexible and guide compulsory Botswana transparent acquisition and compulsory compensation in acquisition and Botswana compensation system. Education communities Non– Improved about property rights and Governmental understanding of compulsory acquisition. Organisations property rights and

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Action Player Expected outcome expropriation by the communities. Understanding of the Government Improved customs and values of the officials working understanding of the affected communities for local and values of local people prior to the planning which might help to implementation of the authorities minimise disputes. expropriation projects.

As shown in Table 2, this study recommends that there is need to review existing statutes guiding property valuation for expropriation in Botswana with the aim of bringing flexibility and transparency. Also, there is need to educate communities about the provisions of the law on compulsory acquisition and compensation. Lastly, there is need for more research with the view of coming up with a valuation approach which is guided by both statutory and customary law and can be acceptable by affected people.

Areas for Further Research It is recommended that future research can assess the fairness of compensation offered for expropriated properties through valuing the subject property using an independent valuer. Also, the size of the population for this study was small, it is recommended that the same study case be replicated in future using the multi-case study approach.

References African Development Bank, 2019. Southern Africa economic outlook 2019. African Development Bank. (Online) Available from: https://www.afdb.org/fileadmin/uploads/afdb/Documents/Publi cations/2019AEO/REO_2019_-_Southern_africa.pdf (Accessed: 26-08-2019). Alemu B (2013). Expropriation, valuation and compensation in Ethiopia. Unpublished PhD thesis, Sweden: Royal Institute of Technology, Asian Development Bank (2007). Compensation and valuation in resettlement: Peoples Republic of China, Cambodia. Du Plessis E, (2009). Compensation for expropriation under the constitution. Unpublished PhD thesis, University of Stellenbosch

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Kabanga, L. and Mooya, M.M. 2018. Compensation theories and expropriation of customary property rights: A Critical Review. Journal of African Real Estate Research, 3(2), pp.87-106. Food and Agriculture Organisation, (2008). Compulsory acquisition of land and compensation. Food and agriculture organisation of the United Nations, Rome. Food and Agriculture Organisation, 2017. Valuing land tenure rights: Governance of Tenure Technical Guides 11. Rome, Food and Agriculture Organisation of the United Nations. Government of Botswana, (1955). Land acquisition Act (Cap 32:10). Gaborone, Government of Botswana. Government of Botswana, (1966). Constitution of Botswana. Gaborone, Government of Botswana Government of Botswana, (1968). Land Tribal Act. Gaborone, Government of Botswana Government of Botswana, (1993). Land Tribal Act. Gaborone, Government of Botswana Government of Botswana, (2004). Compensation guidelines. Gaborone, Government of Botswana Honde, G. and Abraha, F.G., 2017. Botswana. African Economic Outlook 2017, p.9. International Valuation Standards Council, (2016). International valuation standards. London, International Valuation Standards Council. Iyanda, S., A. 2014. Communal land acquisition and valuation for compensation in Nigeria. International Journal of Scientific and Research Publications, 4(1):1-7. Lewin, M., 2011. Botswana’s success: Good governance, good policies, and good luck. Yes, Africa Can, 81. Mengwe, D. 2019. Compensation for expropriation in Botswana: Issues and transformative suggestions. Pimer, F. and McCluskey, W. (Eds.). 2019. Routledge Handbook of Contemporary Issues in Expropriation, pp 352-378. London and New York. Routledge. Ng’ong’ola, C. (1989). Compulsory acquisition of private land in Botswana: The Bonnington farm case. Comparative and International Law Journal of Southern Africa, 22(3). 298–319. Nuhu, M., B. (2008). Compulsory Purchase and Payment of Compensation in Nigeria: A Case Study of Federal Capital Territory (FCT) Abuja. Nordic Journal of Surveying and Real Estate Research, Special Series 3:102-126.

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Tagliarino K, (2017). The status of national legal frameworks for valuing compensation for expropriated land: An analysis of whether National laws in 50 countries/regions across Asia, Africa, Latin America comply with international standards on compensation valuation. Land 6(37):1-29 World Bank, 2004. Involuntary resettlement sourcebook planning and implementation in development projects. Washington, DC, World Bank Zrobek, S., and Zrobek, R. 2008a. Is the amount of compensation for real estate expropriation just? Current state and proposals for change. Nordic Journal of Survey and Real Estate Research, Special Series, 3:190 – 199. Zrobek, R., and Zrobek, S. 2008b. Expropriation as an exceptional tool of acquisition of land for public purposes. Geomatics and Environmental Engineering, 2 (1): 85 – 94.

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VALUATION OF UN REGISTERED COMMUNITY LAND IN KENYA – ADDRESSING THE FUNDAMENTALS

Mwenda K. Makathimo, PhD Mount Kenya University, Nairobi Kenya Email: [email protected]

The subject of valuation of unregistered interests in land is increasingly attracting the attention of Valuers and Land Managers globally. The realization that value of property is not necessarily created by formal registration and that the legitimacy and increasingly the legality of property rights is not conferred by registration has made inquiry into the approaches for valuation of such property critical. Property rights are considered a key element of human rights and persons are not to be deprived of their property rights arbitrarily either by the state or other parties. In cases where private property is required for public purposes or in public interest then the owners / holders of the rights must be compensated in a just and prompt manner. It is therefore important that the value of unregistered property is assessed in ways that are credible, objective and just in the interest of supporting voluntary or involuntary transactions.

In Kenya Community land ownership is recognized Constitutionally and has equal status with private and public land ownership. Nonregistration of community land rights does not make them illegal or illegitimate. The Community Land Act of 2016 and Community Land Regulations 2018 were enacted by parliament to provide a framework for registration and management of Community Land. Despite the passing of these laws and regulations over sixty percent of land in Kenya is still unregistered and falls in the category of Community Land. Public and private investments continue to take place over unregistered community land.

The questions as to how the subject of valuation is ascertained; where and how the information on transactions; proprietorship and other relevant aspects is gathered, analyzed and used to derive valuation amounts ; The methods employed and their appropriateness and the challenges encountered is the subject of this paper.

Keywords: Un registered, Community, Land, Valuation, Methods

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1.0 Introduction and Background Information Valuation of property has generally focused on registered lands. It has not sufficiently supported the unregistered land rights and claims. There is dire need for Governments and individuals to be able to value unregistered lands to support sustainable development10.

Land in Kenya is classified as public, community or private11. It is estimated that Community Land in Kenya comprises more than sixty percent of the total Land mass. Most of this Land is still un registered12 .The Land Act 2012 is the main framework governing administration and management of public and private land while community land governance is addressed under the Community Land Act 2016. Community land vests in and is held on the basis of ethnicity, culture or similar community of interest. It includes land held by group representatives; community forests, grazing areas, shrines, land traditionally held by hunter gatherer communities; land lawfully held as trust land by County Governments and any land lawfully declared to be community land by law13.

The Constitution of Kenya protects everyone’s right to own property anywhere in Kenya either individually or in association without any discrimination. It is provided that the state shall not deprive any person of property or interest in property unless it is in accordance with the Constitution and established statutory law14. In cases where the land is compulsorily acquired for public purpose or in public interest; prompt payment of full and just compensation is required.

Statutory provisions have been made under the Land Act, 2012 to guide the process of determining and making compensation for compulsorily acquired land rights. In addition subsidiary legislation to guide assessment

10 UN Habitat, 2018, Valuation of Un registered Lands- A policy Guide, Nairobi, Kenya 11 Government of Kenya, 2010 ,The Constitution of Kenya Art.61 , Government Printer, Nairobi 12 Government of Kenya, 2009, Sessional Paper No3.of 2009 on National Land Policy, Government Printer, Nairobi 13 Government of Kenya, 2010, The Constitution of Kenya Art. 63, Government Printer, Nairobi 14 Government of Kenya, 2010, The Constitution of Kenya Art. 40, Government Printer, Nairobi

320 The 19th AfRES Annual Conference for just compensation (Valuation) in form of Rules15 have been developed by the National Land Commission (NLC), and approved by parliament. Recently the Land Value Index Laws (Amendment) Bill, 2018 was passed by both the National Assembly and the Senate. This Bill is aimed at amending various sections of the Land Act 2012, the Land Registration Act 2012, Prevention, Protection and Assistance of Internally Displaced Persons and Affected Communities Act and provide for Land Value Index and compulsory acquisition.

With the foregoing it is necessary to review how un registered community land is valued in Kenya within the existing policy and legal and practice frameworks.

2.0 The Problem There are increasing concerns by communities and stakeholders that the value of un registered Community land has often been understated and that government policies and practices relating to acquisition have often not displayed the full appreciation of uses of such land. Community land uses like pastoralism appear to have been routinely undervalued thus allowing the promulgation of inappropriate policies16. Government statistics often display undervaluation of pastoralism and related land uses thus contributing to increased incidences of poverty and environmental degradation.17 Use of government generated indices based on statistics and valuation models that do not capture the full value of un registered community lands and their uses poses the risk of violating the Constitutional protection of property rights .

3.0 Objectives This paper seeks to; i) Review legal and policy frameworks, practices and methodologies relating to and affecting valuation of unregistered community land in Kenya. ii) Identify gaps and challenges that adversely affect the determination of just and fair values for un registered community land for compulsory acquisition purposes as well as voluntary acquisitions

15 Government of Kenya, 2017, Land ( Assessment of Just Compensation) Rules, Government Printer, Nairobi 16 Davies,2007,Total Economic Valuation, WISP 17 COMESA,2010, Assessing Total Economic Value of Pastoralism, COMESA

The 19th AfRES Annual Conference 321 iii) Make recommendations to address the gaps and challenges.

4.0 Methodology The objectives of this paper have been addressed following a survey of relevant literature. The results of the literature survey are presented and discussed in a thematic format.

5.0 Discussions 5.1 Valuation Practice in Kenya Valuation practice in Kenya is governed by the Valuers Act Cap 532, which sets up the Valuers Registration Board that regulates the practice activities and conduct of all Valuers. For registration by the Board one is required to be a full member of the Institution of Surveyors of Kenya (ISK) Chapter of Valuation and Estate Management Surveyors.

Upon registration and obtaining the license to practice Valuers are required to follow the various foundational principles set by the Constitution of Kenya, relevant statutes, regulations, guidelines and Standards set by ISK and the International Valuation Standards Council (IVSC).

Among the notable statutes governing valuation is the Valuation for Rating Act Cap 266 and the Rating Act Cap 267 which deals with valuation and administration of property rates. The Land Act No.6 of 2012 makes provisions for the National Land Commission (NLC) to make Rules to govern valuation (Assessment for Just Compensation) for compulsory acquisition purposes following repeal of Land Acquisition Act Cap 295. NLC in exercise of powers thus granted, made and published in the Gazette the Land (Assessment of Just Compensation) Rules 2017. 5.2 Valuation Methods 5.2. 1 Property Valuation Approaches and Methods The Valuers in Kenya Subscribe to the guidelines set under the ISK Valuers and Estate Management Surveyors Handbook which prescribe the concepts, approaches and bases for undertaking valuation in Kenya and the International Valuation Standards (IVS) set by the IVSC. The standards, guidelines principles and concepts therein serve the purpose of promoting consistency and transparency in valuation practice.

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The standards18 prescribe three Approaches that underpin valuation methods. These Approaches are; iv) Market Approach v) Income Approach vi) Cost Approach

The market approach derives the value of an asset by comparing the asset with comparable (similar) assets for which sale price information is available. It assumes all assets are sold and bought in an open market. The Income approach establishes an indication of value by converting future cash flow from an asset to a single present value taking account of time value for money. It assumes assets are held for investment purposes.

The cost approach seeks to determine the value of an asset using the economic principle that a buyer will pay no more for an asset than the cost to obtain an asset of equal utility, whether by purchase or by construction in normal circumstances.

Based on the foundations of these approaches the following valuation methods have been variably applied in the valuation of assets in Kenya. (i) Direct Sales Comparison (Comparable) Method (ii) Income Capitalization (Investment) Method (iii) Profits (Accounts) Method (iv) Replacement Cost Method (v) Reproduction Cost Method (vi) Summation (Contractors) Method It should be observed that the purpose of the valuation assignment and the nature of the subject asset determine the method that is adopted for valuation. Valuers in Kenya generally apply the above methods depending on the instructions of the client and in line with the standards19. It should however be noted that the standards acknowledge and allow for some valuation assignments to be guided by laws of the jurisdiction where the valuation assignment is being undertaken. In Kenya Valuation for compulsory acquisition, Valuation for rating and Valuation for Stamp Duty

18 IVSC, 2017, International Valuation Standards , IVSC, London 19 IVSC, 2017, International Valuation Standards , IVSC, London

The 19th AfRES Annual Conference 323 purposes are for instance provided for by specific statutes and regulations under those statutes.

The methods outlined above are normally applied to conventional real estate. The valuation practice seldom involves valuation of un registered community lands particularly those under pastoralism except when valuations have been sanctioned by statutes (law) or development project financiers such as World Bank and International Finance Corporation (IFC). In the instances where such valuations have been undertaken, the methodologies adopted have been guided by internal institutional standards and guidelines. The IFC for instance requires compliance with standard Five (5) that addresses land acquisition and involuntary resettlements occasioned by projects20. This standard allows for application of livelihood loss valuations which are not accounted for in the convectional real estate valuation methods discussed above. The closest that Valuers in Kenya have gone in undertaking valuations related to activities closer to un registered Community lands is when dealing with valuation of Ranches. In Valuation of Ranches the methods outlined above have been applied depending on the purposes and scope of valuation. It is worth noting that most private ranches have formal enterprise management approaches with elaborate information management systems that make analysis of cash flows and costs relatively empirical and application of market, income and cost based approaches convenient. The valuations are largely based on carrying capacities of the land in terms of livestock production or rents and income streams from the production activities undertaken in the ranches.

5.2.2. Other Approaches to Valuation Besides the property valuation methods discussed above, there are other approaches to valuation that have developed from environmental management, livelihood safeguards and resource management concepts. These approaches include Total Economic Valuation (TEV), Total Ecosystem Services Valuation, Contingent Valuation Method (CMV) based on willingness to pay method (WTP) or Willingness To Accept (WTA), Hedonic Pricing Method, and Cost Benefit Studies.

As was cited earlier the purpose determines the approach to valuation. The Environmental management based methods are geared to supporting

20International Finance Corporation, 2012, Performance Standard 5, Land Acquisition and Involuntary resettlement

324 The 19th AfRES Annual Conference conservation decisions and policies. Their adequacy or lack of it has been discussed mainly in that context and not as a means of deriving equity following involuntary acquisition. The Contingent Valuation models have been criticized for reliance on hypothetical scenarios rather than real choices and the disparities between values for the same good arrived at by use of WTP and WTA21. Travel Cost and Hedonic pricing also suffer from limitations where there are no behavioral trails or observed market transactions22. The ecosystem services valuation approaches are limited in application given that ecosystems services may not be quantified on a per acres basis as land managers would prefer23. Despite the limitations outlined with respect to environmental management oriented approaches, they offer logical basis for estimating the value of public or communal goods and services not traded in the market which can be applied in evaluating policy and management options.

The Total Economic Valuation (TEV) framework seeks to capture the full range of costs and benefits emanating from an activity. It aims at identifying, quantifying and aggregating all values associated with an activity, thus capturing a whole range of direct and indirect values whether measureable or not24. This framework provides a sound conceptual basis of estimating the contribution of an activity with multiple values that cannot effectively be captured by relying only on official government statistics and market based methods. It has effectively been applied to estimate the value of pastoralism in Kenya with the results that indicate significant variation from official government statistics25. The approach though offering a systematic way of identifying direct and indirect values that are either measurable or not measurable does not offer a site specific method that gives a per acre estimate of value but rather gives a system wide valuation of a production activity. It is more suited at supporting macro- economic and policy decision making. It nonetheless provides a sound basis for capturing the system wide contribution ( value ) of a non-static enterprise like pastoralism that is practiced on un registered community lands and would provide valuable inputs that can supplement the convectional

21 Andrea B. , 2004, Assessment of the Application of Contingent Valuation Theory to Bio-Sequestered Carbon 22 Allen T.L, Etal., 2013, Potential for Valuing Rangeland Ecosystem Services on Public Rangelands 23 Ibid. 24 Davies,2007,Total Economic Valuation, WISP 25 Ibid.

The 19th AfRES Annual Conference 325 property valuation methods in building land value indices for un registered community lands.

As earlier indicated valuation for compulsory land acquisition is guided by statutes. Adoption of any new approaches whether from a property background, livelihood safeguards or environmental management will require legal and policy changes. The section below discusses the legal provisions that guide the approaches and methods for carrying out valuation for compulsory acquisition of property in Kenya.

5.3.0 Valuation of Property for Compulsory Acquisition Purposes in Kenya Valuation of property for compulsory acquisition purposes is necessitated by the provisions of Art 40(3) (b) of the Constitution26 which allows the state to acquire property, interests and rights over property in accordance with the provisions of any Act of Parliament for public purpose or in public interest provided Prompt Payment in Full of Just Compensation is made to the affected person. The determination of the ‘Just Payment’ for the property right or interest becomes the subject of valuation. Art. 40(4) of the Constitution allows for provisions to be made for compensation to be paid to occupants in good faith not holding title to land where land is acquired for public purposes or in public interest. Assessment of Just Payment to such occupants in good faith is therefore a subject of valuation.

Pursuant to the Constitutional provisions the Land Act, 2012 has made provisions to guide the process of Compulsory acquisition of land and the attendant processes. The Act27 outlines public purposes to include roads, canals, highways, railways, bridges, wharves and airports; public buildings including schools, libraries, hospitals, factories, religious institutions and public housing; public utilities for water, sewage, electricity, gas, communication, irrigation and drainage, dams and reservoirs; public parks, playgrounds, gardens, sports facilities and cemeteries; security and defense installations; settlement of squatters, the poor and landless, and the internally displaced persons; and any other analogous public purpose. Land

26 Government of Kenya, 2010, The Constitution of Kenya Art. 40, Government Printer, Nairobi 27 Government of Kenya, 2012, Land Act no. 6 of 2012 S. 3, G Government Printer, Nairobi

326 The 19th AfRES Annual Conference and property compulsorily acquired for these purposes is therefore what constitutes the subject of valuation.

Section 111 (1) of the Land Act provides that should land be acquired compulsorily, just compensation shall be paid promptly in full to all persons whose interest in land have been determined. The National Land Commission is given powers under section 111(2) of the Land Act to make rules to regulate the assessment of just compensation. The National Land Commission in exercising these powers made and published in the Kenya Gazette the Land (Assessment for Just Compensation) Rules 2017.

These Rules28 give the procedure and considerations for valuation of property and interests in land for purposes of payment of compensation to the affected persons.

The rules interpret Market Value to mean the value of the land at the date of publication in the Gazette of the notice of intention to acquire the land. The Rules provide that the commission shall consider the following factors when assessing compensation;

(i) the market value of the land (ii) damage sustained or likely to be sustained by persons interested at the time of the Commission's taking possession of the land by reason of severing the land from his or her other land (iii) damage sustained or likely to be sustained by persons interested at the time of the Commission's taking possession of the land by reason of the acquisition injuriously affecting his or her other property, whether moveable or immovable in any other manner or his or her actual earnings; (iv) reasonable expenses incidental to the relocation any of the persons interested or who will be compelled to change residence or place of business as a consequence of the acquisition; (v) damage genuinely resulting from diminution of the profits of the land between the date of publication in the Gazette of the notice of

28 Government of Kenya, 2017, Land ( Assessment of Just Compensation) Rules, Government Printer, Nairobi

The 19th AfRES Annual Conference 327

intention to acquire the land and the date the Commission takes possession of the land.29 In addition to the factors enumerated above, the commission is required to determine the award taking into consideration the effect of conditions of the title or law which regulates the use of the subject property.

Increases in the market value of the subject property are disregarded if the increases arise from;

(i) Improvements by the owner after the date of the publication of the notice of intention to acquire the land.

(ii) Use of land contrary to the law or detrimental to the health of the occupiers of the premises or public health.

The Rules direct that the following shall not be considered in the determination of compensation: a) The degree of urgency which has led to the acquisition. b) Any disinclination of the person’s interest to part with the land. c) Damages sustained by the claimant which will not represent a good cause of action. d) Damages which are likely to be caused to the land after the publication of the acquisition notice or as a consequence of the future land use. e) Increases in land value likely to accrue from its future use after acquisition. f) Any development at the time of acquisition notice, unless these improvements were necessary for maintaining the land.30 In addition to the amounts determined above the Rules provide that the commission shall add a sum of fifteen percent of the market value of the amount of compensation as compensation for disturbance.

29 Ibid. 30 Government of Kenya, 2017, Land (Assessment of Just Compensation) Rules, Government Printer, Nairobi

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From the foregoing outline of the considerations in valuation, it is clear that the market value of the affected property, injurious and severance effects on the remaining property, costs of relocation, loss of profits plus the statutory disturbance amount form the core contents of compensation payment amount. These considerations in valuation are bound to be significantly affected by the changes introduced in the Land Value Index (Amendment) Laws bill 2018 that has been debated and passed both by the Senate and the National Assembly once assent by the president. The bill amends section 107 of the Land Act 2012 and creates the Land Value Index generated by the National and County Governments as the foundational basis for determining compensation for Freehold and Community Land31. This by implication makes the Government the regulator of value though; property prices and input costs are not based on any Government regulations. The proposed law gives no room for participation of stakeholders including the private practitioners, professional bodies, researchers and public in the process of making the index. The Bill gives the main inputs to be used in computing the index as declared value for payment of rates, rents and stamp duty. It further requires the affected persons to provide tax returns as proof of existence of profits from the subject property32. These requirements are not practical when dealing with unregistered community lands in Kenya given that they are not rateable; are hardly transacted in property markets and therefore no stamp duty payment or rents are declared. The tax return requirements totally disregard the subsistence and livelihood aspects of the land use activities over most unregistered community lands. 5.4.0 Gaps and challenges in valuation of unregistered community lands for compulsorily acquisition purposes The statutory considerations and processes for valuation and determination of just compensation amounts outlined above presume the following; (i) Existence of a formal property market where information about transactions is readily available

31 GOK, 2018, Land Value Index (Amendment)Laws Bill, Government Printer, Nairobi 32 Ibid.

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(ii) That Market Value approach is conclusive and procures Just amounts for compensation purposes (iii) Existence of land use plans and zoning regulations governing land uses (iv) There exists an up to date formal cadaster where subject properties are surveyed and registered. (v) Individual person’s interests in property are registered and can be quantified or shares established. (vi) Permanency of settlement of Affected Persons (vii) That formal Government statistics and records are up to date, complete and proof of just values These assumptions do not always hold in unregistered community lands that constitutes more than sixty percent of Kenya’s land mass33. Transactions over this type of Land are not supported by the National Cadaster and are not processed through the Land Registries. No formal information repositories or indices exist. Land rights are not recorded anywhere but known within the communities. Most rights are communal and land resources are thus shared. The Land uses are regulated through customs and norms. Formal planning rules, regulations and zoning with the attendant controls are not applicable. A majority of people in these regions led a nomadic way of life and therefore do not have permanent residences. Formal property markets do not therefore exist in the regions where land is held under this form of tenure.

The fact that no formal market transactions have been registered over these types of land presents challenges as to how open market values are established. The valuation considerations provided for under the Land Act of 2012 and the Land (Assessment for Just Compensation) Rules 2017 and the Land Value Index (Amendment) Laws Bill 2018 therefore face limitations in practical application over these types of property. This in turn poses challenges as to how just and fair compensation is arrived at given that the statutory methodologies are based on assumptions of existence of a formal property market. The statutory provisions cover physical relocation and appear not to address economic displacement of persons with un registered

33 Government of Kenya, 2009, Sessional Paper No3.of 2009 on National Land Policy, Government Printer, Nairobi

330 The 19th AfRES Annual Conference property rights. Loss of profits addressed under the considerations seems to only regard property owners with enterprises traceable to the particular parcel of land for which tax returns have been made. This appears to exclude the non - static enterprises reflected in nomadic lifestyles of pastoralist communities that occupy most un registered community lands in Kenya. It further ignores the loss of livelihoods and subsistence values associated with production systems established over these types of Lands. The valuation approach prescribed ignores other resource values save for those reflected in a property market set up. Loss of medicinal plants, cultural sites, and critical ecological services is not regarded.

The factors outlined under the Rules do not address how public assets and communal facilities are to be valued. Assets like schools, cattle dips, social halls, boreholes, animal watering points, communal tanks, water supply systems, animal holding grounds, shrines, and other cultural assets are not traded in any market. Their value cannot be established using the market approach. These facilities do no generate direct incomes and therefore income capitalization or profits methods would not apply in determination of their value. The consideration and approach provided by the Rules and the Statute are blind to methodologies suitable for valuation of Special use facilities.

The question of how interests of occupants of land in good faith will be addressed in assessment of just compensation is not overtly addressed under the Land Act 2012, or in the Rules. The Land Value Index (Amendment) Laws Bill has attempted to give statutory guidance by requiring persons to prove that they have been in permanent occupation of the subject land for at least twelve years continuously34. This provision appears to expose those who engage in nomadic pastoralism to likelihood of losing compensation if their land is unregistered and without title.

The public purposes enumerated under the Land Act tend to address instances where property rights and interests are permanently extinguished or where the purpose purely involves public entities or authorities. The scenarios where economic or physical displacements occur during implementation of projects where private investors in public related projects like wind power generation deal directly with communities is not

34 Government of Kenya, 2018, Land Value Index (Amendment) Laws Bill, Government Printer. Nairobi

The 19th AfRES Annual Conference 331 addressed. Just Compensation for displacements that are brought forth by such investments need to be addressed in policy and statute.

The assumptions that Government statistics and records are complete, up to date and are proof of just values is misleading. Valuation rolls used for property rating are seldom updated. There are no valuation rolls covering un registered community land in Kenya. Even in the case of areas where land is registered and under private ownership regimes, the valuation for rates is based on un improved site values and does not reflect full capital values.

The requirements that indices solely be developed by the National and County Government excludes public participation and also locks out contribution from expertise in research institutions, industry practitioners and professional bodies who at times are in possession of valid and current relevant information beyond what is in official Government records. The methodology proposed for the indices is not practical in the case of un registered community lands that have multiple values not identifiable by use of market valuation approaches or convectional property valuation methods best suited for land administered under modern cadastral systems and convectional tenure systems.

6.0 Way Forward Further to the foregoing there is need for changes to be made to the legal, policy and practice guidelines relating to valuation land for compulsory and voluntary acquisition of community land in Kenya to incorporate the following recommendations; (i) Include other basis for valuation apart from market value such as equitable value, and social value to account for instances where the affected assets are not traded in the property market or where no formal property market exists (ii) Provide for consideration of other approaches besides market value, to include income, replacement cost, restoration cost, Indirect values, cultural factors and specify circumstances under which departures would be allowed to accommodate the diverse nature of property interests and rights.

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(iii) Adopt existing use as a premise of value where Planning rules, regulations and controls do not exist and where application of strict and highest and best use principle is not possible. (iv) Allow for identification and quantification of rights and interests not recorded under the formal registration and cadastral systems to form the subject of valuation in the cases of unregistered community land. (v) Include valuation of communal, public and social assets that may not be attributed to a private person but a community as a unit. (vi) Recognize non static enterprises such as those of nomadic pastoralists and adopt concepts of Total Economic Valuation with requisite adaptations in computing Land Value Index for un registered community lands where they are practiced. (vii) Allow for use of social information directly collected from the communities and other stakeholders in building land value indices provided reliability and validity criteria is established. (viii) Make the process of formulating the land value index participatory inclusive of inputs from professional associations, researchers, agencies managing production systems on un registered community land.

7.0 Conclusion Kenya has put in place a legal and policy framework that recognizes and protects all types of property rights. Payment for prompt and just compensation upon expropriation of property rights is safeguarded by the Constitution.

The Current Valuation practice in Kenya is guided by Kenyan statutes and the International Valuation Standards developed by International Valuation Standards Council. The methods employed in valuation are mainly those applied in convectional property valuations with the specific legal adaptations for subjects addressed by the laws of Kenya. The most applied are Market, Income and Cost based approaches. There exist other methods that have addressed the valuation of environmental resources, and livelihood systems. These include Contingent valuation, Hedonic pricing; Total Ecosystem Services Valuation; Total Economic Valuation among others. These methods have registered limited official and practical application in valuation of property and assets in Kenya.

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The valuation methods adopted depends on purpose. The convectional property valuation methods are limited in valuation of un registered community lands since they seem to disregard indirect and system wide values and seem to focus on productivity and substitution principles that are backed by empirical official information characteristically obtained from static convectional enterprises. The other methods seem to be system wide focused and geared towards informing specific policy and management decisions though they offer useful insights towards identifying indirect values and values for non-market goods and services.

There are gaps and challenges relating to the statutory provisions and rules on valuation for compulsory acquisition relating to dependency on only the market approach as a basis of valuation; The non-recognition of non-static enterprises like nomadic pastoralism poses the risks of undervaluation and breaches of the constitutional protection of property. Insistence on use of only Government records in making of the Land Value Index without input from the public, practitioners, researchers and professional bodies poses the risk of use of outdated and incomplete information that will lead to under valuations especially for un registered community land.

There is need for changes to be made to the legal, policy and practice guidelines relating to valuation land for compulsory and voluntary acquisition of community land in Kenya to allow for use of non-market based approaches and allow for participatory valuation approaches that appreciate communal tenure and land uses; cater for special uses and values and allow for use of information generated from production and livelihood systems as opposed to exclusive use of information from convectional cadastral and government statistics and records .

References Allen T.L, Etal., 2013, Potential for Valuing Rangeland Ecosystem Services on Public Rangelands Andrea B., 2004, Assessment of the Application of Contingent Valuation Theory to Bio-Sequestered Carbon COMESA,2010, Assessing Total Economic Value of Pastoralism, COMESA Davies, 2007, Total Economic Valuation, WISP Government of Kenya, 2010, The Constitution of Kenya, Government Printer, Nairobi Government of Kenya, 2017, Land (Assessment of Just Compensation) Rules, Government Printer, Nairobi

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Government of Kenya, 2012, Land Act no. 6 of 2012, G Government Printer, Nairobi Government of Kenya, 2018, Land Value Index (Amendment) Laws Bill, Government Printer, Nairobi Government of Kenya, 2009, Sessional Paper No3.of 2009 on National Land Policy, Government Printer, Nairobi International Finance Corporation, 2012, Performance Standard 5, Land Acquisition and Involuntary Resettlement, Washington D.C. IVSC, 2017, International Valuation Standards, IVSC, London UN Habitat, 2018, Valuation of Un registered Lands- A policy Guide, Nairobi, Kenya

The 19th AfRES Annual Conference 335

REAL ESTATE RETURN CYCLES AND THE CONTRIBUTIONS TO A MIXED ASSET PORTFOLIO

Glenn R. Mueller Professor – University of Denver [email protected] & Andrew G. Mueller Assistant Professor – University of Denver [email protected]

Abstract Real estate has cyclical returns in both public and direct/private investment vehicles. Using data over the past 40 years which represents both high and low interest rate and return cycles, we examine real estate’s contribution to a mixed asset portfolio. Previous research has studied the inclusion of public real estate in a mixed asset portfolio of stocks and bonds or private real estate in a mixed asset portfolio and some studies have include both public and private/direct real estate in a mixed asset portfolio, but usually for short time periods (Maximum 15 years). With 40 years of data now available in both of public REITs and direct “private” real estate (NCREIF), we use the mean/variance Markowitz efficient frontier methodology, to analyze changing allocations during different cycles in the last 4 decades.

Introduction Investors are searching for more stability in their investments after the technology bubble burst in 2001 and the great recession of 2008/9. The majority of stock investment returns come from capital gains, while the majority of bond returns come from interest income. Real estate has proven to be a different asset class with a mix of 60-70% income return and 30-40% capital gains return, in addition to a low correlation with the stock and bond markets. Higher income investments have provided less return volatility for investors and should receive a larger allocation in portfolios, especially in tax advantaged accounts such as IRAs, 401Ks and defined benefit pension plans.

Real Estate has been a favored investment of the wealthiest in most societies for centuries, but only recently available during the last part of the 20th century to the average investor through public and private pooled vehicles (such as limited partnerships, non-listed REITS, Delaware Statutory

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Trusts and publicly traded REITs). While history is not a guarantee of the future, it is instructive to study the contributions and optimal levels of inclusion that different asset class investments have played in a return- maximizing portfolio in the past investment environments.

The year 2018 now provides a 40-year history of returns for direct private real estate (through the NCRIEF index) and a 46-year period for public real estate (through the NAREIT equity index) and thus allows for a more complete study of return contributions in a mixed asset portfolio. The 40- year time period is long enough to include five economic expansion and recession periods as well as stock market and real estate cycles. We perform a 40 year return analysis and 10 year breakdowns with some surprising results.

Literature Review Gilberto (1990) compared public and private real estate returns and found that equity REITs were heavily influenced by stock and bond movements and had little direct correlation with conventional unleveraged real estate (using the NCREIF Property Index). However, after controlling for financial asset market influences in the equity REIT series, the previously uncorrelated NCREIF and equity REIT series showed significant positive correlations that may explain a “pure real estate” effect shared by both series.

Mueller, Pauley and Morrill (94) looked at the inclusion of REITs in a mixed asset portfolio and found that while REITs had similar returns to small cap stocks, they were located in the lower risk portion of a Markowitz efficient frontier due to their return volatility being 1/3 that of small cap stocks. Using the same methodology, Ibbotson (2001) found that REITs provided positive and significant diversification benefits to a mixed asset portfolio of stocks and bonds.

Miles and Tolleson (97) reviewed and updated the size of different public and private, debt and equity investment alternatives. Their study found that real estate had shrunk in the mid 90’s as a result of the rise in stock market values. They concluded that real estate represented approximately 10% of the investable universe for institutional investors but believed that it was still under weighted by a factor of at least 2, due to the inability to get accurate data and properly classify all real estate investments.

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Ziering and McIntosh (97) studied the benefits of adding both REITs and core real estate (using NCREIF returns) in a mixed asset portfolio of stocks and bonds from 1972 to 1995. The empirical results showed that core real estate had low correlations with stocks and bonds and lower volatility. They concluded that real estate provided diversification benefits as well as effective inflation hedging capabilities.

Gordon, et al (98) studies the portfolio diversification effects of international real estate securities on mixed asset portfolio of U.S. stocks, corporate bonds, real estate securities, and international common stocks. They find that the addition of international real estate securities provides diversification benefits for portfolios over the 13-year period studied from 1984 to 1997 over the entire risk reward efficiency frontier.

Chua (99) studies the role of international real estate in a mixed asset portfolio while attempting to control for higher taxes, transaction costs, and asset management fees incurred when investing in real estate as well as the appraisal smoothing in real estate return indices. Chua finds that even after adjusting for additional costs associated with real estate, the optimal portfolio has allocations to real estate range from 3.7 % to 20.7 % depending on an investor’s appetite for risk and return.

Gilberto, et al (99) test the predictive powers of an optimal diversification strategy within a mixed-asset portfolio using a threshold autoregressive conditional heteroskedasticity model (QTARCH). They find that knowing the “state of the economy” from macro-economic variables can help model a better portfolio for the subsequent period. They used major stock, bond and public real estate indexes in both the U.S. and U.K.

Ling and Naranjo (99) found that public market real estate returns were integrated with the stock market between 1978 and 1994, however when un-smoothed real estate returns represented by NCREIF and ACLI data were compared they were not integrated with stock market returns. They also found that the growth rate in per-capita consumption is consistently priced in both commercial real estate markets and stock markets.

Quan and Titman (99) found that the price changes in direct real estate (office) and stocks was not statistically significant between 1984 and 1996 in 16 of 17 different countries studied. However, when they pooled data

338 The 19th AfRES Annual Conference across countries and use longer time intervals, a significant relation between stock returns and both rents and value changes become apparent. They find that economic fundamentals, especially GDP, affect both real estate and stock prices with certain lags.

Ziering, Liang and McIntosh (99) found that REIT performance has been disconnecting form other stock market indices. The NAREIT equity Index correlation to the S&P 500 index has declined from correlations as high as 0.8 in the late 1970s and early 1990s to below 0.2 in 1996 and 1997, but not quite as dramatic declines with other stock indices such as the Russell 3000 and 2000 Value and Growth indices.

Fu and NG (01) find that direct real estate returns that are reported on a quarterly basis do not incorporate the full effect of market news. They develop a cumulative price adjustment model that recovers lost information in real estate returns due to market inefficiency in the Hong Kong markets. Their modeled returns restores the real estate return volatility and the correlation between real estate and stock returns.

Ciochetti, Craft and Shilling (02) using data from 1993 and 1998, find that institutional investors (pension funds, endowments, advisors, insurance companies, mutual funds and bank trust departments) have a preference for liquid investments like REITs and a declining preference for illiquid assets like real estate. There is also a bias for large liquid REITs in their portfolios. Thus, how REITs and real estate fit into the portfolio is important.

Feldman (03) is the first published study to analyze both public and private real estate in a mixed asset portfolio with stocks and bonds (note that NAREIT hired Ibbotson Associates in 2001 to look at REITs in a mixed asset portfolio, however this study was produced in a PowerPoint presentation, available on NAREIT’s web site as opposed to a published paper – this research constrained REIT allocations to 20% of the portfolio). Feldman manipulated the NCRIEF data to increase private direct real estate volatility as a way of acknowledging the higher risks of illiquidity in direct real estate. Because REIT and S&P 500 returns were exceptionally high over the 1985- 1986 period he ran the study from 1987 to 2001 – a 15-year period. Hs study found a maximum real estate allocation of 44.5% was possible in this time period with 15% allocated to REITs and 30% allocated to direct unleveraged real estate.

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Mueller & Mueller (03) performed correlation, risk/return, and efficient frontier analysis on stocks, bonds and both public and direct real estate and found inclusion of both real estate investment forms to improve portfolio performance dramatically.

Data Because public REIT and direct real estate investments are different from other financial assets, the inclusion of each separately or together in a mixed asset portfolio could influence performance. Furthermore, if direct and public real estate have low correlations with each other, then the inclusion of both types of real estate in a mixed asset portfolio is also warranted to increase the performance of the overall portfolio. To examine the inclusion of public and private real estate in a mixed asset portfolio we construct efficiency frontiers over 5 time periods, 40 years, and each 10- year decade using annual returns. Private real estate is represented by the NCREIF index, public real estate is represented by the FTSE/NAREIT Equity index. Real estate is compared to bonds represented by the Barclays Bond Index, S&P Investment Grade Corporate Bonds; and stocks represented by the S&P 500, small-cap stocks represented by the Russell 2000 index, growth stocks represented by the NASDAQ composite, and inflation by the Consumer Price Index (see Exhibit 1).

NCREIF Transaction Based Index Many investors believe that the appraisal based NCREIF index provides an inaccurate estimate of return volatility due to the smoothing or returns produced from the appraisal process necessary to price assets that are not traded. To overcome this criticism NCREIF developed a transaction-based index (TBI) that started in 1984. Using actual transaction data for the 35- year history on quarterly returns produced a higher average quarterly return of 2.25% (9% annual) versus NCREIF appraisal-based return of 1.98%. (7.92% annual). The standard deviation increased from 2.06% on the appraisal based to 5.80% in the TBI return. This is an increase in volatility of 2.8 times.

We expand the TBI to 40 years by using the “Unsmoothing” methodology developed by Geltner and add the missing 5 years of return data. .During this 35-year time frame the NCREIF TBI showed very low or negative correlations to all the stock and bond indexes and only a 0.05 correlation the NAREIT Index. Stock and bond indexes had strong correlations, while

340 The 19th AfRES Annual Conference the NAREIT index had 60% and 65% correlations to the Russell 2000 and S&P 500.

Exhibit 1

Analysis Direct real estate has consistently performed between the stock and bond indexes while REITs have usually performed in the middle range the stock indexes.

Exhibit 2 1 to 40 year Return Averages 15.00

11.00

7.00

3.00

-1.00 NCREIF Barclays S&P Russell S&P 500 NASDAQ CPI NAREIT -5.00 Bond InvGr 2000 Equity Corp -9.00 Bond

-13.00

1 Year 5 Avg 10 Avg 15 Avg 20 Avg 30 Avg 40 Avg

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Volatility Standard Deviations have declined over the last 5 and 10 year time frames, mainly due to the lower returns in these time frames, but relatively consistent over the 15 to 40 year time frames. (Exhibit 3). Direct real estate had higher volatility than bonds, while REITs fell in the middle of the volatility range of stocks.

Exhibit 3

30.00 Return Volatility

20.00

10.00

0.00 NCREIF Barclays S&P InvGr Russell S&P 500 NASDAQ CPI NAREIT Bond Corp 2000 Equity Bond 5 StDev 10 StDev 15 StDev 20 StDev 30 StDev 40 StDev

While NASDAQ had the highest overall return over most time periods its high volatility made it less desirable in a mixed asset portfolio based upon Sharpe Ratios. Direct real estate’s return performance and relatively low volatility in private form made it a popular investment in poor economic conditions. Real Estate’s value as both an income provider and inflation hedge have made real estate a positive allocation asset class for many investors, for at least part of their portfolios. On an annual basis over the last 40 years, the indexes with the highest Sharpe ratios were NCREIF, both bond indexes, and then REITs. (Exhibit 3) NCREIF Sharpe Ratios average above all other equity investments and are similar to bond investments over most time frames.

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Exhibit 4

3.00 Sharpe Ratio Ranges

2.50

2.00

1.50

1.00

0.50

0.00 NCREIF Barclays S&P IG Russell S&P 500 NASDAQ CPI NAREIT Bond Bond 2000 Equity Corp

5 Avg 10 Avg 15 Avg 20 Avg 30 Avg 40 Avg

Correlations Correlations for the various time periods are shown in Exhibit 5 with correlations above 0.50 in bold.

Exhibit 5

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The most interesting correlation observed is that the 40 year direct real estate to REIT correlation of only 0.13 – even though many studies have found strong cointegration over shorter periods of time. Analyzing further we find two decades when the correlations were exactly -.032 and two decades where the correlations were +0.53&+0.56. The decade correlation swings of these two real estate investment vehicles makes a stronger case

344 The 19th AfRES Annual Conference for both direct and public real estate inclusion in a mixed asset portfolio during some but not all periods and the two real estate investment vehicles’ ability to diversify each other at certain times. The long term low correlation of these two investment vehicles may be explained by the fact that the underlying real estate property types have changed over the decades. In the 1980s NCREIF was mainly office and retail, while in the 2010s NCREIF has all 5 major property types. In the 1980s NAREIT was mainly retail and apartment and in the 2010s the 5 major property types make up only 50% of the index with many alternative property types like healthcare, senior housing, timber, self-storage, cell towers, manufactured homes and other income producing real estate. Thus, the 2010s composition of NAREIT now includes almost 50% in property types not represented in the NCREIF five core property types. Thus, dissimilar property types may have contributed to the low correlations. One reason the public and private capital markets have not always moved in harmony, is shown in 1998 and 1999 when the direct real estate market was experiencing strong demand, rising rents and occupancies and increasing property prices and total returns, while public REITs were experiencing a sector rotation out of REIT stocks and into technology stocks, creating negative price returns at a time when REIT earnings were growing strongly.

Over the full 40 years the NCREIF Index has seen low (below 0.20) correlation with all other asset class indexes, but a moderate 0.40 correlation with inflation. Looking decade by decade NCREIF had no correlations over 0.50 in Decade 1 and 2, then 0.52 and 0.68 correlations with Russel 2000 and S&P 500 in Decade 3, then negative -0.58 and -0.59 with S&P Bond and NASDAQ in Decade 4. This points to high diversification potential a majority of the time and in all different economic and market cycles.

NAREIT exhibited a high 0.69 correlation with the Russell 2000 but a low 0.28 correlation with inflation over the full 40 years. Looking decade by decade NAREIT saw 0.60 to 0.73 correlation with all 3 stock indices in decade 1, then 0.85 with Russell 2000 in decade 2, then 0.60 to 0.72 correlation with 2 stock indices in Decade 3 and 0.40 correlation with all 3 stock indices in Decade 4 but also high 0.73 to 0.83 correlation with both bond indexes! This points to less diversification benefits with both stocks and bonds a majority of the time and in different economic and market cycles.

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Efficient Frontier Analysis A Markowitz Efficient Frontier analysis is developed for the total 40 years and each decade. Exhibit 5 shows the forty-year efficient frontier of quarterly returns.

Exhibit 5

Previous studies using public or private real estate show diversifying effects. 40 years shows stock & bond portfolio had the lowest risk/return performance. Adding REITs alone improved the curve (higher returns for same risk). D direct real estate (NCREIF TBI) improved the efficient frontier at the lower end of the risk/return spectrum while REITS were better at the high end of the Markowitz Curve. When both NCREIF and REITs were added to stock & bond portfolios the best performance was achieved. We do NOT artificially constrain any asset allocation to a maximum percentage in this study.

We next look for the most efficient portfolios on each curve and find very interesting results. Calculating the Sharpe ratio for each portfolio combination on the four efficient frontier graphs allows us to find the highest risk adjusted return for each strategy. Exhibit 6 shows the results. The returns are very similar ranging from 1.95% (7.8% annual) to 2.08 (8.32% annual) which are realistically achievable returns and represent the left most tangent portfolio in all four curves. A 7% REIT allocation added to stock & bonds improved the return by 0.04% and increased the standard deviation by 0.04%. A 28% allocation of Direct real estate added to stocks & bonds produced a 2.06% (8.24% annual) return (a 6% increase in return) and lowered the standard deviation to 2.6% (a 16% reduction in volatility)! A

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28% allocation to Direct Real estate and a 3% allocation to REITs produced a 2.08% (8.32% annual) return. Note that stocks always received a low allocation and bonds the highest, this would most likely change in a rising interest rate environment as bond returns decline. Exhibit 6 Sharpe Return StDev Bond% Stock% REIT% RE% Stock & Bond 0.64 1.95 3.08 83% 17% X X S+B+REIT 0.64 1.99 3.12 80% 13% 7% X S+B+RE 0.8 2.06 2.59 64% 7% X 28% S+B+REIT+RE 0.8 2.08 2.60 63% 6% 3% 28%

We next analyze each of four 10-year decades to see if there have been allocation shifts over time.

Decade 1 Performance The Markowitz Efficient Frontier analysis for the 10-year period 1979-1988 is shown in Exhibit 7.

Exhibit 7

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Exhibit 8 Decade 1 Sharpe Return StDev Bond% Stock% REIT% RE% Stock & Bond 0.59 3.09 5.21 77% 23% X X S+B+REIT 0.73 3.87 5.3 43% 0% 57% X S+B+RE 0.86 2.81 3.26 56% 0% X 43% S+B+REIT+RE 0.93 3.20 3.45 41% 0% 22% 37%

This first decade was a period of high inflation, high interest rates and high returns. The efficient frontier was substantially improved by the addition of REITs. Allocating 57% REITs to a portfolio of stock and bonds increased the Sharpe ratio 24% and overall return 28% while increasing risk 2%. Adding private real estate to a portfolio of stocks, bonds and REITs increased the Sharpe ratio 46% mainly by reducing standard deviation 37%. Direct real estate and REITs produced the most efficient portfolio mix in this decade with a 58% increase in Sharpe ratio. This leads to the conclusion that real estate outperformed stocks & bonds in a high inflation and interest rate economy. This dispels the myth that real estate underperforms in a high interest rate environment.

Decade 2 Performance The Markowitz Efficient Frontier analysis for the 10-year period 1989-1998 is shown in Exhibit 9.

Exhibit 9

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Exhibit 10 Decade 2 Sharpe Return StDev Bond% Stock% REIT% RE% Stock & Bond1.06 2.52 2.38 80% 20% X X S+B+REIT 1.06 2.52 2.38 80% 20% 0% X S+B+RE 1.07 2.49 2.34 78% 18% X 4% S+B+REIT+RE 1.07 2.49 2.34 78% 18% 0% 4%

The second decade began with a recession that lowered both interest rates and returns. High but declining interest rates still drove a high 80% bond allocation. REITs did not add any value to any portfolio. Adding 4% real estate did improve the Sharpe ratio by 1%, but that was composed of a 0.03% reduction in return and a 0.04% reduction in risk. Thus, direct real estate only garnered a 4% allocation through a recession, recovery and expansion period.

Decade 3 Performance The Markowitz Efficient Frontier analysis for the 10-year period 1999 to 2008 is shown in Exhibit 11.

Exhibit 11

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Exhibit 12 Decade 3 Sharpe Return StDev Bond% Stock% REIT% RE% Stock & Bond 0.97 1.40 1.44 90% 10% X X S+B+REIT 0.97 1.42 1.47 89% 11% 1% X S+B+RE 1.22 1.74 1.43 72% 7% 0% 22% S+B+REIT+RE 1.22 1.74 1.43 72% 7% 0% 22%

The third decade went from economic peak to bottom to peak. This decade was somewhat unique. High volatility in stocks with the technology “dot.com” boom then bust, REITs and direct real estate prices were volatile as well, which drove capital to the safe alternative of bonds with allocations to bonds in the 70% to 90% range in all four of the most efficient frontier points. The efficient frontier return improved slightly with a 1% allocation to REITs, but no change in Sharpe ratio. A 22% allocation to direct real estate improved the Sharpe ratio 26% and return by 22% with a 2% reduction in volatility. The flight to safety in bonds, drove bond prices up and bond yields down to a 60-year low in the 2% range. Direct real estate performed well as a return enhancer and portfolio diversifier during this volatile economic and stock market decade in a period with declining interest rates.

Decade 4 Performance The Markowitz Efficient Frontier analysis for the 10-year period 2009 to 2018 is shown in Exhibit 13.

Exhibit 13

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Exhibit 14 Decade 4 Sharpe Return StDev Bond% Stock% REIT% RE% Stock & Bond 0.88 1.4 1.59 80% 20% X X S+B+REIT 0.88 1.4 1.59 80% 20% 0% X S+B+RE 1.13 2.03 1.79 55% 19% X 26% S+B+REIT+RE 1.13 2.03 1.79 55% 19% 0% 26%

The fourth decade started with the great recession and was a period of low inflation, very low interest rates and high stock market volatility. Interest rates went from low to lower producing strong bond returns and a high 80% allocation to bonds. REITs were now included in most stock market indexes which gave them similar volatility to stocks, resulting in no allocation to REITs in any scenario. Adding 26% direct real estate increased the Sharpe ratio by 28% which was composed of a 83% increase in return and a 13% increase in risk. The most valuable risk reduction contribution direct real estate made in any of the four decades. That real estate allocation came mainly bonds(Real estate returns have historically been 2/3 “bond like” income and 1/3 appreciation).

Conclusion The ability to improve a mixed asset portfolio’s efficient frontier by adding either direct private real estate or public real estate has been studied individually over shorter time periods and found to provide risk return improvements. We build on previous research and find direct real estate has had low or negative correlations to stocks & bonds over most periods except decade 3 (1999-2008). Therefore, portfolio managers should consider the strong historic returns and low volatility of both public and private real estate when making their portfolio asset allocations.

Based upon all the Markowitz Efficient Frontier analyses, direct private real estate could have played a major role in providing better risk adjusted return in investor portfolios. A direct real estate allocation of 28% over 40 years provided the best risk adjusted return and that allocation varied from 4% to 43% over the four decades. REITs played a lesser role with a 3% allocation over 40 years, but a zero % allocation in two of the four decades and a 22% allocation in the first decade and a 1% allocation in the third decade.

As stock market returns and bond yields have declined over the last four decades, institutional and individual investors have expanded their search

The 19th AfRES Annual Conference 351 for alternative investments to produce better yields and risk adjusted returns. This study suggests adding substantial allocations of direct real estate and small allocations of REITs to meet those goals. The unique characteristics of real estate are unlikely to change in the future allowing a major improvement to portfolio risk adjusted returns. Achieving the NCREIF index return used to be very difficult, but now that Real Estate Interval Funds (that track the NCREIF index) are available, it is possible for small and large investors to receive the NCREIF index returns with a moderate amount of liquidity as well.

Bibliography Alcock, J., Baum,A., Colley, N., & Steiner, E., 2013, The Role of Financial Leverage in the Performance of Private Equity Real Estate Funds, Journal of Portfolio Management special real estate issue. Andonov, A., Kok N., & Eichholtz, P., 2013, “A Global Perspective on Pension Fund Investments in Real Estate,” Journal of Portfolio Management special real estate issue. Andonov, A., Eichholtz, P., & Kok, N., 2015, “Intermediated Investment Management in Private Markets: Evidence from Pension Fund Investments in Real Estate,” Journal of Financial Markets 22-1, pp. 73-103. Ang, A., Nabar, N., & Wald, S., 2013, “Searching for a Common Factor in Public and Private Real Estate Returns,” Journal of Portfolio Management 39 (special real estate issue): pp.120-133. Bond, S., & Chang, Q., 2013, “REITs and the Private Real Estate Market,” Alternative Investments: Instruments, Performance, Benchmarks, and Strategies, Wiley Boudry, W., Coulson, E., Kallberg, J., & Liu, C., 2012, “On the Hybrid Nature of REITs,” Journal of Real Estate Finance and Economics, 44(1- 2):pp.230-249. Chiang. K., 2009, “Discovering REIT Price Discovery: A New Data Setting,” Journal of Real Estate Finance and Economics 39(1). pp.74-91. Cheng,P., Lin,Z.,& Liu,Y., 2013, “Performance of Thinly-Traded Assets: A Case in Real Estate,” Financial Review 48(3):pp.511-536. Chua, A., 1999. The Role of International Real Estate in Global Mixed-Asset Investment Portfolios. Real Estate Portfolio Management, 5,2. pp. 129-137.

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Ciochetti, B.A., Craft, T.M. and Shilling, J.D., 2002. Institutional investors’ preferences for REIT stocks. Real Estate Economics, 30,4. pp. 567- 594. Feldman, B.E., 2003. Investment policy for securitized and direct real estate. The Journal of Portfolio Management, Special Real Estate Issue, pp112-121. Fu, Y., and NG, L.K. 2001. Market efficiency and return statistics: evidence from real estate and stock markets using a present value approach. Real Estate Economics, 29, 2. pp. 227-250. Gilberto, M., Foort, H., Hoesli, M., and MacGregor, B., 1999, Optimal diversification within mixed-asset portfolios using a conditional heteroskedasticity approach: Evidence from the U.S. and U.K. Journal of Real Estate Portfolio Management, 5,1. pp. 31-45. Gordon, J., Canter, T., Webb, J., 1998, The Effect of International Real Estate Securities of Porfolio Diversification. Journal of Real Estate Portfolio Management, 4,2. pp. 83-91. Hoesli, M., & Oikarinen, E., 2013, “Are Public and Private Asset Returns and Risks the Same? Evidence from Real Estate Data,” Journal of Real Estate Portfolio Management, 22(2):pp.179-198. Lee, M., & Chiang< K., 2010, “Long-Run Price Behavior of Equity REITs: Become More Like Common Stocks After the Early 1990s?” Journal of Property Investment & Finance 28(6), pp. 454-465. Lee, ML, Lee, MT, & Chiang, K, 2008, “Real Estate Risk Exposure of Equity Real Estate Investment Trusts,” Journal of Real Estate Finance and Economics 36(2):165-181 Li, J., Mooradian, R., & Yang, S., 2009, “The Information Content of the NCREIF Index,” Journal of Real Estate Research 31(1):pp. 93-116. Ling, D.C., and Naranjo, A. 1999. The integration of commercial real estate markets and stock markets. Real Estate Economics, 27, 3. pp. 483- 515. Miles, M. and Tolleson, N., 1997. A revised look at how real estate compares with other major components of domestic investment universe. Real Estate Finance. 14, 1. pp;11-20. Morawski, J., Rehkugler, H., & Fϋss, R., 2008, “The Nature of Listed Real Estate Companies: Property or Equity Market?” Financial Markets and Portfolio Management 22(2), pp. 101-126. Mueller, A.G. Mueller, G.R. 2003. Public and Private Real Estate in a Mixed Asset Portfolio. The Journal of Real Estate Portfolio Management, 9(3), pp. 193-204.

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Mueller, G. R., Pauley, K., & Morrell, W. A. 1994. Should REITs be included in a mixed-asset portfolio? Real Estate Finance, 11(1), pp 23-28. Oikarinen, E., Hoesli, M., & Serrano, C., 2011, “The Long-Run Dynamics Between Direct and Securitized Real Estate,” Journal of Real Estate Research 33(1), pp. 73-103. Pagliari,J., Scherer, K., & Monopoli, R., 2005, “Public Versus Private Real Estate Equities: A More Refined, Long-Term Comparison,” Real Estate Economics 13(1): pp.147-187. Quan, D.C. and Titman, S. 1999. Do real estate prices and stock prices move together? An international Analyses. Real Estate Economics, 27, 2. pp. 183-207. Riddiough, T.,, Moriarty, M., & Yeatman, PJ., 2005, “Privately Versus Publicly Held Asset Investment Performance,” Real Estate Economics 13(1):pp. 121-146. Yunus, N., Hansz, A., & Kennedy, P., 2012, “Dynamic Interactions Between Private and Public Real Estate Markets: Some International Evidence,” Journal of Real Estate Finance and Economics 45(4), pp.1021-1040 Ziering, B. and Mcintosh, W. 1997. Revisiting the coase for including core real estate in a mixed-asset portfolio. Real Estate Finance. 13, 4. pp;14-22. Ziering, Liang and McIntosh 1999. REIT correlations with capital market indexes: separating signal from noise. Real Estate Finance. 15, 4. pp;61-67.

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CHALLENGES OF ACQUIRING TRIBAL LAND IN GIYANI, LIMPOPO PROVINCE, SOUTH AFRICA FOR COMMERCIAL DEVELOPMENT

Xongile Muthambi, Chris Cloete and Laetitia Cook Department of Construction Economics University of Pretoria Corresponding author: [email protected]

Abstract Purpose: Over the past two decades, rural areas in South Africa have experienced substantial economic growth and a rapid increase in the middle-income population group, resulting in a commensurate increase in consumer spending. In response to this shift, commercial developments in these previously untapped markets have come under increasing scrutiny by developers. However, development in these areas is hampered by the intricacies of the communal land tenure system of ownership prevalent in many rural areas and the concomitant lack of clear procedural requirements for approval of developments. The study endeavoured to identify the challenges which property developers experience when acquiring tribal land for commercial use.

Methodology: The research implemented a mixed research strategy of a desktop review supplemented by in-depth semi-structured interviews with property developers who have successful acquired tribal land in the Giyani area of the Limpopo Province of South Africa.

Findings: The study highlighted challenges procedural challenges, challenges arising from stakeholder engagements and other general challenges. Although the South African government makes provision for land under tribal administration in the legislative and policy environment, the lack of tribal authorities, municipality and other government stakeholders to coherently facilitate the land acquisition process fostered a lack of accountability. The process of land acquisition of tribal land was found to be lengthy and complex. In addition, challenges regarding the lack of services and infrastructure were highlighted.

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Value: Addressing the identified problems will facilitate development in tribal areas in South Africa and contribute to a more sustainable process for development in these areas.

Keywords Rural land tenure, communal land tenure, land development, land acquisition, development challenges, Giyani, Limpopo, South Africa.

1. Introduction Development in rural areas in South Africa is hampered by the intricacies of the communal land tenure system of ownership prevalent in many rural areas and the concomitant lack of clear procedural requirements for approval of developments. The study endeavoured to identify the challenges which property developers experience when acquiring tribal land for commercial use.

South Africa’s rural landscape has undergone a series of transformations since the 1900s (Demacon Market Studies 2010:12). It is evident that these rural landscapes have experienced transformation as described in the transformation timeline developed by the DPLG and European Union. Public and private sector investment in these areas has increased and renewal has since taken place.

South Africa’s spatial planning debacle dates to the 1830s where early measures of regulating the use of land being introduced (Van Wyk & Oranje 2014:6). These measures included restrictive covenants which were inherited from Britain alongside conditions aimed at ensuring good order, dignified conduct and enjoyment of property in villages and small towns.

Both the increase in spending together with the fact that many traditional retail hubs becoming saturated has significantly contributed to the rise of national retailers, especially supermarket stores, to increasingly focus on market expansion strategies in these emerging markets. In response to this shift, a reciprocal shift in developing retail centres in these previously untapped middle and low-income markets is evident (Ligthelm 2008:37).

Prior to South Africa’s new planning reform post 1994, a situation existed where a wealth of laws governed planning and more specifically spatial planning. These laws include chapters of ordinances which have persisted from the pre-Constitutional era, planning laws which were developed after the enactment of the Constitution and sectoral Laws. Over time, there have

356 The 19th AfRES Annual Conference been numerous attempts of introducing policies which attempted at incremental and total planning legislative reform to address the issue pertaining to spatial planning (Joscelyne 2015:4). In July 2015, the South African government introduced the Spatial Planning and Land Use Management Act, No. 16 of 2013 (SPLUMA) as an attempt to address the complexities and issues that still exist.

The present study attempts to analyse the land acquisition process as defined in the legislative framework of South Africa, identify the challenges property developers encounter during the process of acquiring tribal land for commercial use and provide recommendations to mitigate the challenges of acquiring tribal land for commercial use.

2. Land Reform in Democratic South Africa Post- 1994 Apartheid left South Africa’s land use management and development control system as fragmented and disjointed as the spatial landscape it created (Nel 2016:1; van Wyk & Oranje 2014:2). Post 1994, a plethora of new legislation was enacted by the democratic government to reverse the apartheid laws which had been created. The transition to a democratic state post 1994 not only brought an end to the apartheid system of governance but also sparked a prospect of recreating a new South Africa (Maluleke 2017:36; van Wyk & Oranje 2014:2). The 2006 National Spatial Development Perspective describe that the South African urban landscape represents a dualism with two overarching spatial categories; areas of national significance with high population densities and high numbers of people living below the minimum living level and areas with low economic activity and low levels of demonstrated economic potential with high numbers of people living below the minimum living levels (Aliber 2017:1).

Even though the disparities between the rural and urban areas have persisted in South Africa for decades, in democratic South Africa the concerns particularly become a focus (Ndabeni 2015:11). The new democratic state of South Africa embarked on a process of reshaping the colonial inspired and tainted spatial planning system (Maluleke 2017:37; Mpofu 2017:99; van Wyk & Oranje 2014:2). There were significant strides at reforming the urban landscape alongside new legislation put in place to facilitate this process.

Land reform in the democratic South Africa is synonymous with rural development or rural resettlement and hence the presence of the Ministry

The 19th AfRES Annual Conference 357 of Rural Development and Land Reform (Mpofu 2017:99). A major challenge government has been faced with is that most of the land restitution claims which have been processed have resulted with monetary pay-outs rather than land. Thus, the problem perpetuates as these mechanisms do not solve the need for urban land. Post 1994, the prevailing development concepts regarding land reform adopted to the country’s rapidly expanding urban areas has been incapable of attaining the post- apartheid visions to transform South Africa’s disadvantaged majority (Mpofu 2017:106).

It is paramount for the government to transform rural land and create more inclusive rural economies to address the consequences of apartheid legislation that resulted in land dispossession in rural areas. The government’s approach therefore should be cognisant of the land pressures from all its inhabitants (Mpofu 2017:108). In order to promote new urban developments in rural areas, more land should be established and governed to promote development.

The policy and planning environment has been characterised with a renewed focus on the need for aligned, collaborative and spatially coordinated targeted investment (Maluleke 2017:36).

3. The Concept of Land Tenure in South Africa Land tenure in South Africa is influenced by politics, race, location and traditions (Hull et al 2016:70; Urban Landmark 2013:8). In the rural areas, land situated in the former homelands, tribal land/communal land, is administered by a traditional council with communal tenure and plots registered in the name of the state. Farm land located in rural areas is mostly owned by white farmers, surveyed and titled under freehold (Urban Landmark 2013:8). Despite the land redistribution programmes which have been put in place post 1994, this racially discriminatory and fragmented land tenure system has been difficult to overcome. In the democratic South Africa today, race and class distinctions are still evident in the spatial landscape of the country. The transformation and formalisation of land tenure in these rural and underdeveloped areas thus remains a slow process.

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3.1 Rural land tenure Often land in urban areas is formally surveyed, well defined and recorded in a formal cadastre (Maluleke 2017:87) while most of the land in rural areas is not formally surveyed and recorded and thus not formally recognised.

During the apartheid period a use right referred to as a Permission to Occupy commonly known as a PTO was issued to black households allowing them the right to occupy the piece of land (Hull et al 2016:70). Despite being abolished in 1994, the issuing of PTO’s is still active in some regions of the country as the basis system of land allocation.

3.2 Rural land rights Land in rural areas will often present itself as land that is state owned and has a tribal authority which resides on the land. In this instance, the land’s legal owner is the state however the tribal authority has the land owner’s right over the land (Development Facilitation Act of 1995). The right to this is granted by the Interim Protection of Informal Land Rights Act of 1996. The act aims at providing a temporary protection of certain rights and interests in the land which is not adequately protected by law and to provide for matters connected therewith. This therefore implies that any prospective development on this land needs to be granted permission of the person who has the land holder’s right and the developer would have to make a payment to the land holder and not the state for the acquisition of the land.

Provincial and municipal planning policies and legislations have further been introduced which become applicable to the provinces and municipalities specifically. Furthermore, urban and rural areas have experienced different levels of control with former white urban areas subject to the most stringent land use controls but little or no control is exercised in the former black areas (Parnell & Pieterse 2010:15).

Even though South Africa has legislated guidelines regarding public compensation and community participation in land use changes and developments in rural areas, these are not always effectively implemented and administered. On the other hand, the urban and developed areas of South Africa have well developed land use and spatial plans usually cascading from the regional to the local levels. However, these are not always aligned thus urban development at times takes place in an ad hoc manner (Urban Landmark 2013:15).

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Problems around unclear laws and regulations, lack of audits and monitoring, lack of publicly available information, lengthy times for processing investors’ applications, inconsistent implementation of social and environmental safeguard requirements and procedures, lack of action in cases of non-compliance with these problems are pertinent in the case of land tenure in the South African urban landscape (Urban Landmark 2013:19). Furthermore, there is a lack of clarity around expropriation of land by the state and insufficient information from the investors to access a project’s viability, benefits and risks.

As of 2013, approximately 16 million to 19 million South Africans lived in rural areas of which over 90% are located on tribal land (Urban Landmark 2013:23). Although the constitution of South Africa recognises traditional land rights and traditional land tenure, there remains no legal mechanisms to register the tribal land. Consequently, the government holds the tribal land in trusts for the communities. Irrespective of the temporary legal initiatives put in place to address rural land tenure, there remains an urgent need for a cohesive legal framework to the protect the rights of vulnerable groups in these rural areas.

Rural development policy remains a vital cornerstone of national economic policy. Rural development policy reflects a priority that is attached to rural development (Ndabeni 2015:37). It is worth noting that the ideology regarding rural development has changed considerably and this is evident with the parallel shift in the approach and perception from government initiatives. New strategies are needed to ensure that rural areas achieve their full economic potential (Ndabeni 2015:42).

4. Tribal Land Acquisition – Processes And Challenges Hull et al (2016:71) define land allocation as the allocation of land which the state control on the behalf of its nation. State owned land can be defined as either be under the control of the Department of Public Works, Department of Rural Development and Land Reform and or tribal authorities and quitrent land.

The role of land allocation is to administer the land to ensure that it is effectively administered. This is a crucial process to securing land. Hull et al. (2016:70) identify four components of land allocation;

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• The process of allocating land parcels to potential rights-holders (individual, family or community), • The procedures of demarcating land boundaries within tribal jurisdiction, • The mechanisms of solving conflicts concerning property boundaries, land use and other land related rights, restrictions and responsibilities, and • Land tenure security arising as a product of the first three components The South African retail environment in rural areas has long been dominated by small, mainly informal, business traders offering basic products to the low-income consumers (Lighthelm 2008; Tustin & Strydom 2006:48). Due to the political changes post 1994 in South Africa; many consumers have been exposed to opportunities which have allowed them to move from the extreme low-income bracket to the middle-income brackets. This has thus sparked a trend amongst South Africans to trade township and rural life for a more urban life. According to Tustin & Strydom (2006), this shift in economic and demographic boundaries alongside other factors benefitted formal retail trade in rural and underdeveloped areas.

4.1 The role of traditional authorities in land acquisition The institution of traditional leadership occupies an important place in South Africa (White Paper on Traditional Leadership and Governance 2003:5). Tribal authorities shall administer the affairs of the tribes and communities by rendering assistance and guidance of such a tribal authority regarding matters relating to the development and improvement of any land within that area (Black Authorities Act No.68 of 1951 section 4.1).

Acquiring land under the administration of a tribal authority therefore needs to follow the processes as required and defined by the tribal authorities. The Act clearly outline the inclusions and exclusions which a tribal authority under the leadership of a chief has in the control, demarcation and administration of tribal land under his/her jurisdiction. Post 1994, the powers and authorities of tribal authorities have become more prescriptive and legislated.

Traditional leadership represents the communities they are allocated with and render assistance however it should be considered that in most cases,

The 19th AfRES Annual Conference 361 the communities themselves have substantial influence on the land allocation process though they are not the ultimate decision maker (Hull et al 2016:73). It is therefore clear that the processes of land allocation are not as simple as they may appear.

A traditional authority fulfils the role of being the custodians of rural land and do this on behalf of the state (Hull et al 2016:79).

4.2 Transferring development land under the control of tribal authorities Development land in rural areas will present itself in different conditions and often with numerous different challenges (Farrell 2009:19). A property developer willing to acquire such a parcel of land will have to engage with Tribal Authorities, government official and elected political officers to obtain the development land.

As previous highlighted, due to the discriminatory land use and ownership prospects of the previous apartheid government, development land allocation and rights were encompassed through the issuing of a Permission to Occupy (PTO). However, post the apartheid era, in democratic South Africa the issuing of PTO’s is still active in some regions of the county as the basis system of land allocation despite it being abolished in 1994 (Hull et al 2016:70). A PTO is acquired through a personal contract with the local government and traditional authorities. The rights conferred within the PTO were considered a personal right and thus could not be registered in the official Deeds Registry. This has resulted in traditional authority areas with Chieftainships having no legal foundations thus the property rights as defined according to PTO systems are regarded as Old Rights or Informal Land Rights.

Formal ownership of unregistered state-owned land can be registered in terms of Certificates of Registered State Title (CRST) with the purpose of these titles to facilitate parcelling or subdivision of land, facilitate management and spatial information management of the land. No new rights or existing rights are registered or altered through issuing of CRST’s however a full cadastral survey is conducted alongside formal registration by the State Attorney in the Registrar of Deeds (Umhlaba Consulting Group 2013:11).

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5. Methodology This study was executed through a mixed research strategy of a desktop review supplemented by in-depth semi-structured interviews with property developers who have successful acquired tribal land in the Giyani area. It was vital to conduct semi-structured interviews with property developers as they experienced the land acquisition challenges of tribal land for commercial use from on first hand basis.

5.1 Sampling method Three property developers were selected to participate in the semi- structured interviews. The group of companies are all in varying stages of maturity with differing portfolios. To maintaining confidentiality to the research participants, the property developers will not be mentioned however the criteria for selection will be outlined.

Due to the nature of this research study, a selective approach has been employed based on the property developers’ experiences with commercial developments in the Greater Giyani district. Given the demographics of the Greater Giyani district, the sampling criterion was cognisant of the total number of formal commercial development on tribal land.

The research participants collectively account to almost fifty percent of the commercial developments on tribal land in the area. Their profiles were as follows: • Developer one: Less than 10 years’ experience as a property development entity with only one established retail centre with local and national tenants, located on tribal land in the Greater Giyani district

• Developer two. Over 15 years’ experience as a property development entity with one established retail centre with local tenants, located on tribal land in the Greater Giyani district. Has managed to acquire two additional land parcels on tribal land.

• Developer three. Accountable to forty percent of the total number of property developers in the area who have developed on tribal land. Has over 35 years’ experience as a development entity. Developer of seven retail centres located in Greater Giyani.

During the semi-structured interviews with these developers, the focus was on the participant’s first-hand experiences of their life-world rather than on the interpretation or explanations of it. The questions were compiled to

The 19th AfRES Annual Conference 363 guide the semi-structured interviews to receive feedback pertaining to the research theme. To extrapolate as much information as possible, all interviews were conducted in the form of face to face interviews. Even though this was time consuming, the advantage of this method was to allow the researcher to ensure that all the questions are answered and to enable the researcher to steer the conversations to yield accurate and in-depth information.

To complement and validate the results obtained from the field work, secondary information sources including publications, journals and internet sources were used. Contextualising the secondary information sources enabled a coherent investigation while identifying the inherent issues and challenges that persist in acquiring tribal land for commercial use developments.

5.2 Study area The study was conducted in the Greater Giyani District in Limpopo, South Africa (Figure 1) as the area is a good example of a strong commercial district with the area having 10 traditional authority areas comprising of 91 villages. The town of Giyani is the largest centre of population concentration, employment opportunities, retail and recreational amenities. Commercial activity and developments are relatively small with the largest facilities being in the order of community centres.

It is of importance to note that small towns are instrumental in stimulating and sustaining expansion of economic activities in rural areas (Ndabeni 2015:33). Often the location of small towns offers appropriate entry points for public investment and policy interventions that are focused on rural areas; however, the size of the small town is paramount in the attraction and growth of the economic activities. As per the Ndabeni’s research, the key methods of selecting which small town is geared for investment is clarified by the attributes of that small town alongside the potential for development. Therefore, specific attention must be made to the capabilities and the roles of rural-urban development which enhances the diversification of the economic activities which are permissible for that small town. According to the above mentioned, this served as a primary rationale for selecting the area as there is growing commercial land development and most of the commercial developments are taking place on tribal land adjacent to the town.

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The purpose of the field observations was to gather first-hand information sources from property developers in the area who have successful acquired tribal land for commercial use to identify the challenges which are pertinent with the land acquisition process of tribal land.

Figure 1: Locality map illustrating the extent of the Greater Giyani district in relation to the Mopani district (www.researchgate.net).

5.3 Results Table 1 summarises the responses by the developers to the various questions.

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Table 1 Responses by developers during semi-structured interviews Question Respondent A Respondent B Respondent C

Did you obtain Yes Yes Yes the land through a tribal authority?

Can you briefly The land acquisition process followed by all three developers explain what the was basically the same. Some minor differences can be process of attributed to the time taken for the land application, the size obtaining of the proposed development and the credentials of the (purchasing) the applicant. The process is summarised below (Section 6.2) land through the tribal authorities?

How long did the Two years Three months Up to five years process of obtaining (purchasing) the land take?

Did you • Delays in the • Non-availability of • Resistance experience any municipal infrastructure from both challenges or approval • Difficulty in municipalities difficulties during process obtaining and tribal the process of • Financial demarcation of councils obtaining the institutions are land by the (now) • Squabbles land from the not willing to Department of about the tribal authorities? finance Rural jurisdiction [Yes/No]. If so, developments Development and between what? on rural land Land reform tribal • Chiefs cling to • Bribes authorities their sense of • Lack of clear • Bribes power and processes • Lack of clear control processes

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Question Respondent A Respondent B Respondent C

In your opinion, • Bribery in the • Tribal authorities • bribery, what can you say tribal councils are becoming corruption compromised the • tensions and greedy and and greed process of arrogant • acquiring the conflicts due to this, land? between the many tribal councils, frictions Chiefs and the developed municipal between departments Chiefs of • unclear roles of neighbouring authority communities between the • as a result, tribal councils factions arise and the which government ultimately officials of the lengthens the departments processes • tribal authorities are becoming greedy and arrogant

Would you say Yes No. The process was No. The process that the process costly, non- was costly, non- of obtaining the standardised, standardised, land from the disorganised, and disorganised, tribal authorities Indunas often and Indunas was satisfactory? allocate land which often allocate If not, why? is outside of their land which is jurisdiction without outside of their the Chiefs knowing jurisdiction without the Chiefs’ knowledge

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Question Respondent A Respondent B Respondent C

How did you Paid fees and Paid fees and bribes Paid fees and resolve these bribes in order to in order to have bribes in order challenges? have their land their land to have their applications applications land processed by the processed by the applications tribal councils and tribal councils and processed by chiefs. chiefs. the tribal councils and chiefs.

Was there any Road Road infrastructure Road supporting infrastructure in in place but there infrastructure in infrastructure and place but there was no electricity, place but there municipal services was no electricity, water and sewage was no on the water and sewage facilities. electricity, development land facilities. water and you acquired? sewage facilities.

Do you have a No, but had been No, but did receive a Yes Title Deed for the issued a PTO right of use letter land you own? from the tribal council as well as a map indicating the parcel of land they have acquired.

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Question Respondent A Respondent B Respondent C

How would you • better planning • formalise and Reluctant to change the of the land effective manage respond process of acquisition the process obtaining the process, • government land from tribal • reduce the should intervene in authorities? number of role regulating the players, payable fees to the • a better tribal councils and tracking system their stakeholders. • reduce the gate • municipalities keepers and red should have better tape as this working relations complicates the with tribal process. authorities as the political tensions are a constant hinderance. • municipalities should be mandated to service tribal land once it has been demarcated • municipalities should change their antagonistic attitudes and be the service providers they are mandated to be.

6. Results 6.1 Challenges regarding the acquisition processes Although the respondents all raised different challenges, some common themes can be identified:

• illegal fees and bribes are expected from tribal councils and their stakeholders in order to process the land application,

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• the Chiefs present themselves in an arrogant manner as they know that without their approval the entire land acquisition process will come to a standstill, • unwillingness from municipalities to support developments on tribal land, • lengthy processes especially in the demarcation of the land, • land allocation process is fragmented without a clear process to follow, • tribal councils lack knowledge on the policies and procedures, • factions between the tribal councils and unwillingness to function proactively to encourage commercial developments on tribal land. 6.2 The tribal land acquisition process It was found that the tribal land acquisition process takes place in a manifold layered process. It is quite difficult to recommend a uniform process as stakeholders and tribal authorities have different requirements from region to region. Five stages in the land allocation process can be distinguished: land identification, land application, land negotiations, land adjudication and planning and land allocation (Figure 2). As an initial step in the process, the applicant would identify the parcel of land they would like to acquire from the tribal authorities and thus initiating the process. In the case for commercial use particularly, the applicant would have identified the parcel of land based on the site selection principles to suit the type of commercial use they would like to utilise the land for. At this stage the applicant is the only role player of the process. The second phase of the process includes the application of the land. In this stage the applicant would therefore initiate conversations with the Induna regarding the parcel of land they would like to apply for. The Induna would therefore conduct an initial site visit with the applicant as a preliminary check to see if the land has not been allocated to another applicant and to verify whether the land falls within his/her jurisdiction. This stage is primarily reliant on the Induna’s knowledge of the area. The Induna would therefore provide the applicant with applications form for completion.

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Action/Stage Role Player/s Output

1. Land Identification Applicant identifies the portion of land Applicant and/ or Site selection and they are interested Induna identification. in acquiring

2. Land Application The Induna conducts Completed a site visit with the Induna and Application Form applicant and issues applicant submitted to the an application form tribal council. to the applicant.

3. Land Negotiations Application is scrutinised, initiation of land negotiations Applicant, tribal Tribal Approved and the applicant council and Chief. Application Form pays the levies to the tribal council.

4. Land adjudication and planning The approved application form is Municipality submitted to the Municipality Compliance municipality for Certificate. processing.

The process of land Tribal council Survey General demarcation is coordinates with Diagrams. initiated for land COGTA.

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which is not demarcated.

COGTA coordinates COGTA, Department Committee Approved with other of Health, DRDLR Application Form. stakeholders to and DPW. ensure that the application is checked and signed.

5. Land Allocation The Provincial Minister of DRDLR Provincial Minister Provisional PTO approves the of DRDLR Certificate. application.

Applicant is notified Local government PTO Certificate. of the status of the and tribal councils. application and issued a provisional PTO. Figure 2 Tribal land allocation process

In the third stage of the process, the applicant would then engage with the tribal council to submit the application form and initiate the formal land negotiations. Negotiations are normally with the tribal council and the Chief. The applicant would therefore need to pay the levies due to the tribal council once an agreement has been reached. Depending on the applicant’s relationship with the tribal council/Induna/Chief the negotiations can be quick and easy or can be lengthy as the role players struggle to reach an agreement. The scale of the development also influences the outcome of the land negotiations.

Once the role players have reached an agreement, the land adjudication and planning process then is initiated. The secretary of the tribal council then submits the application to the local government. The outcome of this

372 The 19th AfRES Annual Conference process includes; municipal inspections and checks the application for compliance and the necessary site inspections are held (water availability, electricity supply, soil and geological tests, roads and infrastructure checks), land demarcation and the involvement of Provincial government stakeholders being an active part of the process. This stage of the process is concluded by the Minister of DRDLR approving the application.

Once the Minister of DRDLR has approved the application, the last stage of the process is then initiated. This stage concludes the process with a provisional PTO being issued and registered against the applicant. The applicant therefore has the right to utilise the land. A PTO is then issued once the building is completed, inspected and certified to be compliant to all the requirements of the local municipality.

7. Conclusions The findings highlighted the fact that the acquisition of development land in rural areas is riddled with challenges due to the following issues: • The uncertainties of the stakeholders responsible for the administration for land transfer, • The lack of accountability within the DRDLR during the process of land acquisition due to the lengthy procedures, • The resistance of local communities and in some instance the tribal authorities in facilitating land acquisition for commercial use and, • Conflicting agendas and political issues which are not directly related to the land itself but procedural issues between government stakeholders and tribal authorities. The study revealed that provision is made in the legislative and policy environment for land under tribal administration. The enactment of SPLUMA can be commended for explicitly addressing the planning principles of land that has been zoned while being criticised for being rigid and a segregating mechanism for both land uses and people. There have been challenges of adopting one legislative framework to satisfy the fragmentation of the South African urban landscape. The challenges are especially prominent in rural areas where no land and building regulations are applicable. It is evident that the planning systems and laws have fallen short of meeting the objective goals of transforming land under tribal administration. It can therefore be argued that the numerous attempts of

The 19th AfRES Annual Conference 373 legislative reform have largely remained ambiguous and further perpetuated the fragmentation of the urban environment.

The challenges resulting from stakeholder engagements explicitly revealed that the challenges experienced with the processes and procedures of acquiring tribal land for commercial use are in most instances due to the lack of stringent and definitive procedures which are applied a consistent manner. Furthermore, it was evident that the procedural challenges were linked to the level of influence that the property developers had with either the tribal councils or the local government stakeholders. As a consequence of procedural challenges, the land acquisition process fostered corruption within the process. Furthermore, the lack of tribal authorities, municipality and other government stakeholders to coherently facilitate the land acquisition process fostered the lack of accountability and responsibility from the stakeholders.

The study found that the acquisition of tribal land for development is lengthy, complex and fraught with problems. If the major challenges enumerated above are not addressed satisfactorily, the development of rural areas will remain lacking, to the detriment of the communities in those areas.

References Aliber, M. 2017. The former Transkei and Ciskei homelands are still poor, but is there an emerging dynamism? [Online] Available from: http://www.econ3x3.org/sites/default/files/articles/Aliber%2020 17%20Rural%20economic%20change%20-%20FINAL.pdf [Accessed 24/05/2018 at 10:50]. Demacon Market Studies. 2010. Impact of Township Shopping Centres: Market research findings and recommendations. July 2010. [Online] Available from: http://www.urbanlandmark.org.za/downloads/retail_in_townshi ps_2011.pdf [Accessed 09/06/2018 at 15:23]. Farrell, D.A. 2009. Retail Development in rural and underdeveloped Areas. Unpublished thesis. BSc (Hons) Construction Management. University of Pretoria. Hull, S., Sehume, T., Sibiya, S., Sothafile, L., & Whittal, J. 2016. Land allocation, boundary demarcation and tenure security in tribal areas of South Africa. South African Journal of Geomatics. 5(1): 68- 81.

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Joscelyne, K. 2015. Towards a coherent legal framework under SPLUMA. Unpublished thesis (MSc). University of Cape Town. Ligthelm, A. A. (2008). The impact of shopping mall development on small township retailers. South African Journal of Economic and Management Sciences, 11(1), 37-53. Maluleke, M.N. 2017. Implications of Spatial Planning and Land Use Management Act (16 of 2013) (SPLUMA) on land allocation in areas under traditional authorities. Thesis, School of Architecture and Planning, Faculty of Engineering and Built Environment. University of Witwatersrand. Johannesburg. Mpofu, B. 2017. The Urban Land Question, Land Reform and the Spectre of Extrajudicial Land Occupations in South Africa. Africa Insight. 46(4): 96-111a Ndabeni, L.L. 2015. An analysis of rural-urban linkages and their implications for policies that sustain development in a space continuum. [Online] Available from: http://www.cogta.gov.za/cgta_2016/wp- content/uploads/2016/05/ANALYSIS-OF-RURAL-URBAN- LINKAGES-AND-THEIR-IMPLICATIONS.pdf [Accessed 24/05/2018 at 10:28]. Nel, V. 2016. A better zoning system for South Africa? Urban and Regional Planning Department, University of Free State, South Africa. Land Use Policy. [Online] Available from: http://www.sciencedirect.com.uplib.idm.oclc.org/science/article/ pii/S0264837716300321/pdfft?md5=f26b75714516847d8d27789 99f3f938b&pid=1-s2.0-S0264837716300321-main.pdf [Accessed 08/03/2017 at 15:50]. Parnell, S. and Pieterse, E., 2010. The ‘right to the city’: institutional imperatives of a developmental state. International Journal of Urban and Regional Research, 34(1), pp.146-162. Republic of South Africa, 1951. Black Authorities Act No.68 of 1951. Pretoria: Government Printer. Republic of South Africa, 1995. Development Facilitation Act, Act 65 of 1995. Pretoria: Government Printer. Republic of South Africa, 2013. Spatial Planning and Land Use Management Act, 16 of 2013 (SPLUMA). Pretoria: Government Printer. Republic of South Africa, 2003. Traditional Leadership and Government Framework Act No.41 of 2003. Pretoria: Government Printer.

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Tustin, D. H., and J. W. Strydom, 2006. The potential impact of formal retail chains' expansion strategies on retail township development in South Africa. Southern African Business Review. 10(3): 48-66. Umhlaba Consulting Group. 2013. Land and settlement development research study. Land acquisition and transfer. [Online] Available from: http://afesis- corplan.org.za/participatorydemocracy/wiki/images/5/5b/Land_a cquisition_final.pdf. [Accessed 20/04/2017 at 15:28]. Urban Landmark, 2013. Land Governance in South Africa working towards improving access to land and property rights: Implementing the Land Governance Assessment Framework. [Online] Available from: http://www.urbanlandmark.org/downloads/lgaf_booklet.pdf [Accessed 20/04/2017 at 15:31]. Van Wyk, J. and Oranje, M. 2014. The post 1994 South African spatial planning system and Bill of Rights: A meaningful and mutually beneficial fit? Planning Theory. 13(4), pp349-369.

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PHYSICAL DEPRECIATION MODELLING IN THE USE OF DEPRECIATED REPLACEMENT COST FOR THE VALUATION OF PLANT AND MACHINERY

Ogunba, Olusegun & Ogunniyi, Kehinde Department of Estate Management, Obafemi Awolowo University, Ile-Ife Abstract Perhaps the most challenging aspect of depreciated replacement cost valuation is that physical deterioration models popularly used in valuation (straight line depreciation estimated percentage depreciation etc.) are premised on assumptions which do not accurately model the pattern that physical deterioration of plant and machinery follow over useful life. Moreover, the influence of various factors such as intensity of use, power outages, level of maintenance, and design among others on pattern of physical deterioration are not adequately included in depreciation modelling. The aim of the study was accordingly to accurately model physical deterioration in the use of depreciated replacement cost for the valuation of plant and machinery with a view to providing information that would enhance depreciated replacement cost valuation practice. The study sampled operators of plants and machinery in fourteen manufacturing firms, (two manufacturing firms each from seven manufacturing industries) to obtain data addressing the study’s aim. Data were analyzed using means, weighted means, linear regression, multiple linear regression and multiple log-log regression. It was found that the useful life of machinery fell between ten to fifteen years while the useful life of machinery fell between nineteen to twenty- two years. The pattern of physical deteriration was found to be initially flat in early years before assuming a convex upsweep pattern for both plant and machinery. The log-log beta coefficient results showed that increases in age, usage, power outage and fluctuation increased the level of physical deterioration of while increases in maintenance, operator’s years of experience and availability of spare parts reduced the level of physical deterioration.

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The study recommended the use of models formulated in this study to valuers for accurate estimation of physical deterioration in replacement of popular models. Keywords: Physical deterioration modelling, plant and machinery valuation Introduction The valuer is often called upon to determine the value of plant and machinery assets. Machinery refers to an apparatus which is used for a particular process in connection with the operation of an enterprise. Plant refers to machinery assets which are inextricably combined with other asset(s). The method of valuation of plant and machinery often involves the use of depreciation of replacement cost values. The cost method of valuation is a method that seeks to determine value of an asset by summing up the cost involved in its construction. Depreciation is introduced into the cost approach because the cost involved in construction only address newly completed assets without accounting for the loss in the value of asset over time. In international and national valuation standards, depreciation is considered a composite term made up of three basic components: physical deterioration, functional obsolescence and economic obsolescence (RICS, 2005; NIESV, 2006; IVSC, 2007; Ifediorra, 2009). Physical deterioration is the depreciation which is caused by wear and tear of an asset over time, including the lack of or inadequate maintenance. Economic obsolescence is a situation where changes in economic conditions negatively influence the supply and demand for goods and services produced by the asset or the cost of its operation. Functional obsolescence is a situation where advancement in technology results in new assets capable of more efficient delivery of good and services, rendering previously existing assets fully or partially obsolete in terms of its current cost equivalents. Alico (1989) writing for the American society of appraisers modelled the calculation of functional and economic obsolescence. Economic obsolescence is modelled through an assessment of capacity utilization. The idea is that when the operating level of an asset (building or machinery) is less than its rated capacity, economic obsolescence (inutility) exists. The inutility penalty is calculated on percentage basis using the following formula: Inutility (per cent) = {1 – [Actual production/ Rated Capacity]n} x 100, where n is the scale factor. (Alico, 1989)………………………….. (1)

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Functional obsolescence is modelled as consisting of two components: first, excess capital costs and second, excess operating costs (operating obsolescence) of the asset being valued relative to more efficient modern plant and machinery. The first, excess capital costs, are calculated as the difference between reproduction cost and replacement cost. The other component, operating obsolescence, is calculated as the capitalization of future excess operating costs. Functional obsolescence = (Reproduction cost – replacement cost) + (YP x excess operating cost over operating cost of modern assets)………….. (2) With regard to physical deterioration, different models have been developed in an attempt to depreciate assets so as to account for depreciation suffered over the useful life of engineering assets. The choice of depreciation model among the options available is often left to the discretion or judgment of the valuer (Ogunba, 2010). However, each physical deterioration model has its assumptions and the assumptions in turn have different consequences on the value arrived at for the assets. For instance, straight line depreciation model assumes that the value of asset is written off in the same manner throughout the useful life of the asset. On the other hand, the reducing balance depreciation and sum of years digit models assume that there is more depreciation in the early useful life and a reduction in the later useful life of the asset. Conversely, models like sinking fund depreciation model assume that there is more depreciation in the later years of asset. The popularly used estimated percentage depreciation method does not even make any assumption, relying solely on the valuer’s skill and experience in the estimation of depreciation. The variation in the assumptions governing various depreciation models leads to different depreciated replacement cost estimates. To compound the problem, it is questionable whether all these physical deterioration models take into consideration the estimation of functional and economic obsolescence. This choice of physical deterioration model is the most challenging aspect of depreciated replacement cost valuation. The estimation of replacement cost of plant and machinery is usually a fairly straightforward procedure. Valuers would usually determine such costs by visiting the website of the plant and machinery manufacturer and from there obtain current replacement costs. The problem arises much more in the aspect of accurate estimation of the physical deterioration aspect of depreciation. As demonstrated above, the economic and functional obsolescence components of depreciation have been modelled and the modelling makes

The 19th AfRES Annual Conference 379 intuitive sense. The physical deterioration component of depreciation is inaccurately modelled by the existing age life models (straight line, sum of years digits etc.) both with regard to reliability and consistency Which model of depreciation accurately captures the depreciation suffered by plant and machinery assets over their useful life? The accuracy of popular physical deterioration models is questionable because the assumptions of the models are themselves questionable. There has been no study to determine the accurate pattern of depreciation of plant and machinery assets over useful life so as to determine which of the models accurately captures physical deterioration. The usage by valuers of models which are ostensibly based on wrong assumptions for the depreciation of the plant and machinery doubtlessly leads to problems of non-reliability and variation (Bello, 2014; Kuye 2009 and Ogunba, 2011). One other aspect of the problem refers to the useful life/ physical life of plant and machinery which is often not known by the valuer and not often documented. An accurate model must be based on a defined useful life. Useful life is the period beyond which the cost of repairs of the engineering asset exceeded the gains made from use of the asset. The useful life of many types of plant and machinery assets have not been determined. Yet another aspect of the problem is that the influence of various factors such as intensity of use, power outages, level of maintenance, design among others on the useful life and pattern of depreciation have not been determined so that they may be included by valuers in depreciation calculations. There are virtually no study that has considered the accuracy of depreciation models used in depreciated replacement cost for the valuation of plant and machinery in Nigeria because earlier studies attempting to enhance valuation accuracy have largely focused on the income approach to property to the neglect of the cost approach. Accuracy studies focused on the income approach have identified the existence of valuation accuracy (for example: Aluko, 2000; and Ayedun, 2009). Other studies have examined the margin of error that exists before valuations can actually be described as inaccurate (for example Iroham & Ogunba, 2010). Still other studies have investigated the causes of valuation inaccuracy (for example: Ogunba, 1997; Aluko, 2000; Iroham, 2011 among others). Depreciated replacement cost studies that are available have largely focused on buildings without considering plant and machinery (for instance Ogunba 2011, Bello, 2014). The present study is probably a pioneering study on accurate depreciation

380 The 19th AfRES Annual Conference modelling in depreciated replacement cost valuation of plant and machinery. The aim of the study was accordingly to accurately model depreciation in the use of depreciated replacement cost for the valuation of plant and machinery with a view to providing information that would enhance depreciated replacement cost valuation practice. The objectives were: 1. To determine the useful life of plant and machinery in Osun State, Nigeria. 2. To determine the pattern that depreciation of plant and machinery follow over the useful life in the study area. 3. To determine the influence of use, design and maintenance factors on the pattern of depreciation in the study area. The study was restricted in geographical scope to Osun State in Nigeria. Osun State is an inland state in south-western Nigeria with its capital at Osogbo. It is bounded in the north by Kwara State, in the east partly by Ekiti State and partly by Ondo State, in the south by Ogun State and in the west by Oyo State. Like many other states in the country, Osun is home to a sizable number of both small and medium scale manufacturing concerns. The subject scope was restricted to physical obsolescence, without dconsidering functional and economic obsolescence as these have already been modelled by the American Society of Appraisers (Alico 1989).

2.0 Literature Review The literature review addresses empirical literature on each of the three objectives. The review is by no means an exhaustive consideration of all papers on the subject. Rather, the attempt is to provide a sample of empirical papers that are relevant to each of the objectives of the study and in the process demonstrate the gap in literature which this paper would fill.

2.1 Empirical Literature on Useful Life of Plant and Machinery In United States, the government office of management and budget (2003) carried out research to determine the useful life of various machinery assets. The reported useful lives of the assets included: trailers (23years); tractors, full track, low speed (14 years); milling machines (20years); tractors (8 years); refrigerating equipment (11 years); storage tanks (7 years); electric lamps (10 years); musical equipment (12 years); typewriters

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(12 years); kitchen equipment and appliances (18years) among other assets. However, the results of such studies might not be applicable in Nigeria. O’Connor (2004) in United State investigated the actual service lives of North American buildings. She collected survey information for a total 227 buildings (105 commercial/institutional buildings and 122 residential buildings), finding that the largest concentration of buildings have a service live of 76 – 100 years. However, the study did not consider plant and machinery and moreover, her study might not be applicable in Nigeria. In Canada, Statistics Canada (2007) employed two methods to determine asset’s length of life. The first approach involved the use of micro data from investment surveys to arrive at `ex-ante' estimates of service life. In this regard, they drew data based on businesses’ prior expectations from the Annual Capital and Repair Expenditures Survey. The second approach involved `ex-post’ information on asset life are derived by using data on sales and disposals of fixed assets. They used econometric techniques to assess the correlation with market-based service lives. Some of the useful lives of assets reported were: photocopiers (9 years); railroad equipment (28 years); furniture (14 years); steam engines (32years); office computing and accounting machinery (8 years); software (5 years); ships & boats (27 years); farm tractor (9 years) among others. However, the results of such studies might not be applicable in Nigeria. In the United States, the Bureau of Economic Analysis (BEA, 2008) used a forward-looking profit model, and data on annual industry output and Research and Development (R&D) investments between 1987– 2007 to determine industry-specific R&D business depreciation rates. It was possible to get the service life of building from the data. They found that building has a useful life of 60 years while computer software has useful life of 5 years. However, the results of such studies might not be applicable in Nigeria. In the Netherlands, Statistics Netherlands (2008) drew information from discard surveys, capital stock benchmarks, fiscal sources, and statistics on gross fixed capital formation to determine the useful lives of property. They reported that that the average service life of buildings is 75 years in all industries. Ships were found to have an asset life is 25 years in most industries, while seagoing water transport had service life up to 35 years. Inland water transport has service up to 40 years. The service life of other assets were Airplanes (16 years); computers soft (5 years); manufactured

382 The 19th AfRES Annual Conference petroleum products (8 years), and furniture (10 years). However, the results of such studies might not be applicable in Nigeria. Erumban (2008) estimated the useful life and discard pattern of capital assets in Netherland using information directly taken from capital stocks and patterns of retirement of assets in firms. Econometric techniques was used to estimate service lives. The estimated expected service lives of the three capital categories were 24, 9 and 6 years, respectively, but there was substantial variation in the estimated service lives between different manufacturing sectors. In the United States, the Department of Assessment Standards (2010) determined the useful lives of various assets so as to provide a basis for taxation in Carson City. They made use of Marshall and Swift’s (2009) Valuation Service life expectancy Guideline. They recommended that the life expectancy for short life property such as glassware, barware, silverware etc. is 3 years; while taxable software that was not associated with computer - integrated machinery had life expectancy of 3 years; High – Tech Medical Diagnostic Equipment had a life expectancy of 5 years; furniture and trade fixtures, air conditioning had life expectancy of 15 years; mailing machines had life expectancy of 7 years; office furniture (desk, chair, cabinet) has expectancy life of 15 years; typewriter has expectancy life of 12 years, textile mills had life expectancy of 15 years among other items listed. However, the results of such studies might not be applicable to plant and machinery in Nigeria. In Nigeria, Ogunba (2013) carried out research to clarify depreciation issues on the useful life of plant and machinery needed to ensure accuracy in the depreciated replacement cost in Ibadan. He administered questionnaire on engineers and machine operators employed in four types of production facilities. The responses were analyzed by means of frequency distributions mean. He found that the average useful life of process plant for bottling companies is 25 years; food processing plant – 30years; sachet water production – 30 years; average useful life of process plant for water- 20 years and allied producing companies and agro allied firm is 30 years. His findings therefore suggested that the average useful life of plant range between 10 – 30 years. However, the study was limited to only four manufacturing company. In addition, there is need to update the results in his study.

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In Lagos, Bello (2014) carried out research on depreciation in the use of the cost method of valuation to value residential buildings. The responses were analyzed through frequency distributions (mean). He found that the physical life of residential and commercial property is 41-45 years. However, his study was focused on buildings rather than on plant and machinery. Nini, Adne, Terje, Steinar and Thom (2016) conducted studies on depreciation lives in Norway. They administer web design questionnaire on 1100 firms from 7 industries. They found significant variation in the expected life of many capital asset types. For assets relating to transportation, the variation was fairly low while on the other hand, mining and manufacturing assets, tools furnishes and building, structure and fixed installations showed greater variation in the expected service lives. However, this study was not conducted in Nigeria and might not have applicability.. Rinco-Aznar, Riley and Young (2017) carried out research to determine whether asset lives in United Kingdom have significantly changed over the last 20 years. They make use of the Perpetual Inventory Method (PIM). They found that asset lives assumed by United Kingdom Office of National Statistics are in many cases longer than those assumed in other countries. However, the study was not focused on Nigeria. Overall, the gap discovered in the review of literature is that research has not focused on discovering the useful life of plant and machinery in Nigeria. This study intends to fill this gap in literature with a focus on Osun State in Nigeria.

2. 2 Empirical Literature on Patterns of Physical Deterioration of Plant and Machinery In Canada, data was collected on scrapping patterns and depreciation profiles for 36 groups of tangible capital using the perpetual inventory model (PIM). They arrived at two findings that the depreciation profiles are convex that is the depreciation is largest in the initial years of the asset. However, this study was not done in Nigeria. In the United Kingdom, Plimmer and Sayce (2006) considered four depreciation models: estimated percentage depreciation, reducing balance depreciation, straight line depreciation and the S-curve method. The straight line method was criticized as simplistic and unreliable. The reducing

384 The 19th AfRES Annual Conference balance model was criticized as unrealistic because it assumed a constant percentage rate of depreciation. Generally, the authors observed a high degree of inconsistency in the use of the depreciated replacement cost methodology because some valuers allowed for both functional and operational obsolescence while others did not. Subsequent review paper (the RICS Valuation Information Paper, 2007) was derived from a research by Plimmer and Sayce (2006) above and contained the same views. However, these studies generally focused on building rather than plant and machinery. Ogunba (2011) administered questionnaire surveys on 195 valuation firms in Lagos metropolis to determine the pattern of depreciation for buildings. He proceeded by using time series and cross sectional analysis of progressive costs of repairs in five year periods over useful life to deduce S- shaped pattern of depreciation for buildings. He also attempted to determine which of seven depreciation models was in most usage in Nigeria. However, his study generally focused on buildings rather than plant and machinery. Ogunba (2013) carried out research on plant and machinery depreciation in Ibadan to clarify depreciation issues relating to depreciation pattern so as to ensure accuracy in depreciated replacement cost of valuation. He administered questionnaire on engineers and machine operators using four types of production facilities. He found that the pattern that depreciation follows over useful life is initially flat in early years before assuming a convex upsweep pattern. However, the research considered only four manufacturing firms and did not determine the influence of use, design and maintenance factors on the pattern of depreciation. Also, there is need to update the results of that study. In Nigeria, Bello (2014) extended the research of Ogunba (2011) by comparing the results of the S curve with the other depreciation models such as straight line depreciation and estimated percentage depreciation in use. He used time series and relatively importance index. He found that these other depreciation models produced substantially different results from the S curve and concluded that substantial inaccuracy occur when these other models are used despite their apparent user friendliness in Lagos. However, the research did not consider plant and machinery and did not determine the influence of use, design and maintenance factors on the pattern of depreciation

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Bello, Ogunba and Adegunle (2015) conducted research to determine the pattern that depreciation of residential property. Questionnaires were distributed to registered estate surveyors and valuers firms in Lagos metropolis. They found that the depreciation pattern of building has S shape. However, their study focused on buildings and did not consider plant and machinery. Moreover, their study did not determine the influence of use, design and maintenance factors on the pattern of depreciation. Overall, the gap discovered in this aspect of review of literature is that research has largely focused on buildings to the neglect of plant and machinery and has not determined the influence of use, design and maintenance factors on the pattern of depreciation, This study intends to fill this gap in literature with a focus on plant and machinery assets in Osun State, Nigeria. 3.0 Conceptual Framework Seven categories of manufacturing firms were identified in Osun State identified from a pilot survey. These are: basic metals, chemical and pharmaceuticals, pulp and paper products, wood and wood products, food and beverages, industrial / domestic plastic, and water purification industries. Each of these use plant and machinery in their operations. The expected useful life of plant (as suggested by literature in other countries) is 20 years and for machinery is 10 years. Literature also leads one to expect that the pattern of depreciation of the plant and machinery would follow an S shape over the useful life rather than the convex depreciation pattern (assumed by decelerated models such as sinking fund model), the straight line depreciation pattern or the concave depreciation pattern (assumed in sum of years digit and reducing balance models). The S shaped physical deterioration pattern is in turn expected to be negatively affected by higher levels of use, and power supply fluctuations as well as by lower levels of maintenance, repair and design. These conceptual expectations are depicted in figure 1.

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Categories of manufacturing companies in Osun State

Basic Metal For both plant and machinery, the pattern Chemical and of physical Pharmaceutical Plant ((Average deterioration is Wood and Wood expected life of expected to follow an S 20years) Machinery Products – shaped pattern over (Average expected the useful life rather Plup and Paper life of 10years) Products than traditionally used concave pattern or Food and convex or straight line The S shaped physical beverages patterns. deterioration pattern is Industrial and in turn expected to be Domestic Plastic negatively affected by higher levels of use, and Depreciation Water power supply fluctuations as well as by Purification lower levels of maintenance, repair and Age design.

Figure 1: Conceptual Framework

4.0 Research Method The appropriate study population unit that was considered to be in position to provide information on the three research questions were the operators and/or engineers of plant and machinery in the study area (Osun State). Contact was made with the Manufacturers Association of Nigeria which revealed that a large number of manufacturing companies in Osun State are not registered. Therefore, the researchers had to determine sample frame

The 19th AfRES Annual Conference 387 by means of a pilot survey of industries in the major towns in the state. The decision was to settle for two manufacturing firms from each of seven available industries in the study area. The sample frame for this study are accordingly 14 manufacturing companies in Osun State. The names of the Industries and manufacturing firms are presented below.  Chemical and pharmaceutical company: Jostade pharmaceutical Ltd., Ilesa and Sam-Ace Ltd., Osogbo.  Water Purification Factory: OAU Water, Ile Ife and Alba food and drink Ltd. Osogbo  Food Industry: Tuns international Ltd., Osogbo and Fortunate bread, Osogbo.  Feed mill: Trimeb Investment Feed mill, Osogbo and Top Feed mill, Osogbo  Paper and pulp Company: Atman limited, Osogbo and Luking Print, Osogbo  Domestic and Industrial plastic: Lopin limited, Osogbo and Dipson Plastic and Recycle plant, Osogbo  Basic Metal Company: Ife Iron and Steel Nigeria limited, Ile-Ife and Olaoluwa Aina wire industry, Osogbo. The methods of data measurement and data analysis for each of the paper’s objective are detailed in Table 1 Table 1: Data Measurement and Analysis by Objectives Objectives Data Data Data Analysis Requirement Measurement To determine the Useful life of plant Ratio Scale Frequency useful life of plant and machinery of Counts and and machinery in the 20 Averages Osun State. manufacturing (Mean) firms To determine the Pattern of physical Ratio Scale Regression pattern that deterioration analysis depreciation of every 2 years plant and (represented by machinery follow amount of repair over the useful life needed) in the study area. To determine the Influence of Seven point Multiple influence of use, Usage, ordinal scale Regression design and Maintenance and Analysis and maintenance

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Objectives Data Data Data Analysis Requirement Measurement factors on the Design variable on double log pattern of depreciation regression depreciation in the study area. For the second objective, the normal linear regression model was expressed in the following form Y= 푎 + 훽1푋1………………………………………………………….………. (1)

Where Y was the dependent variable (physical deterioration), a was the alpha constant and X is the independent variable (age) and 훽1 was the beta coefficient For the third objective, the Multiple Regression Analysis model took the following form

Y=a + b1X1 + b2X2 + b3X3+…..+ bnXn ……………………………………………….. (2) Where Y was the value of the dependent variable (physical deterioration), a (Alpha) the Constant or intercept, and b1-n were the Beta coefficients for age, number of times maintenance was carried out, response time to repairs, operator years of experience. power outages, country of manufacture, availability of spare parts, experience of servicing personnel, quantity of maintenance material and voltage fluctuations The log-log regression model was employed to complement the multiple linear regression model. This was because scatter diagram relationship was found to be non-linear. The double log multiple regression linear model is expressed in the following manner: lnY = 훽0 + 훽1푙푛푋1 + 훽2푙푛푋2 + 훽3푙푛푋3 + 훽4푙푛푋4 + 훽5푙푛푋5 + 훽6푙푛푋6 + 훽7푙푛푋7 + 훽8푙푛푋8 + 훽9푙푛푋9 + 훽10푙푛푋10 + 훽11푙푛푋11 ……………….. (3)

Where: Y= Physical deterioration, X1-11 were the independent variables: age, number of times maintenance was carried out, response time to repairs, operator years of experience. power outage, country of manufacture, availability of spare parts, experience of servicing personnel, quantity of maintenance material and voltage fluctuations.

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5.0 Data Analysis Questionnaires were administered in December 2019. All 14 questionnaires administered were returned and found useful for analysis. Analysis of the preliminary sections of the questionnaires showed that 85.71% of the respondents (operators and/or engineers) are male with 14.29% are female. Most of the respondents fell within the age group of 36- 45. 78.57% of the respondents were married. 35.71% of the respondents had HND diplomas while 28.57% had B. Sc. Degrees. 71.43% of the respondents were associate or graduate engineers while 28.57% are fellow level member of COREN. 35.71% of the respondents had 10 years’ experience, while 50% had 11-20 years’ experience.

5.1 Useful Life of the Plant and Machinery This section focused on the first objective which was to determine the useful life of the various type of plant and machinery. The useful life was defined to respondents as the period beyond which the cost of repairs of the engineering asset exceeded the gains made from use of the asset. The mean responses are presented in the table below. Table 2: List of Machines and Their Estimated Useful Life Production firm Typical machines Mean estimated available useful life Chemical and Filling Machine 10 years Pharmaceutical Blistering Machine 15 years  Jostade Capping Machine 15years Pharmaceutical Roller Machine 10 years Limited, Ilesa Tableting Machine 10 years  Sam-Ace Limited, Sieving Machine 10 years Osogbo. Coding Machine 15 years

Feed Mill Grinder 15 years  Trimeb Investment Mixer 10 years Feed mill Pelletizer 10 years  Top Feed mill, Extruder 10 years Osogbo

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Water Purification Reverse Osmosis 10 years Factory Machine 10 years  OAU Water, Ile Ife Sachet Water 10 years  Alba Food and Drink Machine 10 years Limited, Osogbo Automatic Rinser 10 years Automatic Capping 10 years Shrinking Tunnel 10 years Automatic Cutter 10 years Wrapping Machine Blower Food Industry Dough Mixer 10 years  Tuns International Baking Oven 15 years Limited, Osogbo Cooling Band 10 years  Fortunate Bread, Packaging Machine 10 years Osogbo. Wet Dough Plant 15 years Proving Cabinet 10 years Siever 15 years Dough Divider 10 years Weighing Scale 15 years Domestic and Industrial Injection 12 years Plastic Mixer 15 years  Lopin Limited, UPVC Extruder 10 years Osogbo Casing Mk 15 years  Dipson Plastic and Crushers 10 years Recycle Plant Foaming 12 years Compressor 15 years Generator 15 years Cooling Unit 10 years Pressure Tester 15 years Tensil Strenght 10 years Laboratory 10 years Equipment 10 years Film Exclusion 15 years Machine Cutting Machine

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Paper And Pulp 3 Knives Trimmer 10 years  Atman Limited, Cutting Machine 15 years Osogbo Sharpening Machine 10 years  Luking Print, Osogbo Paper Shredding 12 years Machine 10 years Color Machine 12 years Ruling Machine 15 years Laminating Machine 10 years Printing Machine Basic Metal Furnace 10 years  Ife Iron and Steel Intermill 12 years Nigeria Limited, Ile Cooking Bed 10 years Ife Drawing Machine 10 years  Olaoluwa Aina Wire Building Wire 12 years Industry, Osogbo. Machine 12 years Generator The table shows that generally, the useful lives of the various machines were between ten and fifteen years.

Table3: Estimated Useful Life of Plants Process plant Mean Useful life Chemical and pharmaceutical  Jostade pharmaceutical limited, 18 years Ilesa 22 years  Sam-ace limited, Osogbo. Feed mill  Trimeb Investment feed mill 20 years  Top feed mill, Osogbo 20 years Water purification factory  OAU water, Ile Ife 21 years  Alba food and drink limited, 20 years Osogbo Food industry  Tuns international limited, Osogbo 21 years  Fortunate bread, Osogbo. 19 years Domestic and industrial plastic  Lopin limited, Osogbo 20 years  Dipson plastic and recycle plant 20 years

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Paper and pulp  Atman limited, Osogbo 21 years  Luking print, Osogbo 19 years Basic metal  Ife iron and steel Nigeria limited, Ile 20 years Ife 20 years  Olaoluwa Aina Wire Industry, Osogbo. The table shows that the useful lives of plant vary depending on the type of production facility. Generally, the useful lives were estimated to be between eighteen and twenty-two years. This is a confirmation of conceptual expectations. 4.2 Pattern of Depreciation of the Plant and Machinery over the Useful Life This section focused on the second objective which was to determine the pattern of depreciation of plant and machinery over useful life. This objective was pursued by asking respondents to estimate the percentage amount spent on repair/maintenance every two years over the useful life of the plant and machinery. The mean responses were calculated and then represented in diagrams where the x axis represented time and the y axis depreciation (physical deterioration). The resulting scatter diagram lines are presented in figures 2 to 8 as follows.

Fig 3: Depreciation Fig 4: Depreciation Fig 2: Depreciation (Physical Deterioration) (Physical Deterioration) (Physical Deterioration) Chemical and Food industry machines Feed mill Machines Pharmaceutical Machines

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Fig 6: Depreciation Fig 5: Depreciation (Physical Fig 7: Depreciation (Physical (Physical Deterioration) Deterioration) Water Deterioration) Metal Paper and Pulp Machines Purification Machines Machines

Fig 9: Depreciation (Physical Fig 8: Depreciation (Physical Deterioration) Plants for all 7 industries Deterioration) Domestic and Industrial Plastic machines

Figures 2-8 show that the pattern of physical depreciation for machinery is initially flat in early years before assuming a convex upsweep pattern. This suggests that the machinery initially experience little wear and tear and require very minimal repairs and maintenance. Subsequently, the physical deterioration accelerates (around midlife) and then the rate of deterioration slows somewhat as the machinery reach the end of their useful life. The above provides compelling evidence that popular models such as the straight line depreciation model (which assumes that the value of asset is written off in a constant manner throughout the useful life of the asset) or reducing balance depreciation and sum of years digit models (which assume that there is more depreciation in the early useful life and a reduction in the later useful life of the asset) or models like sinking fund

394 The 19th AfRES Annual Conference depreciation model (which assume that there is more depreciation in the later years of asset) are wrong in their assumptions. Figure 9 shows that the pattern of depreciation for plants in the seven industries shows a similar S shaped pattern as those for machinery. However, the linear regression equations do not capture the scatter diagram patterns in figures 2-8 accurately. Therefore, the study resorted to a double log transformation of the regression to more accurately represent the regression relationship. The results of double log regression are presented in Table 4 alongside the linear equations. The linear regression equations that approximates these scatter lines are presented in table 4 Table 4: Linear and Log-log approximations of the Scatter Lines Linear Regression Log log Equation transformation Feedmill industry Y= 40X + 0 lnY= 6lnx + 5 Chemical and Y = 70X + 0 lnY= 12.5lnx +3.75 Pharmaceutical Industry Food Industry Y= 100x + 0 lnY= 3.75lnx + 7.5 Water Purification Industry Y= 60x + 0 lnY= 10lnx +5 Paper and Pulp Industry Y= 80x + 0 lnY= 3.125lnx +8.75 Metal Industry Y = 60x + 0 lnY= 7lnx +10.5 Domestic and Industrial Y= 100x + 0 lnY= 15lnx +7.5 Plastic industry Plants Y= 35x + 0 lnY= 10lnx +5

4.3 Influence of usage, design and maintenance factors on the pattern of depreciation of plant and machinery This section focused on the third objective which was to determine the influence of usage, design and maintenance factors on the S shaped pattern of physical deterioration of plant and machinery. The responses in this regard were measured on 7-point likert scales. First, the study measured the influence of number of times maintenance is carried out on physical deterioration. The results revealed that extremely low frequency of maintenance will increase the cost of repair/ pattern of depreciation by 5.36% while a very sufficient frequency of maintenance would result in only a 1% increase.

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Second, the study measured the influence of number of years of experience of servicing personnel on physical deterioration. The results revealed that use of servicing personnel with less than one year experience will result in increases in the cost of repair/ pattern of depreciation of up to 5.57%. Use of servicing personnel with up to 15 years of experience would result in increases costs by only 0.95%. Third, the study measured the influence of the use of quality of maintenance material (e.g servicing oil, plugs etc.) on cost of repair. The result revealed that use of very poor quality maintenance material will increase the cost of repair/ pattern of depreciation by 5.57%, Use of super quality maintenance material will result in only 0.07% increases in costs. Fourth, the study measured the influence of availability of spare parts on cost of repair/pattern of depreciation in percentage terms. The results were that non-availability of spare parts will increase the cost of repair/ pattern of depreciation by 5.21%, while complete availability will result in less than 1% increases. Fifth, the study measured the influence of response time to repair on cost of repair. The result showed that very slow response time to maintenance will increase the cost of repair/ pattern of depreciation by 5.36%, while very quick response time to maintenance will result in only 0.02% increases. Sixth, the study measured the influence of influence of intensity of use on costs of repair. The results revealed that high intensity of use beyond rated capacity will increase the cost of repair/ pattern of depreciation by up to 6%. Low intensity of use will result in only 0.16% increase in wear and tear. Seventh, the study measured the influence of influence of operator’s years of experience on cost of repair. The result revealed that use of inexperienced operators with less than one year experience will increase the cost of repair/ pattern of depreciation by up to 7.71%. Operators with years of experience above fifteen years usually result in only 0.36% increases in wear and tear costs Eighth, the study measured the influence of frequency of power outage on the cost of repair. The result revealed that power outages above fifteen times weekly will increase higher cost of repair/ pattern of depreciation of 5.86%. Power outages below three times weekly will result in 2% increases. Ninth, the study measured the percentage influence of voltage fluctuation on cost of repair. The result revealed that voltage levels above 300v or

396 The 19th AfRES Annual Conference below 100v will increase the cost of repair/ pattern of depreciation by 5.64%, while normal voltage will result in only 0.02% increases. Tenth, the study measured the percentage influence of country of manufacture of plant and machinery on cost of repair. The result revealed that plant and machinery manufactured in Taiwan and Korea will result in increase in wear and tear costs of up to 4.21%. Plant and machinery manufactured in Germany, the US and UK experience only 0.9% increases. The next attempt was to articulate these factors into a multiple regression model. The attempt was to regress at (5% and 1% significant levels), the dependent variable Y (physical deterioration) on the X’s (the independent variables) which are: age, number of times maintenance is carried out, response time to repair, use, experience of servicing personnel, power outage, manufactured country, voltage fluctuation, quality of maintenance material, availability of spare part and operator years of experience. Multiple linear regression was used to model the influence of usage, design and maintenance factors on the pattern of physical deterioration of plant and machinery. The results of the multiple linear regression model for the seven industries is shown in Table 5. It can be seen there that in all cases, 100% or close to 100% of the dependent variable (physical deterioration) were explained by the independent variables. However, despite the high R2, only about eight out of eleven independent variables were displayed by the SPSS (linear regression) program because of strong correlations (dependency) between variables that should be independent, a problem known as mulicolinearity. Further problems with the result was that most of the independent variable have p values above 0.05 and 0.10 which does not make them significant. The analysis was therefore re-done using double log regression. Table 5 presents the results of both the multiple linear regression and the log-log transformations.

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Table 5: The influence of usage, design and maintenance factors on the pattern of physical deterioration of plant and machinery

Industry Multiple Regression Equation Log-log transformation Feed mill Y = 54.40 + 2.30X1 – 10.720x2 lnY = 3.355 +0.418lnX1 - industry +107.553x4 – 53.20X5 – 30.123X6- 0.550lnX2 +0.720lnX5 - 2.441lnX6 2 31.558X7-2.859X8-5.050X11 (R = - 0.516lnX7 + 0.546lnX9 + 2 1.0) 0.032lnX11 (R = 1.0) Chemical and Y= 30.40 + 3.550X1 – 5.979X2 + lnY = 3.355 +0.418lnX1 – Pharmaceutical 100.14X4 – 56.235X5 – 21.096X6 – 0.550lnX2 +0.720lnX5 – industry 36.993X7 + 3.909X8 – 0.168X11 (R2 2.441lnX6 – 0.516lnX7 + = 0.999) 0.546lnX9 + 0.032lnX11 (R2 = 100%) water Y = 30.40 + 3.550X1 -0.336X2 lnY = 2.582 +0. 680lnX1 – purification +23.471X4 + 8.013X5 -21.390X6 – 0.524lnX2 + 2.145x5- 2.624lnX6 + industry 21.911X7 + 4.775X8 – 7.704X11 (R2 0.070lnX7 + 0,094lnX9 – = 100%) 1.090lnX11 (R2 = 100%) Food industry Y = 32.70 + 3.40X1 – 10.90X2 + lnY = 2.679 +0. 645lnX1 – 32.556x4 – 62.982X5 + 23.356X6 – 0.096lnX2 + 1.162lnX5 - 14.918X7 +11.581X8 – 0.360X11 0.598lnX6 – 1.427lnX7 – (R2=1) 0.632lnX9 - 0.369lnX11 R2 = 1 Domestic and Y = 50.40 + 2.550X1 – 23.122X2 + lnY = 3.216 +0. 468lnX1 – industrial plastic 117.509X4 -108.155X5 – 26.763X6 – 1.441lnX2 + 1.003x5– 3.101lnX6 + 3.960X7 – 3.574X11 (R2=1) 0.194lnX7 + 0.904lnX9 - 0.20lnX11 (R2=1) paper and pulp Y = 59.30 + 2.10X1 – 16.143X2 + lnY = 3.355 +0. 418lnX1 – industry 168.246X4-37.002X5 – 72.833X6 + 0.550lnX2 + 0.720lnX5 - 48.424X7 – 11.747X8 – 6.757X11 ((R2 2.441lnX6 – 0.516lnX7 + 0.546X9 = 0.999) +0.032lnX11 (R2=1) Metal industry Y = 52.70 + 2.40X1 – 20.854X2 + lnY = 3.291 +0.441lnX1 – 188.832X4 -66.947X5 – 62.619X6 - 1.216lnX2 +0.954X5 – 3.272lnX6 + 42.409X7- 14.932X8 - 2.665x11 (R2 = 0.107lnX7 + 0.947X9 + 0.438lnX11 0.999) ((R2 = 0.999)

Summary and Recommendations The findings are largely a confirmation of conceptual expectations. The study has found that: Physical deterioration of plant and machinery has been found to be initially flat in early years before assuming a convex upsweep pattern (for both plant and machinery). This means that physical deterioration do not follow the patterns suggested by traditional models like straight line model, sum of years digit etc.

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Reducing balance, Sum of years digits deterioration Physical

deterioration Straight line Depreciation

Sinking fund and other Decelerated deterioration

models The s shape type of deterioration found in this study Useful Life Moreover, the pattern of depreciation varies from Industry to Industry. The attempt in the paper has been to distinguish between modelling for different industries. Any generalization that still exists should be treated as a limitation of the paper. and age, usage, high power outage and voltage fluctuation increase physical deterioration of plants while frequency maintenance, availability of spare parts and highly experienced servicing personnel can decrease physical deterioration of plants. The study also recommends the replacement of popularly used inaccurate physical deterioration models with the patterns of depreciation and regression models propounded by this study in the interests of accuracy. The physical deterioration models designed in this study can be combined with the models designed for functional and economic obsolescence to obtain a holistic model of depreciation for use in depreciated replacement cost valuation of plant and machinery in the following manner. Depreciation = physical deterioration + functional obsolescence + economic obsolescence

= (a + b1X1 + b2X2 + b3X3+…..+ bnXn) + {(Reproduction cost – replacement cost) + (YP x excess operating cost over operating cost of modern assets)} + (Inutility % x Replacement cost).

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References Alico, John (1989) Appraising Machinery and Equipment, Appraising Machinery and Equipment, Published for the American Society of Appraisers by the McGraw-Hill Book Company, New York Bello, I. K. (2014). Depreciation Measurement in Cost Method of Valuation in Lagos Metropolis. American Journal of Social and Management Sciences. Retrieved from https://www.scihub.org/AJSMS/PDF/2014/2/AJSMS-5-2-73- 83.pdf Bello, I. K.; Ogunba, O. A. & Adegunle T. O (2015). Appropriateness of depreciation measurement in the Cost Method of Property Valuation in Lagos, Nigeria. E3 Journal of Business Management and Economics 6(2), 017-026. Retrieved from http://www.e3journals.org/cms/articles/1432005928_Bello%20et%20 al.pdf Bolaji, B. O. & Adejuyigbe, S. B. (2012). Evaluation of Maintenance Culture in Manufacturing Industries in Akure Metropolitan of Nigeria. Journal of information Engineering and Applications. 2 (3). Retrieved from https://www.iiste.org/Journals/index.php/JIEA/article/download/ 1597/1546 Crosby, N; Devanay, S. & Nanda, A. (2015). Which Factor Drive Rental Depreciation Rate for Office and Industrial Property. Retrieved from http://pages.jh.edu/jrer/papers/pdf/forth/accepted/Which%20Fa ctors%20Drive%20Rental%20Depreciation%20Rates%20for%20Of fice%20and%20Industrial%20Properties.pdf Dende, G.A. & Jenyo, B. (2010). An empirical Investigations of Maintenance Performance of Lubcon Limited, Ilorin Kwara State, Nigeria. International Journal of Business and Management. 5 (3). Retrieved from http://www.ccsenet.org/journal/index.php/ijbm/article/downloa d/5336/4441 Dixon, T. (2007). A Critical Review of Methodologies for Measuring Rental Depreciation Applied to UK Commercial Real Estate. Journal of property Research 16(2), 16-23. Effiong, J.B.& Mfam, C.E. (2015). Assessment of Depreciation in Property Valuation: A case Study of Cross River State Housing Estate,

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Nigeria. Journal of Science, Engineering and Technology 4(1), 1-8. Retrieved from https://www.researchgate.net/publication/280804433_ASSESSM ENT_OF_DEPRECIATION_IN_PROPERTY_VALUATION_A_CASE_ST UDY_OF_CROSS_RIVER_STATE_CROSS_RIVER_HOUSING_ESTATE_ NIGERIA Fuanekwu, J. & Eniola S.O. (2016). The impact of Poor Maintenance Culture on the Full Utilization of Residential Properties in Nasarawa. International Journal of Research Development. 10 (1) Retrieved from http://www.globalacademicgroup.com/journals/approaches/J ONES%20FUANEKWU.pdf Hamid, A.; Ali, B. F. & Kiyanooh, G. R. (2013). Impact of Plant and Equipment Management in Construction Industry in Iran. Research Journal of Applied Sciences, Engineering and Technology 7(11): 2371 – 2375. Retrieved from http://maxwellsci.com/msproof.php?doi=rjaset.7.538 IVSC. (2010). International Valuation Standards London: International Valuation Standards Council. James, A. (2007) Developing an Effective Service Life Asset Management and Valuation Model. 13th Pacific- Rim Real Estate Society Conference. Retrieved from https://www.emeraldinsight.com/doi/full/10.1108/14630010 610714871 O’Connor (2004). Survey on Actual Service lives for North America Building. Presented on Woodframe Housing Durability and Disaster Issues Conference, Las Vegas. October 2014. Retrieved from http://cwc.ca/wp- content/uploads/2013/12/DurabilityService_Life_E.pdf Karibo,B. B. (2017) A Review and Analysis of Plant Maintenance and replacement Strategies of Manufacturing Firms in Nigeria. African Journal of Business Management. 11 (2), 17-26. Retrieved from http://docsdrive.com/pdfs/academicjournals/rjbm/2011/16- 25.pdf Maduene T.C. (2000). Maintenance Culture in Electrical Power Industry in Nigeria: Case Study of Afam Power Station. Nigeria Journal of Technology. 21(1). Retrieved from

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https://www.ajol.info/index.php/njt/article/download/12331 2/112855 Nini, B.; Adne, C.;Terje S.; Steiner, T. & Thom A. (2016). Discussion paper No. 840 Statistics Norway, Research Department. Retrieved from https://www.ssb.no/en/forskning/discussion- papers/_attachment/265824 Obamwonyi, M. E. & Gregory, A. (2010). Maintenance Impact on Production Profitability. Retrieved from https://www.diva- portal.org/smash/get/diva2:327878/FULLTEXT01.pdf Ogunba, O.A. (2009). Towards Sustainable Depreciation Measurement in Depreciated Replacement Cost Valuation: A study of Nigeria. Proceeding of the 4th International Conference of the Faculty of Environmental Design and Management, Obafemi Awolowo University, Ile Ife. Ogunba, O. A. (2011). An examination of depreciation sustainability in Depreciated Replacement Cost Valuations. Journal of Property Investment & finance. 23(2): 45- 53. Olarewaju, S.B. & Anifowose, O.S. (2015). The challenges of building maintenance in Nigeria: A case study of Ekiti State. European Journal of Educational and Development Psychology. Vol. 3, No. 2, PP 30-39. Published by European Centre for Research Training and Development UK. Retrieved from http://www.eajournals.org/wp-content/uploads/The- Challenges-of-Building-Maintenance-in-Nigeria.pdf Okon, V.P.; Ebi, U. & Dada A.O. (2017). Causes of Depreciation in process Plants in Paper Industry: Analysis of the Perception of Practicing Estate Surveyors and Valuers in Lagos and Ogun States. IMPACT: International Journal of Research in Business Management 5, 31-38. Retrieved from http://www.impactjournals.us/download.php?fname=-- 1505207443-4.format.%20man CAUSES%20OF%20DEPRECIATION%20IN%20PROCESS%20%20 PLANTS%20IN%20PAPER%20INDUSTRY%20news%202017.pdf Okon, V.P.; Ebi, U. & Johnson O.O. (2017). Causes of Depreciation in process Plants in cement Industry: Analysis of the Perception of Practicing Estate Surveyors and Valuers in Lagos and Ogun States. International Journal of Humanities and Social Science 6. Retrieved from

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http://publication.babcock.edu.ng/asset/docs/publications/C OSC/9459/2454.pdf Okon, V. P.; Ebi, U. & Kemiki, O.A. (2018). Comparative Analysis of the Maintenance Practice on Process Plants in Cement, Papper and Brewery Industries in Lagos and Ogun States Industrial Axes of Nigeria. International Journal of Advanced Research (IJAR). Retrieved from http://www.journalijar.com/uploads/771_IJAR-24082.pdf Okon, V.P.; Ebi, U. & Aderogba (2017). Perception of valuers on Causes of Depreciation in process Plants in Brewery Industry: Analysis of the Perception of Practicing Estate Surveyors and Valuers in Lagos & Ogun States. International Journal of latest Engineering Research and Application 2(8), 111 -116. Retrieved from http://www.ijlera.com/papers/v2-i8/15.201708425.pdf Okoh, V.P.; Ebi, U. & Orelaja, A.O. (2017). Comparative Study on the Causes of Deprecation of Process Plant in Lagos and Ogun States Industrial Axis of Nigeria. International Journal of Latest Engineering and Management Research (IJLEMR) 2(8), 13-19. Retrieved from https://doc.uments.com/download/d- comparative-study-on-the-causes-of-depreciation-of-process- plants.pdf Omran, A (2011) Factors Influencing Water Treatment Management Performance in Malaysia: A case study in Palau Pinang. International Journal of Engineering Tome IX. Fascicule 1. Retrieved from http://annals.fih.upt.ro/pdf- full/2011/ANNALS-2011-1-06.pdf Onyejiaka, J.C.; Oladejo, E.I. & Emoh, F.I. (2015). Challenges of Using the Cost Method of Valuation in Valuation Practice: A case study of selected Residential and Commercial Property in Awkwa and Onitsha, Anambra State. International Journal of Civil Engineering, construction and Estate Management. 3(2) 16-35 Published by European Centre for Research Training and Development UK. Retrieved from http://www.eajournals.org/wp-content/uploads/Challenges- of-Using-the-Cost-Method-OF-Valuation-IN-Valuation- Practice.pdf Plimmer, F. & Sayce, S. (2006). Depreciated Replacement Cost: Consistent Methodology? Shaping the Change XXIII FIG Congress, Munich, Germany. Retrieved from

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https://www.fig.net/resources/proceedings/fig_proceedings/ fig2006/papers/ts86/ts86_01_plimmer_sayce_0268.pdf Rinco-Aznar, A.; Reily R. & Young G. (2007). Academic Review of Asset Lives in United Kingdom.” National Institute of Economic and Social Research Discussion. 474. Retrieved from https://www.niesr.ac.uk/sites/default/files/publications/DP4 74.pdf Uma, K. E. & Obidike C.P. (2014) Maintenance Culture and Sustainable Economic Development in Nigeria. International Journal of Economics, Commerce and Management. II. Retrieved from http://ijecm.co.uk/wp-content/uploads/2014/11/21146.pdf Zaharah, B. M. & Mohammed, N.R. (2007) The Management of Plant and Machinery at Construction Site: Its Impact on Completion time of construction project. Management in Construction Researchers Association Conference (MICRA), Universiti Malaysia, Kuala Lumpur. Retrieved from https://www.researchgate.net/profile/Muhammad_Razali/pu blication/259978493

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TITLE: EMERGING ISSUES ON COMPULSORY LAND ACQUISITION IN KENYA - LAND GOVERNANCE OR POLITICS?

Prof. Washington H. A. Olima Department of Real Estate & Construction Management University Of Nairobi P.O. BOX 30197, 00100 NAIROBI Email: [email protected]

Abstract Land is the most important natural resource in Kenya. It is highly emotive and valued as its importance hinges greatly on socio-economic as well as political considerations.

As a developing country. Kenya requires fast space quality infrastructure development. Over the last decade, the Government of Kenya has substantially increased its focus towards infrastructure development in order to achieve economic growth and transformation. These developments require land which are in private hands, hence forcing the government to undertake compulsory land acquisition for the intended "public purpose". In Kenya legal instruments namely Kenya Constitution 2010 and Land Act of 2012 exist for the purposes of expropriation of land.

However, compulsory land acquisition has always been a delicate issue and is increasingly becoming more complex today despite the establishment of the National Land Commission which has got express and constitutional mandate to undertake compulsory land acquisitions on behalf of government agencies. The paper is based on review of secondary data and project analysis of three major infrastructural projects in Kenya. The analysis reveals that the Kenyan populace continue to be intrigued by the emerging issues on compulsory land acquisition including disagreements over amounts due for compensation, inappropriate compensation of land owners, over valuation of the affected property, political interference and numerous litigations that ultimately result into delayed implementation of infrastructure development. This raises the question - Are the emerging issues on compulsory land acquisition in Kenya hinge on land governance framework or politics?

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Focusing on selected development projects in Kenya, this paper traces the origin of land acquisition practice , highlights the current emerging issues on compulsory land acquisition and possible impact of the process on the implementation of infrastructure projects.

Keywords: Compulsory, land, acquisition, governance, Kenya

A paper submitted and presented at the 19th AfRES conference, Arusha International Conference Centre, Tanzania 10th - 13th September 2019.

1. Introduction Compulsory land acquisition is built into almost every nation's law as the power of the government to acquire/purchase the property of private owner with or without his/her consent for a public purpose (social good/public use). According to FAO (2008), Compulsory Acquisition is the power of government to acquire private rights in land without the willing consent of its owner or occupant for the benefit of the society.

Different terms are used for the right and action of compulsory acquisition in various jurisdictions. For instance,

In the USA and Philippines - the right in known as "Eminent Domain" In India, Malasyia and Singapore - it is known as "Land Acquisition" In the United Kingdom, New Zealand and Republic of Ireland - the rights and action are known as "Compulsory Purchase" In Austria -it is referred to as "Resumption or Compulsory Acquisition" In South Africa, Mexico, Italy, France, Poland and Canada it is known as "Expropriation"

In Kenya, it is referred to as "Compulsory Acquisition". In other states/countries, it is simply referred to as "land taking".

According to West Encyclopedia of America Law (n.d.) the concept of eminent domain is not new. It has existed since biblical times, when King Ahab of Samaria offered Naboth compensation for Naboth's vineyard (1 Kings Chapter 21, Verse 1-3). In ancient Rome, the Roman Government could seize property for public projects, provided they compensate the owners. In 1789, France officially recognized a property owner's right to compensation for taken property, in the French Declaration of the Rights of

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Man and of the Citizen, which reads, "Property being an inviolable and sacred right no one can be deprived of it, unless the public necessity plainly demands it, and upon condition of a just and previous indemnity."

According to Wikipedia (n.d) English sovereigns enjoyed similar powers, such that by the time of the American Revolution the power of the British Government to take private property for public uses was well established. The first case of eminent domain in English law is called the "Dobbie Process" or the "King's Prerogative in Saltpeter Case". The English king needed saltpeter for munitions and took a saltpeter mine from a private individual. The private party sued the king and the court established the right of the sovereign to take "private property for public use" without liability for trespass but requiring payment of compensation for the taken saltpeter.

2. Problem Statement Land is the most important natural resource in Kenya. It is highly valued and seen as a measure of success of an individual. Land enables one to have security mainly in terms of access to credit. It can be utilized for both economic and subsistence purposes. The importance of land ownership hinges greatly on socio-economic as well as political considerations.

The real estate and property development sector across East and Central Africa has been on an upward trend. The growth has also been driven by construction and infrastructure development projects in the emerging economies such as Rwanda, Burundi and South Sudan. The property sector and infrastructural development as a phenomena requires spatial dimension that can only be fulfilled by expropriation of land. Expropriation of land in this context refers to the taking away of private land and landed property for public purpose by the Government with or without the owner's consent subject to laws of eminent domain which however stipulates prompt and adequate compensation among other things. In Kenya, expropriation refers to ‘setting apart’ for unregistered Trust Land and ‘compulsory acquisition’ for all registered private land.

As the developing economies in Kenya, Tanzania Rwanda and Uganda attain levels of maturity, there have been rapid infrastructure development to facilitate regional trade and investment. Access to land to undertake infrastructure development has become the focal point in the realization of

The 19th AfRES Annual Conference 407 the capital projects across the region. With more construction projects being implemented, real estate professionals are playing a vital role in assisting companies and governments make informed development decisions.

Kenya as a developing country therefore requires fast space quality infrastructure development. Over the last decade, the Government of Kenya has substantially increased its focus towards infrastructure development for economic growth and transformation. These development projects including the Standard Gauge Railway (SGR), LAPSSET and Konza Techno City required land which are in private hands, hence forcing the government to acquire for “Public Purpose”. Although in Kenya, the power to compulsorily acquire interests in land is vested on National Land Commission as established under Article 67 of the Kenya Constitution 2010, the practice has encountered serious challenges.

3. Objectives of the study The general objective of this study was to determine the effect of compulsory land acquisition in Kenya on infrastructural development.

Specifically the study sought:- a) To trace the origin of compulsory land acquisition practice. b) To highlight the current emerging issues concerning compulsory land acquisition. c) To analyse the possible impact of compulsory land acquisition process on the implementation of infrastructural development projects.

4. Research Methodology The study basically relied on secondary sources of data and project analysis of three major infrastructural projects in Kenya to achieve the study objectives. The review of related literature focused on the origin of compulsory land acquisition and the documented emerging issues on compulsory land acquisition process in Kenya. The three main infrastructural development projects analysed to determine how land acquisition process impacted on their implementation are the Standard Gauge Railway (SGR), The Lamu Port Southern Sudan - Ethiopia Transport (LAPSSET) and the Konza Technology City Project (Konza Techno City).

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5. Land Acquisition in Kenya According to Sorrenson (1968), in Kenya, acquisition of land for development purposes began with the onset of colonial administration. The first major development project for the colonial administration was the construction of the Kenya - Uganda Railway from the shores of the Indian Ocean to the shores of Lake Victoria. In this instance, the purpose was not directly for urban development, but for a transportation network, which eventually led to the springing up of major urban centres across Kenya. In 1896 Hardinge, the "Commissioner of the East Africa Protectorate" established a Commission to value for compensation of about 400 acres of land on Mombasa Island and the adjoining Kilindini foreshore required by the Railway Authority. However, the Commission was resisted by European and Indian settlers, who had bought land from the local Arabs arguing that Hardinge had no legal authority to expropriate the land. In response to this, Hardinge borrowed the "Indian Land Acquisition Act" of 1894, which provided for the acquisition of land from British subjects for public works to apply to the protectorate (Sorrenson, 1968). The law which heavily borrowed from English law was immediately used to acquire land for railway purposes in Mombasa town. This marked the beginning and origin of land acquisition law as applied in Kenya today. The Indian Land Acquisition Act was later replaced by the Land Acquisition Act of 1968 (Cap 295) laws of Kenya, which has since been repealed and replaced with Part viii of the Land Act, 2012.

At independence in 1963, the constitution section 208 converted all the land in the former African reserves into trust lands vested in the county councils to be held in trust for their occupation. The way the trustees are to administer the land is set out in the Trust Land Act, Chapter 288 of the laws of Kenya.

In Kenya today the right of expropriation is entrenched in the new Constitution under the bill of rights (Chapter 4) Section 40 and the process is guided by several Acts of Parliament.

The principal Act being, The Land Act 2012 part viii (previously the Land Acquisition Act, now repealed) which empowers the Government to acquire land for public body where the acquisition is necessary for public interest. The Land Act 2012 defines Compulsory Acquisition as the power of the state to deprive or acquire any title or any other interest in land for a public

The 19th AfRES Annual Conference 409 purpose subject to prompt and just payment of compensation. The County Government under Section 107(1) of the new law has also been empowered to acquire land like the National Government. The Trust Land Act Cap 288 Section 13 (1) empowered local authority to expropriate land for local needs, which may include urban development and Section 7 (1) of the same Act empowers the Government to expropriate trust land for public needs.

In Kenya, the Land Act, 2012 provides an itemized list of land uses that fall under the jurisdiction of "public purposes" for compulsory acquisition. They include i. Transportation: roads, canals, highways, railways, bridges, airports ii. Public buildings: schools, hospitals, libraries, factories, public housing iii. Public utilities: water, sewerage, electricity, irrigation and drainage, dams, reservoirs, communication iv. Public parks: sports facilities, play grounds 5.1 Procedure for Land Acquisition in Kenya In Kenya, the procedure for land acquisition is outlined in the Land Act of 2012 Part Viii. The procedure is as tabulated in the Table 1 below.

Table 1: Procedure for land acquisition as per the Land Act, 2012 Process Land Act, 2012 Part Viii Authority to Under Section 107(1) of the Land Act, the acquire/Power of National or County Government on being entry to inspect land satisfied that it may be necessary to acquire land, submits the request through the respective Cabinet Secretary or the Executive Committee Member in writing to the National Land Commission. The Commission prescribes criteria and guidelines which it uses to approve or reject the request to acquire the land. Notice Under Section 5, the Commission upon approval of the request publishes a notice in Kenya Gazette or County Gazette for interested persons. In addition to the gazette notices, Section 131(1e) states that the Commission

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may advertise in two newspapers with national circulation.

All land to be acquired are then geo-referenced and authenticated by the surveying office Payment for damage Under section 108, the Commission shall entry for inspection promptly pay in full, just compensation for any damage resulting from the entry. Inquiry for At least thirty days after publishing the notice Compensation of intention to acquire land, the Commission shall appoint a date for an inquiry to hear issues of propriety and claims for compensation by persons interested in the land Award of Upon the conclusion of the inquiry, the compensation Commission shall prepare a written award, in which the Commission shall make a separate award of compensation for every person whom the Commission has established to have an interest in the land. Compensation Any compensation amount held is supposed to amount to be paid be deposited in a special account held by the Commission as per Section 115(2) and attracts interest at the prevailing bank rates as per Section 117 Dispute resolution Under Section 128 all compensation disputes are to be referred to the Land and Environmental Court. Taking possession Section 120(12) states that only after the award has been made and the amount of first offer has been paid can the Commission take possession. Source: Land Act of 2012

6. The Case Studies This study examined emerging issues on compulsory land acquisition in three (3) projects as they relate to compulsory acquisition in Kenya. The issues are considered either as problems of land governance or in political dimension. The projects are the SGR, LAPSSET and Konza Techno City.

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6.1 Standard Gauge Railway Line The Standard Gauge Railway (SGR) was conceived as a flagship project under the Kenya Vision 2030 development agenda. The SGR is critical to the growth of Kenya and regional economies. On 1st October, 2009, the governments of Kenya and Uganda signed a MoU for construction of the SGR from Mombasa to Kampala. On 28th August, 2013 Kenya, Uganda and Rwanda governments signed a Tripartite Agreement committing to fast track the development of the railway to their respective capital cities. South Sudan has since come on board as an interested stakeholder in the project.

Map of the Standard Gauge Railway Master Plan Source: www.krc.co.ke downloaded on 29th November, 2014

Regional economic interests have therefore worked in favour of the project. In this regard, the SGR line will snake its way from the port of Mombasa to Kigali through Kampala with a branch line to Juba. In Kenya it is planned that there will be a branch line to Kisumu from Naivasha. As a necessary transport mode, the project is therefore a key component of the Northern Corridor. Kenya is vigorously pursuing the development of the first phase of the SGR from Mombasa to Nairobi, which has since been completed and started operating in June 2017. The project is being constructed by a

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Chinese company (China Road and Bridge Corporation). The first phase of the project is estimated to cost Kshs 327 billion, which was financed by the Exim Bank of China at 90 percent, while the Kenyan government contributed 10 percent.

The implementation of the project has faced numerous challenges. On 13th March 2014, the National Land Commission was summoned to appear before the Parliamentary Investment Committee to shed light on various issues were being raised, namely;  Why did the National Land Commission publish a notice to acquire land without Kenya Railways having deposited compensation funds (Money) with the National Land Commission?  Why did Kenya Railways only start with 56km, and these parcels are not in Mombasa which is the starting point?  Why are some affected parcels not in the list provided in the notice?  Why the contractor has been visiting the corridor without the resident's consent.  Why County Governments of Mombasa, Kwale, Taita Taveta and Makueni do not seem to have been updated on the progress of land acquisition despite the concern being forwarded to the Kenya Railways Corporation.

On 23rd October 2014, the High Court stopped the construction of the SGR in Kibwezi area of Makueni County because residents were not compensated for land acquired by the government for the project. The lawyer for the residents told the court that residents were not properly compensated for land compulsorily acquired by the government for the project and that they were not given notice before the takeover, as required by the law. The lawyer further argued that the affected residents will suffer economically as the land will be fenced off with a perimeter wall and thus inhibit their movement and that of their livestock to grazing fields (Daily Nation, 23rd October 2014). The temporary stoppage by the court caused delay in the completion of the project as planned and programmed.

6.2 Lapsset The Lamu Port Southern Sudan-Ethiopia Transport (LAPSSET) Corridor project, also known as the Lamu corridor is a transportation and infrastructure project in Kenya that, when complete, will be the country's second transport corridor. Kenya's other transport corridor is the Mombasa

The 19th AfRES Annual Conference 413 port and Mombasa–Uganda transport corridor that passes through Nairobi and much of the Northern Rift. The cost of the LAPSSET project is put at KSh. 2.5 trillion ($29.24 billion).

Map indicating the LAPSSET Corridor route Source: www.lapsset.go.ke

The project comprises the following components:  A port at Manda Bay, Lamu  Standard Gauge Railway line to Juba and Addis Ababa, the South Sudanese and Ethiopian capital  Road network (approximately 1,000 Km to Ethiopia)  Oil pipelines from Lamu to Southern Sudan and Ethiopia  Oil refinery at Bargoni  Three airports (Lamu, Isiolo and Lokichogio)  Three resort cities (Lamu, Isiolo and Lake Turkana shores)

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 High voltage electricity supply

The LAPSSET Corridor Project covers over half of the country with a planned investment resource equivalent to half of Kenya’s GDP for the core investment alone. Conservative feasibility statistics show that the project is expected to inject between 2% to 3% of GDP into the economy.

While the LAPSSET project promises to open Kenya's coastal, eastern and northern regions, allowing access to vast resources and creating opportunities for jobs, the costs outweigh the benefits for some residents along the corridor. Thousands of people are due for eviction from their lands to pave way for the railway and oil pipeline networks, and since only those with title deeds will be eligible to receive government compensation, the project has reignited underlying conflicts over land ownership.

Despite the government sourcing for funds to compensate at current market rates those displaced by Lamu port construction work, it has been noted that the communal ownership of land is complicating the compensation process as individual land ownership documents are lacking. Failure to recognize individual and community land rights is a historical problem along the Kenyan coast. Most of coastal Kenya is Trust land. The lucrative beach fronts have been allotted to powerful individuals in government at the expense of the local communities. The community is therefore afraid that the same will befall them on the LAPSSET Project.

6.3 Konza Techno City The idea and interest for an African Silicon Savannah in Kenya was first inspired by trends in Business Processing Outsourcing and Information Technology Enabled Services (BPO/ITES), which showed global offshore BPO/ITES revenue estimated at US$ 110 billion in 2010 and a projected three fold growth to reach US$ 300 billion by 2015.

Currently, there are over 2.8 million people employed in this sub-sector worldwide. However, statistics show that Africa only attracts about 1 % of the total revenues accruing from this growing industry. Only a few African countries have made effort to develop this industry; South Africa, Egypt, Morocco, Ghana and Mauritius have each launched national programs to grow BPO/ITES.

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It became clear that Kenya stood a good chance to attract a sizeable chunk of the expected growth in the off shoring BPO/ITES trade revenues if the Government took lead in the development of this industry.

In 2009, The Konza Technology City project was initiated with the acquisition of a 5,000 acre piece of land at Malili Ranch, 60km South East of Nairobi along Mombasa-Nairobi A09 Trunk road. The acquisition process was clouded with assertions that the land prices were exaggerated thereby affecting the overall cost of the project.

Photo showing an artistic impression of Konza Techno City Source: www.konza.go.ke

The following key sectors were identified as possible drivers of growth for the Techno City: 1. Business Process Outsourcing (BPO) 2. Software Development 3. Data Centers 4. Disaster Recovery Centers 5. Call Centers and 6. Light assembly manufacturing industries

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There has been a dispute between Makueni and Machakos counties over the location of Konza Technopolis, with each saying it falls on their side. This has forced the Senate to initiate the process of forming an independent commission to handle matters relating to county boundaries so as to enable smooth implementation of the project. While the Independent Electoral and Boundaries Commission deals with constituency and ward boundaries, the law is unclear on the counties.

7. Emerging issues on compulsory land acquisition Land acquisition in Kenya has always been a delicate issue and is increasingly becoming complex today in the context of rapid growth and changes in land use. The current state of economic development continues to create a voracious appetite for space to meet the demand for industrial, infrastructure building, urban expansion and resource extraction.

The process of compulsory acquisition in Kenya has therefore been characterized by illegalities and irregularities, informality, political influence/interference and involvement of many actors some with conflicting interests. Cases of illegalities and irregularities in compulsory acquisition have led to increased court cases by persons/parties aggrieved. This brings into focus whether the emerging issues in compulsory land acquisition in Kenya are as a result of land governance problem or politics surrounding land ownership. It is worth noting that there exists land governance framework that should guide all land transactions in Kenya.

7.1 Disagreements over Compensation Amounts A notable emerging issue in compulsory land acquisition in Kenya is to do with determination of the amount payable based on the market trend. This have got the potential of delaying the conclusion of land expropriation process. Table 2 shows the amounts awarded for compulsory acquisition against the market value of the land parcels before and after compulsory acquisition.

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S/N Region of Plot Market value of Market Market value of compulsory size the plot before value of the plot after acquisition compulsory the plot compulsory acquisition awarded acquisition for compulsory acquisition 1 Rongai 0.1 an Kshs. 1.5m-Kshs. Kshs. 2.3m Kshs. 2.5m-Kshs. (Kandisi acre 2.0m 3.0m area) 2 Rongai 0.1 an Kshs. 1.5m-Kshs. Kshs. 2.3m Kshs. 2.5m-Kshs. (Kona Baridi acre 2.0m 3.0m area) 3 Mombasa 1 acre Kshs. 4.0m Kshs. Kshs. 4.0m-Kshs. Southern 13.0m 6.0m Bypass 4 Kipevu New 1 acre Kshs. 4.0m Kshs. Kshs. 4.0m-Kshs. Highway 13.0m 6.0m Container Terminal Link 5 Thiba Dam 1 acre Kshs. 0.4m –Kshs. Kshs. Kshs. 1.2m-2.0m 0.6m 0.75m 6 Waiyaki 0.1 an Kshs. 6.0m –Kshs. Kshs. 6.0m Kshs. 10.0m- Way (Sigona acre 8.0m 15.0m area) Source: NLC Records

7.2 Inappropriate Compensation of Land Owners Another emerging issue on compulsory land acquisition is the consideration of illegal land owners. This is a serious political problem notwithstanding the existence of laid down land governance framework.

For instance, on 31st July, 2014 while responding to the growing pressure, President Uhuru Kenyatta announced that the government will revoke ownership of nearly 500,000 acres of land acquired in Lamu between 2011 and 2012 through "dubious and corrupt means". The president linked the insecurity witnessed in Lamu to land issues connected to LAPSSET. The president therefore tasked Criminal Investigation Department and the Kenya Police Service to conduct thorough investigations to identify legitimate owners of the grabbed land, but reassured citizens who acquired land lawfully that they would not be affected by the order. On August 3rd, 2014, a ten-member CID team was appointed to investigate the illegal purchases of land under the leadership of Mr Muhoro, Director of CID. This

418 The 19th AfRES Annual Conference led to more confusion because the constitution has tasked the National Land Commission with acquisition and investigation into land matters.

Before the President tasked the CID and the police with investigating land issues in Lamu, the National Land Commission announced that it was moving its experts into Lamu to investigate land issues as stipulated by the constitution, setting parallel investigating teams. This was now clear case of the interplay of politics in land acquisition.

On 8th September 2014, the Cabinet Secretary in charge of Lands, Housing and Urban Development nullified the list of 146 families earmarked for compensation on grounds of corruption. On 27th November 2014, the 146 beneficiaries got an injunction from the High Court stopping the development of any LAPSSET project until their compensation is determined. The impact of this is that the timely completion of the project will be affected.

In the case of SGR, it was reported in the Daily Nation of Thursday August 1st 2019 that some Three Hundred and Thirty (330) Individuals and Firms have not claimed their compensation awards totaling to Kshs. 1.14 Billion. This raises questions as to whether the affected individuals were real owners of the acquired land. It is suspected that some of those who have not claimed their compensations are absentee landlords.

7.3 Political Interference Political interference may take various forms and at times may defeat the whole process, especially where rich or politically influential land owners are involved.

7.4 Financial Constraints Land required for infrastructure development that stretches hundreds of kilometers has to be paid for by the beneficiaries who more often than not are the respective national and county governments. It happens that these institutions are plagued by mismanagement and financial problems to the extent that they always face problems in getting money to pay for compensation of land to be expropriated in their favour.

The implications of this is that many development projects would delay due to un-availability of money. In many cases, donors would not provide funds

The 19th AfRES Annual Conference 419 for purchase of land which they regard as a local resource and which should be contributed by the beneficiary of their funding. Donors prefer to finance only the technical aspects of projects.

7.5 Over Valuation of the affected Property Compulsory Land Acquisition has witnessed overvaluation of affected land parcels. For instance, one of the affected eleven properties by the construction of the Standard Gauge Railway phase 2A from Nairobi to Naivasha was valued at over Kshs. 244 Million but upon revaluation by the Multi Agency Team the figure was reduced to Kshs. 18 Million, a drop of over 1,200% (Daily Nation, Thursday August 1st 2019). This brings to focus the integrity of the valuers from the National Land Commission who participated in the original valuation exercise.

7.6 Litigation Litigation is also a major problem, especially when it causes delays in the process of land expropriation. Along the SGR line, the litigations interfered with the smooth implementation of the project. In other projects, for example, the 146 LAPSSET land owners whose compensation had been stopped by the Minister in charge of Lands, Housing and Urban Development obtained an injunction from the High Court stopping any development until their compensation issues are completed.

7.7 Legal Issues Land ownership in Kenya is designated as freehold and leasehold. The tenurial arrangements have to be adequately addressed if infrastructure development projects are to be implemented as conceived. A civil law system grants outright ownership of land, provided that the rights of enjoyment and disposal are not contrary to the laws and regulations introduced in the interest of the wider community or neighbours. For every right, privilege or power by one person, there is duty or liability of another. The Kenya Constitution 2010 has brought in Citizen rights and stakeholder participation in decision making process. This is particularly significant when dealing with land rights under communal ownership.

In the case of the Standard Gauge Railway, legal issues concerning rights and disputes to land has delayed payment to the affected families. Out of the Kshs. 4.53 Billion yet to be paid out, Kshs. 737 Million is being held because of disputes, Kshs. 135.88 Million is yet to be settled following feuds

420 The 19th AfRES Annual Conference involving 136 families while nine matters totaling Kshs. 66.75 Million are stuck in succession process (Daily Nation of Thursday August 1st 2019).

8. Impact of Land Acquisition on Infrastructure Development Expropriation forcefully converts land use from existing use to the gazetted use depending on the purpose for which land is being acquired. Conversion mainly is from private use to public use that may have a distributive effect as it increases amount of state lands at the expense of private lands. There is also interference with tenurial and ownership arrangements.

The process of land expropriation for infrastructure development has faced many problems. The problems have resulted in delayed implementation of projects, putting into focus the efficiency by which the system has functioned in availing land for infrastructural development.

As has been mentioned in the case of LAPSSET, an intended acquisition was delayed due to compensation issues, thus slowing down the implementation of the project. This unexpected delay will ultimately affect the envisaged project completion time.

The combined effect of disagreements over compensation amounts, delayed compensation of land owners, political interference, financial constraints on acquiring agencies, and litigations by aggrieved parties will ultimately influence the project completion time and thus result into increased project costs. The delays if not judiciously addressed impacts negatively on the overall goal of the infrastructure development and overall economy of the country.

For instance, in the phase 2 of the SGR, covering the sketch from Nairobi to Naivasha, the construction work in some sections had to stop for almost one (1) year between June 2018 and June 2019 due to litigations over compensation payments. The Directorate of Public Prosecutions and Directorate of Criminal Investigation stopped payments for compensation until verification of the rightful land owners and correct compensation amounts are determined. This will ultimately result into delayed completion time as originally envisaged.

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9. Conclusion and Recommendation Expropriation as a forceful form of land-use succession is another way of achieving the highest and best use (HBU) of the land. This would however not happen if the society were to rely on market mechanisms as is always rationalized by economic and social factors. By putting the land to its highest and best use, expropriation enhances the capital value of land. For example, the acquisition of land for LAPSSET, Standard Gauge Railway and Konza Technopolis will in addition to putting land to best use, also provide job opportunities to the catchment area. This will assist the government to address the problem of unemployment that is currently facing the country.

Land acquisition is one of the most controversial and politically sensitive instruments of state power anywhere in the world. Depending on how it is used, it can clear the way for rapid economic transitions, technological progress and inclusive growth, or it can trample on property rights, the economic interests of poor and vulnerable groups, and fundamental principles of justice. The current review of land laws, including acquisition of land, is long overdue in addressing inadequacies of the colonial Land Acquisition Act, which has for a long time been exploited by commercial interests, corrupt politicians and the state to promote widespread land grabbing. Before initiation of a project, it is imperative that land expropriation be given due consideration as it will determine the success or otherwise of any proposed infrastructure development. In addition, such big construction projects take a long time between inception and commencement of the actual construction because financing negotiations and decisions take too long to make

Reference  Daily Nation, Newspapers  FAO (2008), Compulsory Acquisition of Land and Compensation, Rome: s.n  K’Akumu, O.A. (1996): The Impacts of Land Acquisition. Problems on Project Implementation. University of Nairobi: MA Thesis  Kenya Government (2012), Land Act, 2012, Government Printers, Nairobi  Onalo, P.L (1986), Land Law and Conveyance in Kenya, Heinemann, Nairobi, Kenya  Sorrenson, M, 1968: Origin of European Settlement in Kenya, Nairobi: Oxford University Press.

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 Syagga, P.M. and Olima, W.H.A. (1995): The Impact of Compulsory Land Acquisition on Displaced Households: The Case of the Third Nairobi Water Supply Project, Kenya. In: Habitat International, Vol. 20, No.1, pp. 61-75  West Encyclopedia of American Law (n.d): Eminent Domain, www.aswer.com/topiceminent domain

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A CRITICAL REVIEW OF PROPERTY VALUATION FOR EXPROPRIATION IN ZIMBABWE

Partson Paradza; Joseph Yacim and Benita Zulch Department of Construction Economics, Faculty of Engineering, Built Environment and Information Technology, University of Pretoria, Hatfield 0028, South Africa

Abstract Purpose: This paper aimed at contributing to the growing academic debate on property valuation for expropriation.

Approach/Design: The paper was based on document analysis or archival research approach. Statutes which formed the legal framework that guide property valuation for expropriation in Zimbabwe, was critically reviewed relative to World bank, Food and Agriculture Organisation (FAO) guidelines as well as the International Federation of Surveyors (FIG), to unravel agreement and or conflicts among laws, so that limitations in the Zimbabwean laws could be remediated.

Results/Findings: This study established that the existing property valuation for expropriation in Zimbabwe followed the recommendations of World Bank and FAO. However, there are notable differences particularly on estimation of replacement cost value, where depreciation is deducted contrary to World Bank and FAO specifications.

Practical Limitation: Though there is no empirical evidence, the study assumed that guidelines provided by World Bank and FAO as well as recommendation by FIG can be considered as international best practice on property valuation for expropriation in Zimbabwe.

Practical Implication: Results of this study is useful to the Zimbabwean Government as it was geared towards bringing a lasting solution to the unresolved decade long land compensation disputes.

Originality/Value of Work: Though many studies were done on property valuation for expropriation in many countries, none of the existing literature assessed legal provisions guiding property valuation for expropriation in Zimbabwe. This study seeks to bridge this gap and

424 The 19th AfRES Annual Conference contribute to existing international debate on compulsory acquisition and compensation.

Keywords: Benchmarking, compulsory acquisition, fair compensation, expropriation policy, indemnity, legal framework.

Introduction and study background Compulsory land acquisition has been an issue of debate globally and the topical issues have been centred on dissatisfaction of the dispossessed people because of insufficient compensation offered by the expropriating authorities (Viitanen, 2002; Tagliarino, 2017; Olanrele, Alias, Said & Bello, 2017). It is observed that compulsory land acquisition has continue to increase the rate at which people is displaced worldwide to pave way for public uses like urban renewal, natural resource extraction, dam, railway and road construction among others (Langford and Halim, 2008; Saheed, 2012). Property valuation for expropriation is the techniques used to ascertain the market value of peoples landed property assets for compensation. Studies have suggested that improper use of property valuation is the chief cause of insufficient amount of compensation among other issues including delayed compensation payment devoid of interest at prevailing market rate (Asian Development Bank (ADB), 2007; Cernea, 2008; Mahalingam & Vyas, 2011; Famuyiwa & Omirin, 2011; Tuladhar & Sharma 2017; Tagliarino, 2017).

Inadequate compensation is against the concept of equity and equivalency which requires compensation to be fair and efficient. According to Olanrele Alias, Said, and Bello, (2017), expropriation has been one of the main causes of destitution as dispossessed persons are negatively impacted by government’s move to promote public purpose. Inadequate compensation for expropriated land is one factor which strained the relationships between expropriating authorities and the dispossessed or displaced people (Oladapo & Ige, 2014; Shen, 2015; Ige, Akintomide & Adeola, 2016; Tanrivermiş, & Aliefendioğlu, 2019). In paying compensation, an individual, family or community are all subjects of compensation, the moment their unexhausted improvement on land is compulsorily taken. However, the practice of assessment to determine the quantum of compensation is relative to different geographic context as enshrined in the statute book. Accordingly, Kakulu (2008) expropriated properties were undervalued in Nigeria due to the use of predetermined compensation rates by government valuers which were not market related and poorly defined

The 19th AfRES Annual Conference 425 property valuation guidelines. In Ethiopia, undervaluation and lack of consistency in estimated values of expropriated properties has also been poorly defined in the statutes which resulted in subjectivity by valuers (Ambaye, 2013). Therefore, it can be argued that issues with expropriation and compensation worldwide are directly related to provisions of the statutes and implementations. Thus, a well couched out statute in line with best practice provides a good framework for use in the assessment of market value of unexhausted improvement on land. Conversely, an ambiguous statute may give avenue/leeway for abuses leading to misleading value estimates, of which implementation had over the years worsen the state of claimants.

Zimbabwe has implemented the fast track land reform programme in 2000 with the aim of reversing the discriminatory land tenure system of the colonial era (Sekgabi, 2019). However, for close to two decades down the line, compensation for expropriated commercial farms remains a contentious issue. Mpofu (2019) concluded that former commercial farmers and government seem to be reading from the different page when it comes to the adequacy of the proposed compensation value. Government officials are of the view that what they are of the view that what the expropriating authority is offering is what is in-line with the existing property valuation for expropriation framework. On the other hand, former commercial farmers are of the perception that current statutes which guide property valuation for expropriation in Zimbabwe no not meet international best practice. The question therefore is, if the statute is okay, why is valuation estimates not in line with best practice in some cases? Similarly, if the statute is ambiguous a double barrel problem ensues – poor statute begets poor valuation estimates. Since statutes on expropriation and compensation are design relative to a particular context; so also, must property valuation follow, and complaints from dispossessed persons must follow statutory guidelines. It is therefore difficult to generalise and implement results from previous studies relative to expropriation and compensation of other contexts to a local market without having to understudy the Zimbabwean practice and provide contextual solution.

Many scholars observed inconsistency in property valuation for expropriation in Zimbabwe (United Nations Development Programme, 2002; Moyo, 2006; Kaseke, 2016; Nemukuyu, 2018; Mpofu, 2019). The United Nations Development Programme (2002) observed that there was

426 The 19th AfRES Annual Conference no consistency in valuation practice. Government valuers used different valuation methods when valuing the same or similar properties. The same problem of inconsistency was noted by Moyo (2006:153) who pointed out that there was an approximately 800% difference between the government estimated values and those estimated by private valuers. This problem of wide variances between government and private sector estimated values has persisted for decades now. According to Kaseke (2016:05), the government offered compensation value was just 10% of what has been estimated by private valuers as fair compensation value. According to Nemukuyu (2018), there was a difference of twenty-two million United States Dollars ($22 000 000) between what government offered Interfresh (Private Limited) as compensation for the seven expropriated farms and what the company claimed to be fair compensation. Mpofu (2019) attributed gaps in the property valuation for expropriation practice to ambiguity of the legal frameworks guiding valuation for compensation.

The remaining aspect of this study is divided into six sections including section two contain theoretical and conceptual frameworks, section three discusses international best practice in property valuation for compensation and section four provides the methodology employed in this study. Section five discusses the results of this study; and section six concludes the study with appropriate recommendations.

Theoretical and Conceptual Framework Many scholars concluded that property valuation for expropriation is supposed to be guided by the theory of equity and equivalency, which states that, affected owners and occupants should neither be enriched nor impoverished as a result of the compulsory acquisition (Viitanen, 2002; Asian Development Bank, 2007; Keith, McAuslan, Knight, Lindsy, Munro- Faure, Palmer, and Spannenberg, 2008; FAO, 2009; Ambaye, 2009; Viitanen, Falkenbach & Nuuja, 2010; Mahalingam & Vyas, 2011; Pai & Eves, 2016; Deeyah, & Akujuru, 2017). The equity and equivalence principle seek to balance two conflicting interests which are protecting private property rights and promoting public interest (FAO, 2009; Johnson & Chakravarty, 2013) as illustrated in Figure 1.

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Protecting Fair Promoting private property compensation public interest rights value

Figure 1: The concept of fair compensation value

In Figure 1, fair compensation value strives to attain a balance between protecting private property rights without jeopardising public interests. If the balance within promoting public interest and protecting private property rights continuum is not achieved, compensation offered might fail the equity and equivalence litmus tests.

International best practice in property valuation for compensation Property valuation is guided by international valuation standards set by the International Valuation Standards Council (IPVSC). The purpose of international valuation standards is to provide a framework that brings uniformity in the way property valuation is assessed across the world. Property valuation is done for different purposes which include among others valuation for tax, insurance, purchase or sale, deceased estate, compensation and accounting purposes. The basis upon which valuation is required for these different purposes is well spelt out in the international valuation standards. International valuation standards can be used as a yardstick to assess if the estimated values are of acceptable standards or otherwise. However, Kakulu (2008) noted that the Red Book which is prepared by the Royal Institution of Chartered Surveyors based on the International Property Valuation Standards (prepared by the International Valuation Standards Council) is silent on property valuation for expropriation. Thus, there are no specific international standards which guide property valuation for expropriation. The result, there are notable

428 The 19th AfRES Annual Conference differences in the property valuation for compensation across the world (Arul Vikram and Murali, 2015; Viitanen & Kakulu, 2009). This leaves a gap in property valuation for compensation which then results in lack of standardisation in statutes and practice. Kakulu (2008) also recommended that there is need to come up with international valuation for expropriation standards which can be used as a yardstick to measure if valuations meet the minimum acceptable standards.

Even though there are no globally accepted standards for compensation valuation when real estate is expropriated, the FIG, World Bank and FAO guidelines can be used for benchmarking purposes. FIG is one of the leading international institutions in terms of membership and World Bank and FAO play a key role in infrastructure financing across the world. Projects which are fubded by both the World Bank and FAO are guided by their compensation guidelines. In terms of the guidelines which are provided by FAO (2008) and (World Bank, 2004), property valuation for compensation should be a summation of the value of land, valuation of improvements, valuation of standing crops, and disturbance allowance. Both the FAO (2008) and World Bank (2004) concurs that property valuation for expropriation must be based on the replacement value principle. Additionally, these two organisations provide that property valuation for compensation should be a summation of the value of land and improvements.

Property valuation for expropriation is in the statutory valuation class. This means that the valuer is guided by specific laws on how to calculate the compensation value. It is important that laws guiding property valuation for expropriation be clear so as to avoid misinterpretation or different application by valuers. Lack of standardisation in property valuation for expropriation practice has been attributed to ambiguous statutes which guides the process (Kakulu, 2008; Kakulu, Byrne and Viitanen, 2009; Vaughan and Smith, 2014; Mengwe, 2019). Fundamental issues in property valuation for expropriation include how expropriation notice is issued/served on affected people, estimating the compensation value, the valuation date, the valuation method, the valuation date and appeal. The following guidelines are however provided by FAO (2008) during expropriation and compensation exercises. Firstly, it is recommended that before compulsory property acquisition is done, a notice is expected to be given to the affected people. The notice period and the media used to

The 19th AfRES Annual Conference 429 publish the notice are crucial; because if the law is not clear on how the notice should be served, it can be a source of dispute. Best practice is to publish a notice over a period of not less than three months in a local media, to all affected people and in a language, which is understood by the affected people. If the publication used is not accessible to the local people, then it might be as good as not serving the notice. Besides, circulating the notice in a local media, it is also necessary to serve notices directly to affected persons.

Secondly, as soon as the notice period has expired and all objections and reservations have been considered, the project valuers are expected to estimate the value of the expropriated property. This is based on the fact that values do change so if a lot of time is taken before inspecting the affected properties for property valuation can result in compensation disputes. Another key issue is the valuation date; statutes should clearly define the valuation date to be based on when properties are expropriated. It is recommended that a valuation date can be the same as the date of notice.

Furthermore, the law must be specific on who has the mandate of calculating the compensation value. The responsibility of calculating property valuation for compensation varies in different countries. In some countries an independent commission is used to calculate compensation value (FAO, 2008) while in other countries like Turkey the expropriating authority is also the valuer (FAO, 2008; Tanrivermiş & Aliefendioğlu, 2017). According Kosareva, Baykova, and Polidi, (2019), and Karasek- Wojciechowicz, and Brzeski (2019), in countries like Russia and Poland property valuation for expropriation is done by independent valuers. For avoidance of doubt it is recommended that an independent commission be used since the expropriating authority is also an interested party. However, in other countries the expropriating authority is expected to estimate the compensation offer in good faith then negotiate with the affected people for the final compensation. FAO (2008) recommends that affected people must be given access to professional valuers and legal representation at very low or no cost for them to make informed decisions. The whole expropriation and compensation processes are supposed to be done in a transparent and inclusive manner.

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Statutes which guide property valuation for expropriation must also be specific on the method of valuation to be used when real estate is expropriated. FAO (2008) recommended that the property valuation framework must be comprehensive but at the same time flexible to accommodate various situations. The most preferable method of calculating compensation value is the market value (World Bank, 2004; FAO, 2008). This is because the value is based on verifiable facts based on market data. Market value is used as compensation value in most developed countries which include USA, UK, Poland and Australia (Zrobek & Zrobek, 2008; Kucharska-Stasiak, 2008; Vaughan & Smith, 2014; Walters, 2019; Parker, 2019; Karasek-Wojciechowicz, & Brzeski, 2019). However, some scholars have questioned the fairness of market-based compensation (Tomson, 2009; Walters, 2019). It has been noted that the interpretation of market value differs from one place to the other hence FAO (2008) recommended that regulations must describe what is meant by market value. The appropriateness of market value when calculating the compensation value has been challenged by Kabanga and Mooya (2017), Kabanga and Mooya (2018) as well as Iyanda, (2014). Their argument is that there is no market for land and even the cost of improvements is difficult to estimate due to the fact that they are not commonly sold in the open market. In as much as property valuation for expropriation is guided by statutes, there is also need to consider customary law (FAO, 2008). The valuer is supposed to do a thorough research of the customary law and make sure that valuation method used is acceptable to the displaced people (FAO, 2008). The World Bank (2004) recommended that when the market is weak, the replacement value is supposed to be calculated from the productive potential of the land. A detailed guideline was prepared by the World Bank (2004) on how to calculate replacement value of land and improvements as well as crops. It is also important to note that the World Bank (2004) prescribes that depreciation is not supposed to be deducted from the replacement/reproduction value of the subject property when calculating compensation value. This recommendation is based on the notion that the expropriating authority which is government in most cases is expected to improve the living standards of the affected people (betterment). After the expropriating authority and the displaced people agreed on the compensation value, the regulations are also supposed to be specific about when and how the compensation is supposed to be paid. FAO, (2008)

The 19th AfRES Annual Conference 431 recommended that the expropriating authority can only take the subject property after a substantial amount have been paid to the displaced persons. In the event that there is a delay in payment of compensation, then the law must specify how the interest must be calculated form the date of possession (FAO, 2008). In the event that there is a dispute, the law must be specific on how and where the appeal must be send (FAO, 2008). Methodology The study adopted the archival approach, academic journals and Zimbabwean statutes on property valuation for compensation were reviewed. Journals were sourced online from Google Scholar and from the University of Pretoria Library while Zimbabwean statutes were downloaded from the Parliament of Zimbabwe website. Also, the FAO and World Bank guidelines were downloaded from their respective websites. Results and Discussion In Zimbabwe, the legal framework guiding property valuation for expropriation has been evolving since attainment of independence in 1980. In 1979, the war of liberation in Rhodesia (now Zimbabwe) ended by signing of the Lancaster House agreement. One of the conditions of the Lancaster House agreement of 1979 which was then incorporated into Section 16 the Lancaster House Constitution of 1980 was that during the first decade after independence (1980–1990) when land was acquired, the prompt and adequate payment was supposed to be paid based on the willing-seller and willing-buyer principle (Moyo, 2004; Moyo, 2006; Njaya and Mazuru, 2010:166; Moyo, 2011a; Dabate, Jagero & Chiriga, 2014; Chilunjika, & Uwizeyimana, 2015). In terms of the willing-buyer and willing-seller principles, property owners were the ones who offer and compensation prices are determined by the market. It can be noted that there were challenges associated with this approach since it resulted in land owners offering poor quality land at inflated values (Moyo, 2004; Pazvakavambwa & Hungwe, 2009; Chilunjika, & Uwizeyimana, 2015).

Another notable development in the history of property valuation for expropriation in Zimbabwe was the passing of the Land Acquisition Act (Chapter 20:10) in 1985 (Chivandi, Fushai & Masaka, 2010). The Section 29 of the 1985 Land Acquisition Act was structured in-line with the provisions of Section 16 of the Lancaster House Constitution of 1980. Section 29 of the Land Acquisition Act (Chapter 20:10) of 1985 stipulated that whenever land was to be expropriated then a prompt and adequate compensation was

432 The 19th AfRES Annual Conference supposed to be paid on or prior to the expropriation date. Prompt and adequate compensation was based on the willing-buyer and willing-seller principles (Mutema, 2019).

After the expiry of the Lancaster House Agreement in the early 1990s, the Government of Zimbabwe amended Section 16 of the Lancaster House Constitution through the Constitution of Zimbabwe Amendment Act (Number 11) Act number 30 of 1991. The amendments changed the wording of the compensation which must be paid for expropriated properties from prompt and adequate to fair compensation which is to be paid within a reasonable time (De Villiers, 2003).

Following the Constitution of Zimbabwe Amendment Act (Number 11) Act number 30 of 1991, the Land Acquisition Act of 1985 was repealed (Moyo, 2000; Adams & Howell, 2001; Thomas, 2003; De Villiers, 2003; Moyo, 2005; Chivandi, Fushai & Masaka, 2010) and replaced by the Land Acquisition Act (Chapter 20:10) of 1992 through the Land Acquisition Act Amendment (number 3) of 1992 (De Villiers, 2003, Moyo, 2006). The Land Acquisition Act (Chapter 20:10) of 1992 was crafted in-line with the Constitution of Zimbabwe Amendment Act (Number 11) Act number 30 of 1991 which departed from market value and adapted fair value for compensation (De Villiers, 2003; Moyo, 2006). Another notable change brought by Section 29 of the 1992 Land Acquisition Act (Chapter 20:10) is that it gave the mandate of determining the compensation value to the Compensation Committee (De Villiers, 2003; Chivandi, Fushai & Masaka, 2010).

The year 2000 saw a paradigm shift in the legal framework guiding compensation for expropriation in Zimbabwe when the Constitution of Zimbabwe Amendment Act 5 and the Land Acquisition Act Amendment 15 were passed. These two amendments stipulate that compensation for expropriated agricultural land is the responsibility of British Government and the Government of Zimbabwe remained with the mandate to compensate for improvements on land (De Villiers, 2003; Moyo, 2006; Pazvakavambwa & Hungwe, 2009; Moyo, 2016). Mutema (2019) noted that expropriation which provided compensation for improvements on land only opened flood gates of critics as critics are of the view that it is against international best practice.

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Land Acquisition Act Amendment 6 of 2002 introduced a property valuation for expropriation framework in the form of schedules which are used when calculating property value for compensation purposes in Sections 29 and 50. According to De Villiers (2003) the valuation criteria introduced by the valuation schedules in Sections 29 and 50 “… included vague criteria such as the history of ownership, the use and occupation of the land, the resources available to the acquiring authority responsible for implementing land reform and any other financial constraints.” In view of the foregoing discussion, one might be justified to question the reason for considering ownership history when valuing a property.

In 2004 the Acquisition of Farm Equipment or Material Act (Chapter 18:23) was passed with the sole purpose of also empowering the state to expropriate farm equipment. Section 5 of this Act gives the responsibility of estimating the value of farm equipment for the purposes of compensation to designate valuers who are also civil servants. In this case one might be justified to question the degree of fairness on the estimated property values which are offered by the expropriating authority as fair compensation value. In 2013, Zimbabwe replaced the Lancaster House Constitution of 1980 with the Constitution Amendment number 20 Act 1. This new constitution maintained that fair compensation paid at a reasonable time. Also, for land expropriated from commercial farmers who are foreigners, compensation is paid only for improvements on land. Table 1 is a summary of the evolution of provisions of key statutes which guide property valuation for expropriation in independent Zimbabwe (1980 to 2019).

Table 1: Evolution of legal provisions guiding property valuation for expropriation in Zimbabwe Amendment/New Year Impact on property valuation for statute expropriation Section 16 of the 1980 Prompt and adequate compensation value Lancaster House paid based on the open market value and Constitution of 1980 paid in foreign currency. Section 29 of the Land 1985 In terms of this Act compensation value was Acquisition Act determined by the Compensation Court (Chapter 20:10) based on the open market value. Constitution of 1991 Fair compensation to be paid on Zimbabwe Amendment expropriated real property. Act (Number 11) Act number 30

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Land Acquisition Act 1992 Fair compensation was paid instead of (Chapter 20:10) prompt and adequate and the requirement to pay compensation value in foreign currency was removed. Constitution of 2000 For land expropriated for land reform from Zimbabwe Amendment former commercial farmers, government Act 5 pays compensation for improvements on land and compensation for land was placed on the British Government as the former colonial master. Land Acquisition Act 2000 For land expropriated for land reform from Amendment 15 former commercial farmers, government pays compensation for improvements on land and compensation for land was placed on the British Government as the former colonial master. Land Acquisition Act 2002 Inserting of property valuation schedules Amendment 15 which guide estimation of compensation value. The schedules stipulate that depreciation must be deducted from the estimated compensation value of improvements on land. Section 5 of the 2004 Section 5 stipulates that valuation of farm Acquisition of farm equipment compulsorily acquired by the equipment or material state is done by a designate valuer Act (Chapter 18:23) appointed by the Minister from the serving Civil Servants. Sections 72 & 292 of 2013 Fair compensation paid at a reasonable the Constitution of time. For land expropriated from former Zimbabwe Amendment commercial farmers who are foreigners, number 20 Act 1 compensation paid only for improvements on land. Source: modified from (Moyo, 2006: pp146; Mutema, 2019)

As shown in Table 1, a number of amendments were done especially to the constitution and the Land Acquisition Act (Chapter 20:10). These amendments were a response to a paradigm shift in the political landscape in relation to the land compensation dispute between Zimbabwe and Britain (the former colonial master). The overall idea of a radical change in the political terrain was “justified” by a quest to “decolonise” Zimbabwe and empower the marginalised indigenous Africans. From the foregoing discussion, it can be noted that the legal framework guiding has been

The 19th AfRES Annual Conference 435 evolving over the years. However, Moyo (2016) noted that changes in the legal terrain guiding property valuation for expropriation in Zimbabwe was meant to reduce expropriation bottlenecks but at the same time negatively impacted agricultural property rights and dented investor confidence.

The existing property valuation for expropriation in Zimbabwe stipulates that estimation of compensation value is done by the Compensation Committee based on a preliminary value calculated by designate valuers appointed in terms of Section 29B of the Land Acquisition Act (Chapter 20:10) of 2006 and Section 5 of the Acquisition of farm equipment or material Act (Chapter 18:23) of 2004. Chimbetete (2016) noted a statutory gap in the provisions of the Valuers’ Act (Chapter 27:18) and the Land Acquisition Act (Chapter 20:10) pertaining to the qualifications of designate and professional valuers. As a result, most designate valuers do not qualify to be registered as professional valuers. The main aim of this study was to examine the current legal framework guiding property valuation for expropriation in Zimbabwe relative to international best practice. Table 2 is a summary of existing property valuation for expropriation framework in Zimbabwe, in comparison to FAO and World Bank guidelines. Table 2: A benchmark of Zimbabwean property valuation for expropriation framework against international best practice Heads of claim to World Bank and FAO FIG Compulsory Zimbabwean be valued guidelines Purchase and current property Compensation valuation for Recommendations for expropriation Good Practice framework

Valuation of land Where markets are Market value is the For land active, replacement preferred method but expropriated from cost of affected land, in cases where it is not former commercial in either rural or being determined, fair farmers who are urban areas, is based value is the second- foreigners, on fair market value best option. compensation is (plus transaction Assessment of paid only for costs and, in rural compensation value is improvements on areas, any to be guided by the land. preparation costs). International Property Alternatively, where Valuation Standards or Land which owned markets are weak, any other recognized by foreigners and replacement cost is valuation standards. protected by calculated from the Bilateral productive potential agreements is

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Heads of claim to World Bank and FAO FIG Compulsory Zimbabwean be valued guidelines Purchase and current property Compensation valuation for Recommendations for expropriation Good Practice framework

of agricultural or compensated in commercial land of terms of the equivalent size. provisions of the agreements.

When valuing cleared virgin land, consideration shall be given to the costs of clearing the land. Valuation of Replacement cost- Replacement value improvements can be calculated be assessed using the according to infrastructure standards set by the schedule or Ministry responsible contractors’ quotes. for housing standards for the Depreciation is not types of building subtracted from the concerned. estimated replacement value. The age and condition of the buildings shall also be taken into account.

Valuation of Where markets exist,- Regard shall be paid trees and the value of a tree of to the potential perennial crops a specified age and yield of such crops use can be used to and their determine marketability, but compensation rates. only where the For timber trees, the crops are value of a tree equals maintained in a that of the lumber. satisfactory If replacement trees condition and are are provided, good well-pruned, practice indicates fertilised and that compensation sprayed. be based on the value of the harvests lost until the replacement trees come into full

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Heads of claim to World Bank and FAO FIG Compulsory Zimbabwean be valued guidelines Purchase and current property Compensation valuation for Recommendations for expropriation Good Practice framework

production (typically, 7–10 years). Estimation of Replacement cost Interest shall be paid Interest shall be interest includes a provision on outstanding paid by an acquiring for inflation if compensation from authority at a rate, payments are the valuation date or being not less than delayed. possession date, the current rate of depending on which is interest prescribed earlier, till the full in terms of the payment is made. Prescribed Rate of Interest Act [Chapter 8:09] on compensation awarded to a claimant in terms of this Part or Part VA for the period extending from the date on which the land was acquired in terms of this Act to the date the money is paid to the claimant or paid to the Master of the High Court in terms of subsection (1) of section twenty- eight.

As shown in Table 2, the existing property valuation for expropriation in Zimbabwe followed the recommendations of World Bank, FIG and FAO. However, there are notable differences especially on estimation of replacement cost value, where depreciation is deducted contrary to World Bank and FAO specifications. Conclusion, Policy Options and Recommendations Compulsory land acquisition and compensation in Zimbabwe is provided for and regulated by a number of statutes which include: The Constitution of Zimbabwe Amendment (number 20) Act number 1 of 2013, the Regional

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Town and Country Planning Act (Chapter 29:12) of 1976; Section 150 of the Urban Councils Act (Chapter 29:15) of 1997 and Section 78 of the Rural District Councils Act (Chapter 29:13) of 1988, the Forest Act (Chapter 19:05) of 1949, the Parks and Wild Life Act (Chapter 20:14) of 1975, the Land Acquisition Act (Chapter 20:10) of 1992, the Communal Land Act (Chapter 20:04) and the Acquisition of farm equipment or material Act (Chapter 18:23) of 2004. Two of these Acts which are the Land Acquisition Act (Chapter 20:10) of 1992 and the Acquisition of farm equipment or material Act (Chapter 18:23) of 2004 regulate how property valuation for expropriation is done in Zimbabwe. The Land Acquisition Act (Chapter 20:10) of 1992 (LAA) provides a valuation guideline for expropriated properties while the Acquisition of farm equipment or material Act (Chapter 18:23) of 2004 regulates valuation of expropriated plant and equipment. This study will be based on the Land Acquisition Act (Chapter 20:10) of 1992 which guides how property valuation for expropriation. These schedules were benchmarked with property valuation guidelines provided by FIG (2010), FAO (2008) and World Bank (2004). FAO (2008) guidelines stipulates that before land is expropriated, a notice must be sent be displaced people using a local media and a language which can be understood by affected people. Section 5 of the LAA provide for a preliminary notice which must be saved to displaced persons before expropriation. The FAO (2008) guideline recommends that the notice must be circulated on a local media using a local language over a period of three months. Also, FIG (2010) recommended that the notice is supposed to be written in languages commonly used in the area. The recommended media of communication include local newspapers, letters and mobile centres. However, the LAA only states that the notice is circulated once in the Government Gazette and twice in the local newspaper. Existing statutes in Zimbabwe are silent on the language to be used when publishing the preliminary expropriation policy. This study established that Zimbabwe used a blanket approach when calculating property valuation for compensation of land with different land tenure systems. There is no specific guideline which prescribes how property valuation for communal land is to be calculated. FAO (2008) and FIG (2010) emphasised the importance of customary law when estimating property valuation for compensation of customary land. However, the existing valuation framework in Zimbabwe is silent on the issue of whether valuers are supposed to be guided by customary law or not. Also, the

The 19th AfRES Annual Conference 439 current property valuation for expropriation statutes base calculation of replacement cost on market value. However, as pointed out by Kabanga, and Mooya (2018) market-based might not result in fair compensation in markets which are dominated by the customary land tenure system. This is because land is not sold in the open market (Kabanga, and Mooya, 2018) but it is inherited by tribes and rights are passed from one generation to the other without any exchange of money (Mutema, 2003). Under the communal land tenure system “value” is in most cases intangible which comes as a result of social ties and cultural beliefs. The World Bank (2004) noted that intangible value is difficult to quantify. The point in as much as the market approach is preferred when estimating compensation value its application in markets dominated by customary land is limited due to unavailability of market evidence. The second most preferred method of valuation in Zimbabwe study is the replacement cost method. It is also important to note that the replacement cost approach is recommended by the World Bank (2004) in markets where reliable market data is not easily available. Under the replacement method, the value of the subject property is the sum of the value of land (as if vacant) and the value of improvements (as if new) (IVSC, 2017). Iyanda (2014) as well as Kabanga, and Mooya, (2018) concurred that in as much as the cost approach seem to be the most appropriate valuation in markets where market data is scarce, it has its limitations when it comes to valuation of traditional properties. This is based on the fact that estimation of replacement/reproduction costs of improvements is to some extent based on market evidence. In some cases, materials which are used to construct traditional rural properties are difficulty to quantify because they are not sold in the open market. In view of the foregoing, Kabanga, and Mooya, (2018) argued that there is need to come up with a valuation framework which can work best in areas dominated by customary land. Existing property valuation framework for compensation purposes in Zimbabwe provide a detailed guideline on how replacement value is calculated as provided by the valuation schedules in Sections 29 and 50 of the LLA. However, the existing schedules are silent on how valuation of crops is supposed to be done. Mutema (2019) noted that the current property valuation for expropriation process is shrouded in obscurity; it is not transparent how government come up with compensation values since affected people are not involved. According to Chimbetete (2016), there are shortcomings in the valuation for standing crops as Designate Valuers were not using the discounted cash flow valuation method properly. The World

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Bank (2004) guidelines recommend that estimation of compensation value for unharvested crops be based on the average market value of crops for the previous three years. Depreciation is not expected to be deducted from estimated replacement value for compensation purposes (World Bank, 2004). The whole idea for not subtracting depreciation is that it is the responsibility of the expropriation authority (government) to improve the living standard of its citizen (betterment of displaced people). If depreciation is subtracted, chances are that affected persons will not be able to find a property of the equivalent value in the open market. If this happens, then the compensation offered can be considered to have failed the litmus test of the principles of indemnification which is used as a measure of fairness in compensation. The principle of indemnification stipulates that affected persons are not supposed to be made poor-off as a result of the compulsory acquisition. However, in terms of the valuation schedules provided by the Land Acquisition Act (Chapter 20:10) of 1992 when replacement value is estimated for the purposes of compensation, depreciation is supposed to be deducted. This shows a deviation of the existing framework which guides property valuation for expropriation from international best practice. Chances are that statutes stipulates that depreciation must be calculated and deducted such that the compensation will be a true reflection of the current state of the expropriated property as at the date of expropriation. From this angle the government will be justified not to pay a compensation which is equivalent to a new structure whilst the structure is not new. However, as highlighted before it is the responsibility of government to improve the living standards of its citizens.

FAO (2008) recommends that affected people are expected to be given a chance to estimate and justify their compensation claim for negotiation with the expropriating authority. If the displaced people are not justified with the either the expropriation process or the compensation offered, the law must guarantee the right to appeal in a court of law (FAO, 2008; FIG, 2010). In terms of Section 22 on the LLA, people whose properties are expropriated are given a chance to submit their compensation claim. Also, the existing statutes provide a room for appeal in the event that the displaced persons and the expropriating authority failed to agree on the compensation value and process. Application for appeal is done at the Administrative Court in terms of Sections 24 and 29 of the LLA. Provisions for appeal are in line with international best practice. However, the LLA is

The 19th AfRES Annual Conference 441 silent on who is supposed to pay the costs of the appeal. The FAO (2008) guideline recommends that the appeal is supposed to be done either at a very low cost or free of charge. According to FIG (2010), reasonable costs of appeal are supposed to be paid by the expropriating authority. The term ‘reasonable’ us used and can be interpreted to mean that if an appeal is made without justifiable grounds, then the affected person will have to meet the cost. This might be done to discourage those who might decide to appeal just for the sake of delaying the expropriation process. In this case chancers can be deterred from unnecessary objections and appeals. It is also important to note that in the event that communal land is expropriated, affected persons might not have the knowledge of how to appeal. The LLA, is silent on the need for the expropriating authority to provide relevant information on how affected persons can appeal and the responsibility of the government and non-governmental organisation in providing legal representation. Other important aspects in compensation for expropriation are the date of valuation and payment of compensation. Statutes are supposed to be specific on the date of valuation and recommended the use of the date of notice as the valuation date (FAO, 2008; FIG, 2010). In Zimbabwe, one policy gap of existing statutes is that it is not specific on which date is used as the valuation date. Section 29B of the LLA simply states that the designate valuer is supposed to estimate the value of the expropriated property as soon as possible. How is as soon as possible measured? Chimbetete (2016) noted that the main source of dispute between the Zimbabwean Government and former commercial farmers is emanating from the date at which the compensation value is to be based. It took close to two decades for the Government of Zimbabwe to finish property valuation of expropriated properties and currently a lot of things have changed over the years. Also, statutes are expected to be specific on when exactly compensation is supposed to be paid. FAO (2008) recommends that a substantial amount of the compensation is supposed to be paid before the expropriated property can be possessed. The recommendations by FIG (2010) are that a once off payment of compensation must be paid in due time and most preferably in cash. In terms of Section 16 of the LAA compensation is paid at a reasonable time and Section 29C gives the Minister the power to fix the period which compensation must be paid. Moyo (2016) criticized the fact that the existing law is silent on the definition of what constitutes a reasonable time. In trying

442 The 19th AfRES Annual Conference to interpret what is meant by reasonable time, Moyo (2016) is of the view that a reasonable time might mean a period which is not more than two years since in terms of Section 29C (3)B, the second quarter of the compensation must be paid within two years. In the event that payment of compensation is delayed, FAO (2008) recommended that interest must be paid on the compensation amount. Calculation of interest on any unpaid compensation amount is supposed to start from the date of possession. Section 29 of the LAA is structured in-line with this guideline as it stipulates that interest on any money which is delayed is supposed to be paid to the displaced people. Also, calculation of interest is to be based on interest rates prescribed in terms of the Prescribed Rate of Interest Act (Chapter 8:09). FIG (2010), recommended that the law must take into account the issue of valuation inaccuracy. This is done to make sure that the expropriating authority will take responsibility of taking all necessary measures so that the estimated compensation is accurate. In the event that it is proven that the estimated value was inaccurate due to negligence or any other avoidable factors, the law in this case can provide room for recourse. However, the existing statutes in Zimbabwe a silent on the issue of valuation accuracy. There is no statutory requirement to hold the expropriating authority accountable for valuation accuracy. In view of the findings of this paper, it is recommended that there is need to review the current valuation for expropriation in Zimbabwe in-line with international best practice. Issues like specification of the valuation date, calculation of the value of unharvested crops, recognition and compensation of customary land rights and deduction on deprivation on property values need to be addressed urgently. Policy makers can take advantage of the existing process of aligning statutes with the constitution to do a holistic review of the existing valuation for expropriation framework. Furthermore, there is need for synchronising the LAA and the Valuers Act (Chapter 27:18) of 1996 so that only qualified and experienced professional valuers will be appointed as designate valuers for the purposes of calculation of property valuation for compensation.

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Kabanga, L. and Mooya, M. M. 2017. Assessing compensation for customary property rights in Malawi: The case of Mombera University project. African Journal of Rural Development, 2 (4): pp. 483-496. Kabanga, L. and Mooya, M.M. (2018). Compensation theories and expropriation of customary property rights: A critical review. Journal of African Real Estate Research, 3(2):87-106. Kakulu, I. I. 2008. Issues in valuation for compulsory acquisition of land in Niger Delta region of Nigeria. The Nigerian Journal of environmental Sciences: pp 12-25. Kakulu, I. I., Byrne, P. and Viitanen, K. 2009. Phenomenological Research in Compulsory Land Acquisition and Compensation. A paper presented at the International Federation of Surveyors (FIG) Working Week 2009, Eilat, Israel, 3-8 May 2009. Karasek-Wojciechowicz, I. and Brzeski, W. J. 2019. Regulatory framework for expropriation of real property in Poland. In Plimmer, F. and McCluskey, W. 2019. Routledge Handbook of Contemporary Issues in Expropriation. London and New York, Routledge, pp158-170. Keith, S. McAuslan, P. Knight, R. Lindsy, J. Munro-Faure, P. Palmer, D. and Spannenberg, L. 2008. Compulsory acquisition of land and compensation. In: Food and Agriculture Organisation, 2008. Land Reform: Land Settlement and Cooperatives, pp 7 - 16. Rome, Food and Agriculture Organisation. Kosareva, N., B., Baykova, T., K. and Polidi, T., D. 2019. Real estate expropriation in Russia: Statutory regulation and enforcement. In Plimmer, F. and McCluskey, W. (eds). 2019. Routledge Handbook of Contemporary Issues in Expropriation. Routledge, pp298-320. Kucharska-Stasiak, E, 2008. Uncertainty of Valuation in Expropriation Processes -The Case of Poland. Nordic Journal of Surveying and Real Estate Research Special Series 3. Langford, M., and Halim, U. 2008. Path of least resistance: a human rights perspective on expropriation. In: Food and Agriculture Organisation, 2008. Land Reform: Land Settlement and Cooperatives, pp 33 - 43. Rome, Food and Agriculture Organisation. Mahalingam, A. and Vyas, A. 2011. Comparative Evaluation of Land Acquisition and Compensation Processes across the World. Economic & Political Weekly, 46 (32):94-102. Mengwe, D. 2019. Compensation for expropriation in Botswana: Issues and transformative suggestions. Pimer, F. and McCluskey, W. (eds.).

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Pai, A., and Eves, C. 2016. Valuation and equity concerns in customary land takings compensation: the case in Papua New Guinea. A paper presented at the 22nd Annual Pacific-rim Real Estate Society Conference, Sunshine Coast, Queensland, Australia 17-20 January 2016. Parker, D. 2019. Compulsory acquisition compensation issues in Australia. In Plimmer, F. and McCluskey, W. (eds). 2019. Routledge Handbook of Contemporary Issues in Expropriation. London and New York, Routledge, pp321-340. Pazvakavambwa, S., and Hungwe, V. 2009. Land Redistribution in Zimbabwe. In Binswanger-Mkhize, H., P., Bourguignon, C., van den Brink, R. 2009. Agricultural Land Redistribution: Toward Greater Consensus. Washington D.C, World Bank. pp 137 – 167. Scheed, Z., S. 2012. Externalities of urban redevelopment: eviction, relocation and compensation in Nigeria. International Journal of Business and Social Science 3(5):272-278. Shen, J. 2015. Measures for Improvement of the Land Acquisition and Compensation System in Urban-Rural Integrated Construction Land Market. Cross-Cultural Communication 11(7): pp. 87-92. Sekgabi, L. 2019. Expropriation of property in South Africa: A transition from compensation to non-compensation on expropriation for land reform purposes - A comparative analysis of South Africa and Zimbabwe. Unpublished MSc Mini-dissertation, Pretoria, University of Pretoria. Tagliarino, N., K. 2017. The status of national legal frameworks for valuing compensation for expropriated land: an analysis of whether national laws in 50 countries/regions across Asia, Africa, and Latin America comply with international standards on compensation valuation. Land, 6 (37):2-29. Tanrivermiş, H. and Aliefendioğlu, Y. 2017. Principles of land acquisition, expropriation, and compensation calculation for infrastructure projects in turkey and an analysis of key issues. Paper prepared for presentation at the World Bank Conference on Land and Poverty.” The World Bank - Washington DC, March 20-24. Tanrivermiş, H. and Aliefendioğlu, Y. 2019. Legal and institutional fundaments of expropriation and compensation issues in Turkey. In Plimmer, F, and McCluskey. W. (eds). 2019. Routledge Handbook of Contemporary Issues in Expropriation. London and New York, Routledge, pp 118 – 157.

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Thomas, N., H. 2003. Land reform in Zimbabwe. Third World Quarterly, 24(4):691-712. Tomson, A. 2009. Key issues of mass valuation for compensation within the land restitution process in Albania. Nordic Journal of Surveying and Real Estate Research, 6(1):40–59. Vaughan, D., and Smith, L. C. 2014. An introduction to compulsory purchase valuation principles spanning 150 years. Journal of Building Survey, Appraisal & Valuation, 3(2): 184-189. Viitanen, K. 2002. Just compensation in expropriation? International Federation of Surveyors (FIG) XXII International Congress, Washington, D.C. USA, April 19-26. Viitanen, K. and Kakulu, I., I. 2009. Global concerns in compulsory purchase and compensation processes. A paper presented at the International Federation of Surveyors (FIG) working week, 14-19 June, Stockholm, Sweden. Viitanen, K., Falkenbach, H, and Nuuja, K. 2010. Compulsory purchase and compensation recommendations for good practice. FIG Commission 9 – Valuation and the Management of Real Estate. Denmark, International Federation of Surveyors (FIG). Walters, L. 2019. The United States’ experience with expropriation and the lessons yet to be learned. In Plimmer, F. McCluskey, W. (eds.) 2019. Routledge Handbook of Contemporary Issues in Expropriation. London and New York, Routledge, pp417-433. World Bank, 2004. Involuntary resettlement sourcebook planning and implementation in development projects. Washington, DC, World Bank Zrobek, R., and Zrobek, S. 2008. Expropriation as an exceptional tool of acquisition of land for public purposes. Geomatics and Environmental Engineering, 2 (1): 85 – 94.

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ELITES IVOIRIENNES, HÉVÉACULTURE ET QUESTION FONCIÈRE EN PÉRIODE POST-CONFLIT

TARROUTH Honnéo Gabin Sociologue, Attaché de recherche, Institut d’Ethno-sociologie, Université Félix Houphouët Boigny Mail: [email protected]

Résumé Les acquisitions de terre ne se limitent pas aux opérations à capitaux étrangers. Les études récentes mentionnent le rôle parfois joué par les élites nationales dans les grandes acquisitions foncières. Cette question revêt une importance toute particulière en Côte d'Ivoire, avec l'engouement marqué, ces dernières années, des élites ivoiriennes pour la terre. L’implication de ces élites nationales dans l’agriculture de plantation n’est pas un fait nouveau. Par le passé, l’accès à la terre des élites pour la création de plantations de caféier, cacaoyer ou palmier se faisait à travers l’octroi de terres rurales à des barons du régime lors de déclassements de forêts, ou à travers des procédures coutumières dans les villages d’origine, pour les originaires de la zone forestière. Depuis les années 2000, la dynamique d’acquisitions foncières par les élites ivoiriennes a pris une autre forme, avec un recours généralisé au marché foncier. Cette dynamique va s’accentuer trois ans après la crise militaro-politique. L’étude est essentiellement qualitative. L’analyse repose sur des données collectées en 2017 auprès de 40 acquéreurs et 31 cédants. Ce texte offre un éclairage sur les logiques d’accès à la terre pour la création des plantations d’hévéas, les stratégies pragmatiques d’appropriation foncière des élites et les enjeux fonciers et sociaux induits par ces transferts fonciers en période post- conflit.

Mots clés: hévéaculture, marché foncier, élites nationales, terres rurales, conflits fonciers, post-conflit

Abstract Land acquisitions are not limited to foreign-invested operations. Recent studies mention the role sometimes played by national elites in large land acquisitions. This issue is of particular importance in Côte d'Ivoire, with Ivorian elites for the land having become so popular in recent years. The involvement of these national elites in plantation agriculture is not new. In the past, elites' access to land for the creation of coffee, cocoa or palm

450 The 19th AfRES Annual Conference plantations was through the granting of rural land to regime barons in the decommissioning of forests, or through customary procedures. in the villages of origin, for the natives of the forest zone. Since the 2000s, the dynamics of land acquisitions by the Ivorian elites has taken another form, with widespread use of the land market. This dynamic will be accentuated three years after the military-political crisis. The study is essentially qualitative. The analysis is based on data collected in 2017 from 40 purchasers and 31 sellers. This text provides insight into the logics of access to land for the creation of rubber plantations, the pragmatic strategies of land appropriation of elites and land and social issues induced by these land transfers in post-conflict period.

Key words: rubber growing, land market, national elites, rural lands, land conflicts, post-conflict

Introduction La question foncière dans les pays du Sud et en transition est abordée depuis quelques années avec pour thème favori les « grandes acquisitions » de terres agricoles par des opérateurs internationaux. Les acquisitions de terre ne se limitent pas aux opérations à capitaux étrangers. Les études récentes mentionnent le rôle parfois joué par les élites nationales dans les grandes acquisitions foncières. Cette question revêt une importance toute particulière en Côte d'Ivoire, avec l'engouement marqué, ces dernières années, des élites politiques et économiques pour la terre. L’implication de ces élites dans l’agriculture de plantation n’est pas un fait nouveau. Par le passé, l’accès à la terre de celles-ci pour la création de plantations de caféier, cacaoyer ou palmier se faisait à travers l’octroi de terres rurales à des barons du régime lors de déclassements de forêts, ou à travers des procédures coutumières dans les villages d’origine, pour les originaires de la zone forestière. Depuis les années 2000, la dynamique d’acquisitions foncières par les élites ivoiriennes a pris une autre forme, avec un recours généralisé au marché foncier. Cette dynamique va s’accentuer trois ans après la crise militaro-politique par la ruée de ces élites dans les régions où il y a encore une disponibilité foncière avec pour objectif d’accéder à la terre pour y créer une plantation d’hévéas.

La question des transactions foncières est largement mise en exergue dans de nombreux travaux de recherche conduits en Côte d’Ivoire (Colin et Ayouz, 2006 ; Colin., 2008 ; Ruf, 2008a ; Ruf, 2008b, Tarrouth et Colin, 2016 ; Colin et Tarrouth, 2017). Ces recherches abordent la question des

The 19th AfRES Annual Conference 451 acquisitions foncières par les cadres ou élites de façon fine dans la description des pratiques et jeux d’acteurs alors à l’œuvre, mais sans véritablement faire une analyse spécifique sur l’implication des élites économiques et politiques.

Les acquisitions de terres rurales par les élites nationales demeurent donc une question encore à explorer dans le contexte ivoirien. C’est ce constat qui nous a conduit à nous intéresser à cette question en privilégiant spécifiquement les élites politiques et économiques.

Il s'agit de tenter d'apporter une réponse aux interrogations suivantes: quels sont ces acteurs et les logiques d’accès à la terre qui sous-tendent la création des plantations d’hévéas? Quelles sont les stratégies pragmatiques d’appropriation et de sécurisation foncière des élites ? Quels sont les enjeux fonciers et sociaux induits par ces acquisitions au niveau des populations concernées ?

Ce texte vise à analyser les motivations, les stratégies d’acquisition et de sécurisation foncière des élites ainsi que les enjeux fonciers et sociaux induits par ces transactions. Une première section du texte fait un bref état des lieux des acquisitions foncières par les élites nationales en Côte d’Ivoire. La seconde présente les conditions de production des données de la recherche. Les trois sections qui suivent présentent respectivement les motivations des acteurs, les stratégies d’appropriation et de sécurisation foncière des élites, les enjeux fonciers et sociaux.

1. Conditions de productions des données L’étude est essentiellement qualitative, l’étude s’appuie sur les données collectées en 2013-2014 avec une actualisation sur le terrain en 2017 et l’exploration de d’autres sites au niveau de cette localité.

La collecte des données a été réalisée dans une double perspective. D’une part, des enquêtes ont été réalisées dans la région de Toumodi au centre connue pour être attractive pour les élites. Les acquisitions étant observées en zone de contact forêt-savane principalement dans les villages d’Adaou, Kalekoa, Dida-Kouadiokro, Akakro-N’gban, Kpacobo, Dida-blé. Ces villages ont été identifiés lors d’entretiens avec les agents du ministère de l’Agriculture en charge des levés de parcelles (cf. infra). Au niveau des villages, nous avons procédé par un échantillonnage en « boule-de-neige ». Outre les enquêtes conduites auprès de cédants et d’acquéreurs, des

452 The 19th AfRES Annual Conference entretiens ont été conduits sur chacun des sites avec le sous-préfet, le directeur départemental de l’agriculture, les autorités villageoises, les associations de jeunes et des « démarcheurs ruraux » (terme local désignant certains des intermédiaires dans les transactions). D’autre part, des enquêtes ont été conduites auprès d’acquéreur vivant à Abidjan, ayant acquis uniquement plus de 50 hectares. Nous avons identifié ces acquéreurs en jouant initialement sur nos réseaux sociaux, puis en étendant « en boule- de-neige » la population à enquêter.

Ont été enquêtés 32 acquéreurs au niveau d’Abidjan, 8 Acquéreurs et 31 cédants à Toumodi. Les enquêtes ont ainsi porté au total sur 40 acquéreurs et 31 cédants individuels. Les données relatives aux cédants et aux acquéreurs viennent des enquêtes directement effectuées auprès des concernés, mais certaines informations ont aussi pu être collectées indirectement, en étant fournies par la partie à la transaction enquêtée et portant sur la partie non enquêtée. Cette recherche fait partie d’un projet comparatif plus vaste (ANR-17-CE41-0001) financé ultérieurement par la Fondation de la Maison des Sciences de l’Homme (Paris) et l’Agence française de la recherche scientifique (ANR).

2. Les acquisitions foncières par les élites en Côte d’Ivoire : bref état des lieux La question des acquisitions de terres rurales reste relativement documentée dans la littérature traitant des questions foncières en Côte d’Ivoire.

Le phénomène des cadres et de politiciens investissant dans la terre n’est pas complètement nouveau. Divers cadres du régime Houphouët-Boigny ont pu se créer de grandes plantations de palmiers à huile, d’ananas ou banane « poyo », et pour quelques-uns, quelques premières plantations d’hévéas dans les années 70 et 80.

L’'implication des cadres ou élites a été également mentionnée dans l’histoire agraire de la Côte d’Ivoire, qui a fait l’objet, dans les années 70, d’un débat spécifique autour de la pénétration du capitalisme dans l'agriculture, comparativement au débat kenyan. On parlait à cette époque de capitalisme agraire (Stavenhagen, 1974), de " bourgeoisie de planteurs " (Gastellu et Yapi, 1982). Une des idées qui ressortaient de ces différents débats est que les " grands planteurs" villageois et absentéistes (cadres et fonctionnaires) (Yapi, 1987) sont confrontés à des difficultés en matière de

The 19th AfRES Annual Conference 453 reproduction élargie de leur investissement agricole, qui limite le processus d’accumulation.

Affou Yapi, décrit le planteur absentéiste comme un agent économique d’une situation particulière de l’agriculture à temps partiel : actif hors de l’agriculture et inactif dans celle-ci. En d’autres termes, il n’y pas d’investissement de la force de travail et/ou des compétences de l’agent économique en question dans les différentes activités. Cet investissement est destiné à l’activité principale, tandis que l’agriculture bénéficie seulement d’un apport monétaire. Ces planteurs absentéistes sont : « des cadres supérieurs de l’administration (2), des hauts cadres politiques (6), des personnes exerçant des professions libérales (2), des enseignants du primaire (18), des techniciens divers (7), des employés (8), des commerçant (8) » (Affou Yapi 1987 : 22). Les raisons du choix de l’activité sont d’ordre politique, économique, subjectif et d’opportunité. Pour l’exploitation de leurs parcelles, ils avaient recours à la main d’œuvre salariale. Le rôle des cadres et des politiciens investissant l’enjeu foncier, notamment de « certains barons du régime qui capitalisent de grandes superficies de terre dans le Sud-ouest » est d’ailleurs évoqué par Chauveau (2000).

D’autres études récentes évoquent aussi la présence de ce type d’acteurs dans l’agriculture en corrélation avec le boom de l’hévéa (Colin, 2008a, 2011 ; Ruf, 2008a, 2011 ; Colin et Ruf, 2011 ; Mlan, 2013 ; Tarrouth et Colin 2016 ; Colin et Tarrouth,2017).

Pour Ruf, (2008, 2011), le phénomène a pris de l’ampleur sous le régime Gbagbo à partir des années 2002, avec une accélération en 2005. Ces acteurs qualifiés de « planteurs cadres " par l’auteur sont plus motivés par une stratégie " hévéa ", traduisant une course vers une nouvelle rente que des stratégies foncières. Ces cadres résident pour la plupart à Abidjan, voire à l’étranger, et ont des postes importants dans l’administration, voir au sommet de l’Etat, ou dans les professions libérales et services, parfois dans l’agro-industrie. Ils sont différents des " planteurs villageois ", lesquels, sauf exception, vivent en permanence dans le village et dont les revenus sont essentiellement agricoles. Ils achètent la terre par lots de dizaines ou centaines d’hectares ou prennent en contrat de P&P (Colin et Ruf, 2009). Ruf signalait ainsi « la présence des avocats, des juges, des préfets, des gradés de l’armée, des comptables, des directeurs des ministères et des cadres des sociétés hévéicoles ou des structures professionnelles liées au monde du caoutchouc et du cacao, voire de sociétés de la téléphonie

454 The 19th AfRES Annual Conference mobile, tous profitant de ce regain d’opportunité sur l’hévéa. Les parcelles cédées sont des jachères, forêts et vieilles plantations. Les cédants sont en majorité les autochtones (67), les allogènes (10 burkinabés) » (Ruf, 2008). Les principales raisons de cessions identifiées chez les cédants que révèlent cette étude sont : « le financement des soins médicaux, des funérailles et de l’école, les parcelles conflictuelles : pour surmonter un conflit sur une parcelle avec un frère, un oncle, une tante, l’individu la vend de préférence à une personne dont le statut va museler les rivaux (par exemple un gradé militaire, un juge). Les conflits intra-familiaux sont très souvent générés par ces transactions » (Ruf, op.cit).

Dans une étude réalisée à une échelle nationale, Colin (2008a, 2011) note que les cadres ivoiriens apparaissent comme les nouveaux acteurs dans le jeu des achats-ventes, avec des observations réalisées de Toumodi (où les superficies cédées peuvent dépasser 100 ha, du fait en particulier des cessions de terres de savane) à Guiglo, Soubré, Aboisso (où les cessions porteraient sur des superficies dépassant rarement 10 ha), Daloa, Oumé, Tabou. Sur tous ces sites, la dynamique serait très récente (depuis 2005) et est mise en rapport avec l'essor de l'hévéaculture. « Ces acquéreurs sont médecins ou pharmaciens, officiers dans l'armée, la police ou les Eaux et Forêts, cadres, dirigeants d'entreprises, hommes d'affaires, commerçants, professeurs d'université, ambassadeurs), magistrats, employés, agents (hors cadres) d'administrations publiques, infirmiers, instituteurs, etc., ou encore résident en Europe sans que l'on dispose d'information sur leurs activités » (Colin, 2008 : 26).

La présence des cadres est également mise en évidence par Colin et Ruf (2011), comme les acteurs à la base de l’essor d’un nouveau type d’arrangement institutionnel en zone forestière qui est le planter-partager décrit plus haut.

3- Caractérisation des acteurs et logiques d’accès à la terre pour la création des plantations d’hévéas 3.1. Caractérisation des élites et des cédants Les acquéreurs sont les officiers supérieurs de l’armée, de la gendarmerie, de la marine, des eaux et forêts, les ministres, les cadres de l’administration publique, les cadre du privé, les hommes politiques, les hommes d’affaires, avocats, les opérateurs économiques, les présidents des institutions, les ambassadeurs.

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Les cédants sont des autochtones. Ce sont des chefs de famille, des chefs de terre, des jeunes (cadets sociaux), des chefs de village, des femmes (toutes chefs de famille).

3.2. Logiques d’accès à la terre des élites Par logiques d’acteurs, il faut comprendre le fondement des choix des acteurs en présence. Il s’agit d’identifier les motivations qui sous-tendent les acquisitions foncières et la création des plantations d’hévéas par les élites.

3.2.1. La recherche d’une diversification des sources de revenu ou complément de revenu des élites

L’engouement des élites pour la création de plantations d’hévéas est au départ un phénomène conjoncturel. Pendant longtemps, l’investissement dans l’agriculture n’a pas été considéré comme particulièrement attractif par élites ivoiriennes, comparativement à l’investissement dans le foncier urbain, le commerce d’import-export, les services.

Aujourd’hui, ces acteurs urbains acquièrent des terres et investissent dans l’agriculture. L'acquisition foncière vise avant tout à permettre la réalisation d'une plantation d'hévéas, qui offre un intérêt majeur d'un point de vue économique.

Cet investissement était vu, lors des enquêtes, comme assurant un complément de revenu sûr et intéressant35.

« Vous savez, la terre ne trahit pas, il y a des revenus sûrs et garantis avec l’hévéaculture. Tous les produits manufacturiers découlent de l’hévéaculture. Ça donne aussi de l’argent à chaque mois jusqu’à plus de 45 ans, qui est la durée de vie d’une plantation d’hévéas ».

35 Selon la SPLCI (Société de Plantation de Côte d’Ivoire), la production mensuelle attendue de 1400Kg de caoutchouc humide à l’hectare permettait d'escompter en 2012, pour 5 hectares, un gain mensuel de 770 000 Francs CFA (prix de 550 FCFA/kg). Cette appréciation favorable, largement partagée par les enquêtés, pourrait être revue au regard de la baisse récente du prix du caoutchouc (391 FCFA/kg en janvier 2014, 272 FCFA en aout 2015 selon l’association des professionnels du caoutchouc naturel de Côte d’Ivoire, APROMAC).

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« Je suis certes directeur d’une société et compte tenu des aléas de la vie et que je suis dans le privé, j’ai décidé de sécuriser mon revenu et stabiliser mon niveau de vie jusqu’à la mort. Jusqu’aujourd’hui, l’hévéaculture est un investissement prometteur. Aussi, il y a un adage qui dit que la terre ne trahit jamais son homme ».

3.2.2. La préparation de la retraite La préparation de la retraite est une autre incitation à la création des plantations d’hévéas et à l’acquisition des terres par les élites nationales. Le souci de maintenir leur niveau de vie après la retraite incite certaines élites quelle que soit leur richesse à se reconvertir en entrepreneurs agricoles. Cet investissement permet d’assurer un revenu pour la retraite. L’intérêt économique de la création de la plantation est envisagé ici à long terme. Cet argument, évoqué par la majorité des enquêtés, est à mettre en rapport avec l’insuffisance des pensions de retraite (d'autant plus que la mise à la retraite peut faire disparaître pour certains des sources "informelles" de revenus additionnels). « [J'ai acheté de la terre pour faire de l'hévéa] pour préparer ma retraite parce que je suis dans le privé, et à la retraite quelqu’un qui est dans le privé gagne moins qu’un fonctionnaire du public. L’hévéaculture nourrit son homme pendant plus de 40 ans, on y gagne beaucoup en termes de revenu » ; « c’est le passeport pour la retraite » ; « c’est pour me garantir une bonne retraite tranquille, car avec l'hévéa c'est possible et sûr ». 3.2.3. La constitution d’un patrimoine foncier familial L’implication des élites dans la culture de l’hévéa en Côte d’Ivoire cache souvent mal la volonté de certains acquéreurs de se constituer des réserves ou des patrimoines fonciers pour leur descendance. L'investissement dans l'hévéaculture vise enfin à assurer l’avenir des enfants, dans une logique patrimoniale. Ainsi, lors d’un entretien avec des élites, au sujet de leurs intérêts pour l’agriculture, mes interlocuteurs déclarent : « j’ai investi dans l'hévéa, car c’est un investissement sûr et certains et c'est un héritage pour mes enfants » ; « je fais de l’hévéa pour pouvoir laisser un héritage à mes enfants ; l'hévéa paie et c'est jusqu'à 40 ans de vie et c'est un héritage pour mes enfants et mes petits-fils » ; « J’ai choisi l’hévéa, car c’est la culture de l'avenir de nos jours et je pourrai laisser un héritage à mes enfants »

Dans la plupart des régions en Côte d’Ivoire, la terre est considérée aujourd’hui comme le meilleur héritage qu’on puisse laisser à sa

The 19th AfRES Annual Conference 457 progéniture. Cette tendance semble concerner toutes les élites impliquées dans l’agriculture. 3.2.3. Le blanchiment d’argent Les exploitations agricoles et en particulier les plantations d’hévéas créées par les élites constituent une forme de blanchiment d’argent. Les fonds d’origine douteuse sont investis massivement dans la création d’une plantation. Ultérieurement, les revenus des récoltes permettent d’approvisionner les comptes en banque de l’élite de manière totalement licite.

4. Les stratégies pragmatiques d’appropriation et de sécurisation foncière des élites ivoiriennes Les élites urbaines développent des stratégies variées pour acquérir la terre et créer des plantations d’hévéa. L’analyse qui suit présente les cas les plus fréquents rencontrés sur le terrain. 4.1. Les stratégies pragmatiques d’appropriation foncière des élites Les acquisitions réalisées par les acquéreurs enquêtés à Abidjan sont localisées à Divo, Anyama, Sikensi, Fresco, Agboville, Grand-Lahou, Toumodi, Daoukro, Ayamé, Zoukougbeu, Dabou, Aboisso, Gagnoa, Soubré, Guiglo, Meagui, Tabou, Abengourou, N’Douci, Bongouanou, Daloa. Le choix de ces localités s’explique par le fait qu’elles sont proches ou relativement proches d’Abidjan (lieu de résidence habituelle des cadres), facilement et rapidement accessible, et sont considérées comme des zones où il reste encore de la forêt ou des jachères disponibles. Dans ces zones les contrats d’achat et de planter-partager sont les stratégies d’acquisition les plus mobilisées par ces élites ? 4.1.1. L’acquisition foncière par l’achat: une sécurité foncière recherchée par la certification Le recours à l’achat peut résulter de la distribution inéquitable des terres entre les membres d’une même famille. Il est fréquent que l’élite, absente du village, soit lésée à l’occasion du partage des terres et que le patrimoine familial soit occupé en totalité par ses frères restés au village. C’est la situation vécue par un homme politique enquêté à Abidjan, qui a constaté que ses ainés s’étaient accaparés des parcelles de terrain qui lui revenaient de droit par héritage. Il a été obligé d’acheter plus de 72 ha de terres dans le village voisin pour y cultiver de l’hévéa. Qu’est-ce qui explique le choix de ces types de contrat ?

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Le choix du type de contrat est donc lié au contexte local, à la perception des différents contrats par les acteurs, aux conditions de la rencontre des acteurs (rapport de pouvoir dans la négociation).

Les résultats de nos enquêtes montrent que le choix contractuel est en corrélation avec un certain nombre d’avantages et d’inconvénients qui transparaissent chez nos enquêtés. Les acquéreurs préfèrent l’achat parce qu’ils veulent devenir des propriétaires, travailler librement sans être inquiétés, être en sécurités par l’établissement du certificat foncier : « avec l'achat, je suis à l'aise parce que je n'ai pas de compte à rendre à quelqu’un une fois que j'ai eu le certificat foncier » ; « je peux avoir le certificat foncier et devenir propriétaire contrairement aux autres contrats ou je pense que le propriétaire récupère sa terre », « l’achat permet d'être propriétaire pour la vie. Tu as tous les droits sur la terre. Tu peux faire ce que tu veux de la parcelle et sur la parcelle » ; « être propriétaire pour être à l'abri des contestations. Avec ton certificat, ton investissement est sécurisé devant la justice » ; « je préfère l’achat parce que pour moi, c'est plus sécurisant. Une fois que tu as le certificat, c'est une preuve légale »

4.1.2. L’acquisition foncière par le contrat de planter-partager : un contrat gagnant-gagnant pour l’acquéreur et le propriétaire terrien Le planter-partager peut être défini en termes génériques comme un arrangement par lequel un exploitant gagne l'accès à un droit d'usage de long terme, voire à un droit de propriété du sol, en mettant en valeur une terre par la réalisation d'une plantation pérenne (cacaoyer, palmier à huile, hévéa) et en rétrocédant au propriétaire foncier une partie de la plantation créée, ou de sa production. Trois types de contrats de P&P peuvent être distingués en Côte d’Ivoire, au regard de l'objet du partage (Colin et Ruf, 2011) : (i) contrat portant sur la plantation uniquement : à l'entrée en production, la plantation est partagée entre l'exploitant et le cédant, qui conserve son droit de propriété sur l'ensemble de la terre; (ii) contrat portant sur la plantation et sur la terre : lors du partage, l'exploitant conserve non seulement une partie de la plantation, mais également la terre portant cette dernière; (iii) contrat portant sur la récolte uniquement, sans partage de la plantation (et éventuellement de la terre) ; la personne qui réalise la plantation l'exploite ensuite en conservant une partie de la récolte.

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Concernant le planter-partager les enquêtés pensent qu’il est moins conflictuel que l'achat. Ils affirment que ce contrat ne délaisse ni le cédant ni sa famille et cela évite les aigreurs et les éventuelles contestations du cédant ou des membres de sa famille. Pour eux, c’est un contrat gagnant- gagnant.

« Je pense qu’avec ce contrat chacun gagne et demain sa famille ne va pas se plaindre parce qu’ils gagnent aussi. » ; « Pour éviter les problèmes dans le futur sur cette parcelle ; comme ça le contrat implique les deux parties et chacun gagne sa part, la famille du cédant ne sera pas aigrie. » ; « Aussi, les deux parties y gagnent ; le cédant comme le preneur et cela évite des contestations parce que le cédant et sa famille gagnent aussi. ».

Pour un sous-préfet un contrat gagnant-gagnant serait le mieux adapté pour éviter les conflits et une concentration foncière. Ces arguments explicitent cette position « Les gens vendent parce que les populations paysannes n’ont pas les moyens pour mettre ces parcelles en valeur et il n’existe pas de crédit pour leur permettre d’avoir les moyens pour le faire. La pauvreté fait que les gens n’ont pas le choix quand ils ont un problème, l’alternative qu’ils ont, c’est de vendre sans réfléchir. Le contrat de partage de la plantation (planter-partager) serait un modèle contractuel à promouvoir parce qu’il permet au paysan de suivre le rythme de l’évolution du boom de l’hévéaculture. C’est aussi un contrat ou les deux parties gagnent. On éviterait en ce moment une contestation d’un quelconque membre de la famille du cédant et une concentration, un accaparement des terres dans les mains des plus riches comme on le voit actuellement ».

5. Les stratégies pragmatiques de sécurisation des transactions Le recours aux témoins, la rédaction d’un acte sous-seing privé, la délivrance des attestations de délimitation et de plantation, l’établissement d’un certificat foncier, l’enchâssement social sont les stratégies mobilisées par les élites pour la sécurisation des transactions réalisées avec les acteurs locaux.

5.1 La présence des témoins: une garantie en cas de conflit Tous les acteurs interrogés affirment que toutes les transactions ont été conclues devant témoins. L'implication de ces derniers dans la transaction donne parfois lieu à un "cadeau" en espèces ou en nature, cédant et

460 The 19th AfRES Annual Conference acquéreur prenant alors en charge le coût de leur témoin. En numéraire, la somme varie de 5 000 à 300 000 FCFA – ce dernier montant correspondant à une transaction faite devant les autorités villageoises ; il a été utilisé pour l’achat d’un bœuf et l’organisation d’une cérémonie de libation publique. En nature, il s’agira le plus souvent d’une ou quelques bouteilles de liqueur (gin pour la cérémonie de libation, gage de l’accueil de l’acquéreur sur leurs terres). Ces éléments symboliques mentionnées lors de la transaction renforcent, garantissent, rendent efficace les transactions et limitent les remises en causes.

5.2 La rédaction d’un acte sous-seing privé: une preuve de cession en cas de conflit Cette pratique est une modalité fréquente de sécurisation. Tous les acteurs enquêtés affirment que les transactions effectuées ont fait l’objet de "papier". Les contrats manuscrits ou saisis sur ordinateur sont rédigés par un jeune du village souvent intermédiaire dans la transaction, par le cédant ou l'acquéreur, par le secrétaire du chef du village, par un agent du ministère de l’Agriculture à titre privé (moyennant une somme allant de 10 000 à 20 000 FCFA). Ces contrats sont labéllisés sous diverses appellations : contrat de cession (pour une cession d’un droit d’usage à long terme), attestation ou convention de partenariat (pour le planter-partager), attestation de vente, convention de vente, contrat de vente. Ces contrats mentionnent généralement l’identité des parties, les noms des témoins, la localisation de la parcelle, la superficie, le montant total versé dans le cas de l’achat-vente, le montant à verser ultérieurement (s'il y a plusieurs versements). Les signatures sont parfois légalisées à la mairie ou à la sous- préfecture ou visées par la chefferie villageoise. Ce qui, sans donner de valeur légale au document, en renforce la crédibilité dans l'optique des acteurs (coût variant de 500 à 5 000 FCFA). Ces "papiers" constituent une preuve de cession mobilisée par le sous-préfet ou les autorités coutumières en cas de conflit.

5.3 La production de documents administratifs par les directions locales du ministère de l’Agriculture : une garantie pour une mise en valeur de la parcelle acquise Cette pratique ne constitue pas une reconnaissance légale de la transaction. Elle est toutefois une pratique courante de sécurisation : attestation de délimitation (parcelle non encore mise en valeur) ou de plantation (parcelle déjà cultivée), après levé de parcelle. La sécurisation apportée par ces

The 19th AfRES Annual Conference 461 documents réside dans les conditions de leur production. Dans la réalisation du levé de parcelle, les limites (souvent sources de conflit) avec les voisins sont bien précisées, l’établissement du procès-verbal fait intervenir tous les ayants droit, les autorités villageoises, les autorités administratives – en particulier les agents du département du ministère de l’Agriculture – voire des notaires. Les coûts sont à la charge de l’acquéreur, le coût moyen est de 97 000 FCFA, avec un minimum de 65 000 FCFA et un maximum de 300 000 FCFA. Pour les élites acquéreurs enquêtés, l’établissement de ces documents administratifs est non seulement une garantie pour une mise en valeur de la parcelle acquise, mais aussi une preuve du transfert des droits fonciers acquis.

5.4 La certification des terres: une formalisation gage de la confirmation des droits fonciers des élites La certification des terres (telle qu’organisée par la Loi foncière de 1998) reste peu pratiquée : 14 acheteurs seulement ont engagé une demande de certificat foncier. Ce faible recours à la certification vient, selon les élites enquêtées, du coût élevé de la procédure (plus de 150 000FCFA/ha pour la seule intervention du géomètre). Ils attendent, pour engager cette dernière, que la plantation entre en production. On peut donc anticiper un recours plus marqué, à terme, à la certification. Selon la directrice de la Direction départementale de l'agriculture de Toumodi, 95 % des 377 demandes de certificats en cours de traitement par ses services émanaient de cadres.

5.5 La sécurisation par l’enchâssement social : une garantie de cohésion sociale et une prévention en présence ou l’absence du certificat foncier La sécurisation par l’enchâssement social est une pratique perceptible par l’accroissement des contreparties non contractuelles. Certains acquéreurs conscients du fait qu’ils sont souvent exposés au risque de remise en cause d’un arrangement, les acquéreurs eux-mêmes peuvent jouer le jeu de l’augmentation des contreparties non contractuelles, des services divers, matériels et financiers, rendus à celui qui leur a cédé la parcelle qu’ils exploitent. Cette pratique de sécurisation est avérée chez les acquéreurs sur les sites enquêtés. Ces propos recueillis auprès de quelques acquéreurs enquêtés sont parlants.

« Quand tu donnes des cadeaux de temps en temps à celui qui t’a donné la parcelle, ça permet de renforcer les relations et ça

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créé une confiance entre vous. En faisant ces gestes, c’est une manière aussi d’être en sécurité sur la terre exploitée ». (Inspecteur des impôts)

Cette pratique de sécurisation permet donc aux élites en cas de contestation d’une tierce personne (membre de la famille du cédant ou non) d’avoir le soutien du cédant ou de certains membres de sa famille en cas de conflit. L’accroissement des contreparties après la transaction peut être aussi un moyen pour l’acquéreur de sécuriser son investissement en l’absence de certificat foncier.

6- Les enjeux fonciers et sociaux induits par ces transferts fonciers Le foncier constitue un enjeu qui met en rapport de nombreux acteurs aux intérêts souvent divergents. Dans le cadre les investissements des plantations d’hévéas des élites, divers conflits intrafamiliaux, interfamiliaux et intervillageois émergent et s’entremêlent dans certains cas. En plus de ces conflits familiaux et villageois, d’autres enjeux des plantations d’hévéas des élites relatif à l’incidence sur la distribution des ressources foncières émergent.

6.1. Tensions et conflits fonciers De manière générale, les conflits résultent de nombreux facteurs que l’on se saurait énumérer ici. Mais généralement, ces conflits traduisent une divergence d’interprétation des acteurs en ce qui concerne les normes et les principes communs de gestion de la terre à l’échelle de la famille ou du village. Certains acteurs optent pour une logique productiviste tandis que d’autres soutiennent une logique rentière. Lorsqu’une élite à la recherche de la terre a affaire à une famille ou à un village se trouvant dans cette dernière situation, le conflit ne tarde pas à émerger. Parfois, les élites sont souvent victimes de leur désintéressement aux besoins des familles cédantes de la communauté villageoise. Les conflits peuvent également être l’expression d’une insubordination de certains membres à l’idéologie familiale sur le foncier. Cette attitude est propre aux cadets et aux jeunes générations qui remettent en cause le contenu des droits que leur imposent les aînés. C’est ainsi que les acquisitions foncières de grande envergure de certaines élites sont souvent perçues par la jeunesse ou la communauté villageoise comme des accaparements de terres.

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A Kpouèbo nous avons identifié trois principaux niveaux de conflits fonciers liés aux plantations d’hévéas des élites : les conflits intervillageois, intrafamiliaux et les conflits entre élites et les propriétaires fonciers

Les conflits entre villages sont fréquents lorsque la parcelle disputée se situe à la frontière de deux villages. Il s’agit de conflits complexes impliquant à la fois des familles, mais aussi des lignages dans les deux villages limitrophes. Ce sont les conflits nés sur les limites des terroirs villageois. De nos jours des villages voisins revendiquent de part et d’autre la limite de leurs terres soit pour agrandir leur exploitation, soit pour conquérir quelques portions de terres fertiles jusque-là non exploitées. Ces conflits sont de plus en plus récurrents en Côte d’Ivoire. Cette recrudescence s’explique par la méconnaissance des limites par les plaignants et à l’inexistence d’un recueil de documents historiques permettant d’identifier aisément les limites du patrimoine foncier de chaque village. Dans la sous-préfecture de Kpouèbo, nos enquêtes révèlent que ces conflits autrefois moins fréquents se sont accentués aujourd’hui avec la ruée des élites dans certains villages à la recherche de parcelles pour acheter. Face au pouvoir de l’argent et l’arrivée de nouveaux acteurs solvables dans un contexte local de crise économique, certains chefs de village revendiquent les espaces non encore exploités appartenant à leurs voisins qu’ils auraient installées depuis des lustres. Ces revendications tendancieuses, fondées sur le droit de propriété du premier arrivant, vont engendrer de nombreux conflits entre villages. On dénombre ainsi sept (7) cas de conflits : Adaou vs Kalekoa, Akakro N’Gban vs Kpouébo, Kpouébo vs Assakra, Dida-Blé vs Dida-Yaokro, Assakra vs Akakro N’Gban, Adaou vs Akakro N’Gban ; Kalékoa vs Kpacobo. Le dernier cas cité portant sur une parcelle de 700 ha vendue à un colonel par les chefs coutumiers du village de Kpacobo, s’est soldé par un affrontement avec des fusils de chasse entre les deux villages suite aux revendications des populations de Kalekoa. Il a fallu l’intervention de l’armée et de la gendarmerie pour contenir les deux belligérants.

Les conflits intrafamiliaux opposent le plus souvent les membres d’une même famille. Ces conflits surviennent en général quand un des parents (frère, ainé ou petit frère, cousin, neveu, tante, oncle) du cédant résidant le plus souvent en ville conteste la cession. Ces transactions sont pour la plupart du temps conclues en leur absence. Ici, la présence des élites est encore perceptible.

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Les conflits entre élites et populations rurales surviennent lorsque l’élite ne respecte pas les clauses contractuelles ou ses engagements vis-à-vis du cédant ou des populations. Par exemple, à Dida-Kouadiokro, Une plantation de 10 hectares devrait être pour le chef de famille ayant cédé 187 hectares à un directeur de la Compagnie Ivoirienne d’Electricité (CIE), cette plantation a bien été réalisée, mais n'a ensuite plus été entretenue– l'attente du cédant étant que cet entretien était à la charge de l'acheteur. A Kalékoa, le village est toujours en attente de l'électrification et de la réalisation d'un château d'eau, alors que ces investissements auraient dû être réalisés avant l'engagement de la plantation par l'acquéreur (les 67 ha ont été intégralement plantés à ce jour) dans ces deux cas, cette absence de respect des engagements de l'acquéreur ne se traduisait, lors des enquêtes, que par un ressentiment exprimé par les villageois.

Pour ce qui est de la question relative à l’incidence des transferts sur la distribution foncière, l’analyse de nos données empiriques montre que ces acquisitions peuvent conduire à la longue à : (i) une concentration foncière dans les mains des élites, (ii) une disparition des terres propices aux cultures vivrières, (iii) à une exclusion des femmes et des cadets sociaux.

6.2 Une concentration foncière. Celle-ci comme nous l’avons mentionné est avérée lorsque la plupart des terres sont concentrées dans la main d’un petit groupe d’individus. Concernant la question relative à la concentration foncière, nous avons calculé le ratio en pourcentage au niveau de chaque sous-préfecture. Ces ratios révèlent que les cadres détiennent 4,5 % des superficies de terre rurales au niveau de Toumodi. Ces résultats témoignent à minima d’une éventuelle concentration foncière des terres rurales à la longue dans les mains des cadres dans ces différentes localités concernées. A l’échelle villageoise, nous avons constaté sur le terrain, notamment dans les villages d’Adou et de Kalekoua situés dans la sous-préfecture de Kpouèbo que certaines familles cédantes plaident auprès de certains cadres auxquels ils avaient cédé leurs terres pour avoir une portion de terre pour cultiver du vivrier. En dehors de ces facteurs, on note également une forte présence de ces acquéreurs avec des superficies variant de 50 à plus de 1000 hectares. Les plus importantes dénombrées auprès des enquêtés sont impressionnantes : un homme d’affaires (+ de 3 kilomètres), un ancien directeur du port autonome (1200 ha), un ancien directeur de la Compagnie Ivoirienne d’Electricité (1075 ha), un ancien Premier ministre (700 ha), un

The 19th AfRES Annual Conference 465 responsable de la fédération ivoirienne de football (700 ha), ancien dignitaire de la cour constitutionnelle (400 ha), colonel (700 ha).

6.3. La disparition des terres propices aux cultures vivrières Dans le département de Toumodi, la sous-préfecture de Kpouèbo est une zone de forte production de cultures vivrières notamment le riz et la banane plantain depuis des lustres. La situation est différente aujourd’hui avec la création des plantations des élites. Les lopins de terre disponibles où se pratiquent ces cultures sont presque plantés en hévéa à l’image des villes comme Grand-Lahou, Aboisso, Bonoua ou tout le couvert végétal est dominé par les plantations d’hévéa. Pour traiter cette section nous avons mobilisé les observations et entretiens réalisés avec les autorités sur chaque site (sous-préfets, chefs de village, présidents de la jeunesse, les directeurs départementaux de l’agriculture). Il ressort de ces différents entretiens un certain nombre de facteurs significatifs, révélateurs et témoignant d’une potentielle disparition des espaces cultivables pour les cultures vivrières dans les localités enquêtées. Ces facteurs sont entre autres (i) la baisse de la production du riz pluvial qui est passé de 150 tonnes en 2011 à 17 tonnes en 2017, (ii) l’augmentation du prix de la banane plantain qui est passé de 7 bananes à 100 FCFA sur le marché de Kpouébo en 2011 à 3 bananes à 100 FCFA en 2017, (iii) une interdiction des ventes de terre par le Sous-préfet par la signature d’une circulaire pour freiner les ventes dans la sous- préfecture, (iv) la sensibilisation des populations locales face aux ventes anarchiques. Ces actions entreprises par les autorités locales démontrent la gravité du phénomène dans cette localité.

6.4. Une exclusion des femmes et des cadets sociaux L’exclusion survient lorsque la majorité des terres dans une localité donnée est détenue par un petit nombre d’individu. Cette situation peut avoir des conséquences au niveau des familles. En effet, face à l’argent et des acteurs solvables tels que les élites, les chefs de famille n’hésitent pas à brader la terre au détriment des ayants droit. Il arrive même que des ayants droit voient leurs droits remis en cause. Vu sous cet angle, ces cessions conduisent au rétrécissement considérable, voire à la disparition totale du patrimoine foncier familial. Ces cas de cession faites par les chefs de famille, identifiés sur nos sites sont impressionnants :

Cas 1. K.K.J, jeune chef de famille âgé de 38 ans résidant à Kalékoa cède trois parcelles (49 ha, 40 ha, 30 ha) à trois grands cadres. Après cession, il

466 The 19th AfRES Annual Conference se retrouve avec une superficie de 9 ha sur 128 ha, presque la totalité du patrimoine foncier familial vendue.

Cas 2. Y.N, chef de famille âgé de 61 ans résidant à Dida-Kouadiokro fait une cession de deux parcelles (40 ha, 20 ha) respectivement à un grand cadre du public et un grand homme politique. Il ne lui reste plus qu’une parcelle de 2 ha.

Cas 3. G.Y, chef de famille âgé de 82 ans résidant à Adaou cède 62 ha à un comptable. Le patrimoine foncier est réduit à zéro.

Les données d’enquête montrent aussi que la superficie des terres cédées chez les enquêtés est trois fois plus importante que la superficie restante (2233,2 ha cédés contre 681,25 ha). Ces résultats traduisent également un rétrécissement du patrimoine foncier des cédants. On peut interpréter ces cessions comme une sorte de rationalité limitée chez ces cédants, caractérisée par ce que les psycho-économistes appellent la préférence pour le présent. En effet, ces derniers sachant bien qu’ils disposent d’un patrimoine foncier insuffisant cèdent les terres familiales sans se soucier des générations futures. La satisfaction des besoins immédiats, prime plus sur tout autre projet.

Discussion et Conclusion La création des plantations d’hévéas est perçue comme un moyen de diversification des ressources de revenu ou un complément de revenu, une manière de maintenir le niveau de vie après la retraite, une constitution d’un patrimoine pour les héritiers, dans certains cas un blanchiment des fonds d’origine douteuse pour les élites en Côte d’Ivoire. La terre qui est un capital précieux, indispensable à la création des plantations d’hévéa s’obtient principalement par les contrats d’achat et de planter-partager. Le premier leur permet de devenir des propriétaires et de détenir tous les droits fonciers par l’établissement du certificat en vue de travailler librement sur la parcelle acquise. Le second est vu comme un contrat gagnant-gagnant, et évite les aigreurs de la part du cédant et les membres de sa famille. Pour parvenir à leurs fins, « ces hommes de l’articulation ville- campagne » ou absentéiste tirent profit du pluralisme institutionnel dans un contexte de post-conflit. Au rythme actuel des acquisitions foncières liées à la création des plantations d’hévéas par les élites, la sécurité alimentaire et la cohésion sociale constituent un réel motif de préoccupation. La compétition entre l’hévéaculture et les cultures vivrières

The 19th AfRES Annual Conference 467 est réelle et s’exprime en termes de disponibilité de la terre. La conséquence logique de cette compétition foncière est la baisse de la production des cultures vivrières, qui handicape le ravitaillement des villes dans le pays. Cette tendance explique en partie la flambée des prix des produits vivriers observée ces dix dernières années. Un meilleur encadrement de la filière de l’hévéa soutenu par une réforme foncière volontariste axée sur ces nouveaux acteurs devrait leur permettre de participer plus efficacement au développement durable de leurs localités respectives. Ces acteurs pourraient être de véritables entrepreneurs agricoles, innovateurs apportant le développement dans les localités d’accueil que de simples rentiers soucieux de maximiser leurs gains.

Bibliographie Affou Yapi S., 1987. Les planteurs absentéistes de Côte d’Ivoire. ORSTOM, Paris. Chauveau, J.-P. (2000). Question foncière et construction nationale en Côte d’Ivoire. Les enjeux silencieux d’un coup d’État, Politique Africaine, 78 : 94-125. Colin J.-Ph., 2008. Éude sur les locations et les ventes de terre rurales en Côte d’Ivoire. Abidjan : Républiquede Côte d’Ivoire, Ministère de L’agriculture, Direction du Foncier Rural et du Cadastre Rural. Délégation del’union européenne en Côte d’Ivoire. Rapport 1, Diagnostic des Pratiques. Colin J.-Ph., F. Ruf, 2011. Une économie de plantation en devenir. L’essor des contrats de Planter-Partager,comme innovation institutionnelle dans les rapports entre autochtones et étrangers en Côte d’Ivoire. Revue Tiers Monde 207, 169-187. Colin, J.-P., Ruf, F. 2009. The "Plant & Share" Contract in Côte d’Ivoire: Incomplete Contracting and Land Conflicts. Paper presented at the 13th Annual Conference of The International Society for New Institutional Economics, University of California at Berkeley, 18-20 juin. Colin J.-Ph et Tarrouth H.G., 2017, Les élites urbaines comme nouveaux acteurs du marché foncier en Côte d’Ivoire, Géographie, Économie, Société 2017/3 (Vol.19), p. 331-355. DOI 10.3166/ges.19. 2017.0016 Dubresson A., Raison J.-P., 2003. L’Afrique subsaharienne : une géographie du changement, Paris, Armand Colin, 546 p Fauré Y.-A., Médard J.-F. 1995. L’État-business et les politiciens entrepreneurs. Néo-patrimonialisme et big men : économie et

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politique, in S. Ellis & Y.-A. Fauré (dir.), Entreprises et entrepreneurs africains, Paris, Karthala–Orstrom : 289-309. Gastellu J.-M. et Affou Yapi S., 1982. Un mythe à décomposer : la bourgeoisie de planteurs. In Fauré Y.A. (ed.), Médard J.F. (ed.), État et bourgeoisie en Côte d’Ivoire, Karthala, Paris, Gastellu J.-M. et Affou Yapi S., 1982. Un mythe à décomposer : la bourgeoisie de planteurs. In Fauré Y.A. (ed.)Médard J.F. (ed.), État et bourgeoisie en Côte d’Ivoire, Karthala, Paris, 149-179. Mlan,K S., 2015. Une localité, un espace reboisé : une réponse à la concentration foncière et aux « jeux et pouvoirs » des dirigeants politiques en Côte d’Ivoire, Revue Africaine d’Anthropologie, Nyansa-Pô, N°19 – 2015, EDUCI, ISSN 1819-0642

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CHALLENGING INSTITUTIONAL FRAMEWORKS IN LAND ADMINISTRATION: MANY INSTITUTIONS, BUT LESS PROPERTY RIGHTS (CASE OF BURUNDI)

Turimubumwe Prosper PhD Student (Land Policy and Governance) Bahir Dar University, Institute of Land Administration

Abstract Land administration as one of the mechanisms of availing property rights to owners cannot be achieved unless there are well-functioning and coordinated institutional frameworks. Institutions are there to provide legal frameworks, technical, human and financial support to help land administration initiatives work effectively. The number of these institutional frameworks may be insignificant on rendering property rights if not well organised and focussed. Instead of being opportunities, they may become challenges to land administration in the country. This paper explored the challenges emanating from the existing institutional frameworks dealing with land administration in providing property right in Burundi.

A mixed research design has been applied to capture qualitative and quantitative data. A desk review of different government reports, academic and professional papers as well as books have been consulted. Also, structured and semi-structured interview have been used to collect primary data on property rights in Burundi. A total of 60 respondents have participated in this paper such as officials in land department, local leaders, and individual land owners. A nonprobability, with snowball sampling method has been applied to identify 60 respondents (40 for structure interview and 20 semi-structured interviews). Descriptive analysis and inferential statistics have been used in data analysis.

The findings show that Burundi has got many institution frameworks, but are fragmented and dispersed. This engendered the lack focus on specific issues related to land administration. As results, challenges faced by many groups of people are not addressed by these institutions which make these people to have less property rights. Consequently, these people are marginalised; becoming poor and pauper, and suffering from food insecurity. Also, they live in extreme poverty, their children are dropping

470 The 19th AfRES Annual Conference out from their studies and even some families flee the country. Therefore, the government of Burundi is advised to have one ministry that will deal with land issues with focus and specificity. Keywords: Land Administration, Institutional Framework, Property Rights, Burundi

1. Background information The emergence of land administration started as a land administration theory that dated for long time as means of supporting land taxation and markets by providing clear land information, legal recognition of owners and related infrastructure to parcels (Williamson, Enemark, Wallace& Rajabifard, 2010). William (et al., 2015) highlight that collecting and availing land related information was in place more than 400 years. But the heyday of land administration is attributed to Napoleon’s Government which concentrated its effort to documenting on land information for the betterment of his imperial land. Step by step, the importance of land administration was broadened to support the provision of security of tenure, a basis for valuation and taxation of property; access to credit for further investments, for sustainable land use, minimisation of land conflicts, and better management of natural resources (Oosteroma & Lemmen, 2015). This can be stressed on as the root cause of land administration being aspired and inspired by development agencies, government and researchers to support the theory.

2. Land administration: approaches and tools Land administration is a process once followed effectively, land rights are enhanced for all land owners despite their socio-economic, political or gender status. For that, many tools have been invented and adopted to cater for needs of poor and marginalised people so that they can access to land rights. For example, the Fit-For-Purpose is an approach that was conceptualised to meet the needs of poor and vulnerable people to access to system that can register and protect the land rights in short time, low and affordable cost needed via large scale mapping, participatory as well as inclusivity (Enemark, Clifford-Bell, Lemmen &McLaren, 2014). According to the authors, it is not a new concept as well, but its flexibility, upgradability, reliability and attainability, added to other features allows vulnerable and other disadvantaged people to secure their property rights. However, its application and effectiveness have to be checked especially in developing countries where it is not easy to apply all new concepts.

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Also, the Pro-Poor Approach is inscribed as another tool due to its affordability in cost and process as well as in time saving to provide land tenure security to the poor (Zevenbergen, Augustinus, Danilo, & Bennett, 2013). Many benefits to be accumulated after the implementation of the approach were listed, but what can be accepted with the authors is their sincere agreement that these benefits are not set as default for poor people. This shows how far these tools and approach must be checked and even re-checked before applying them in African context. Moreover, tools like Participatory Land Administration, Crowdsourced, Participatory, and Voluntary participation approaches have been designed and piloted in many African countries. But none of them has been proved to be effective and massively adopted for duplication in other countries of the same status. Participatory Land administration has been recently tested in Northern part of Ghana, but the results show that it needs further studies for its effectiveness so that it can be integrated in the formal land administration system (Kwabena, Bennett & Zevenbergen, 2017).

3. Role of institutions in land administration In order these tools, approaches and strategies to be effective in responding to challenges in hands, they need well-functioning and coordinated institutional frameworks. These institutions may be termed as hardware institutions for organisational structures such as ministries, commissions and private actors including NGOs and the software institutions such as legal texts that include policies, proclamations and directives or rules and regulations for land access, land use, users’ rights and the like. Williamson, Enemark, Wallace and Rajabifard (2014) talk about land administration systems that are considered as a country’s infrastructure to implement land policies and other land related decisions. To support the idea, Lee, et al. (2016) argue that institutional frameworks in land administration should be affordable and good practices included so that land issues might be addressed effectively. That is what we are missing in African and developing countries. Many institutional frameworks are designed or even imported by donors and governments are requested to apply them as they are. At the end, the problems persist or even are aggravated due to the lack of focus and contextualisation.

In addition to that, many institutions such as Ministries, Commissions, Committees and Organisations are created, all dealing with land issues, but with overlapping responsibilities, conflicting structures, and institutional interface. At the same time, laws, policies and bylaws are issued, but still

472 The 19th AfRES Annual Conference issues in hand remain unsolved. Myers et al, (2004) cited in Ykhanbai (2008) highlights that the failure of institutions in land administration may welcome conflict and instability, insecure land and doubtful property rights as well as inefficient land cadastre, landlessness and or inequitable land distribution, poorly performing land markets, and unsustainable natural resources management. From here, we can understand that having ill- functioning institutional frameworks have further impacts to the existing challenges on land and land owners especially on land or property rights.

4. Concept of property rights Property in this paper refers to land and or development on it which can be transformed in an asset or capital (Platt, 2014; De Soto 2000; and McAuslan, 1987). De Soto goes far by stating that ‘property is not the house itself but an economic concept about the house, embodied in a legal representation that describes not its physical qualities but rather economically and socially meaningful qualities we humans have attributed to the house’ (2000, p.2). In other hand, McAuslan (1987) argues that land has multidimensional aspects (economy, social, political, and development) and can harnesses social relations between people and society, and economic relations between persons and persons. The author is in view that to understand the concept of land, we need to mirror it in three circuits: (i) customary land and its regulation via traditional processes; (ii) an unofficial market in land regulated by custom and practice; and (iii) the modern official land market regulated by statutory codes of law interpreted and applied by professionals and state officials. All these meanings and explanations on land lead us to think of rights that human as the user, planner and active actor have on it and how these rights are among fundamental human rights.

When you consult literatures on property rights, different definitions are provided. However, Bromley (1991:15) has defined property rights concretively as “the capacity to call upon the collective to stand behind one’s claim to a benefit stream”. Then, Schlager and Ostrom (1992) grouped these rights in bundle whereas Meinzen-Dick & Di Gregorio (2004) broadly established the table showing the relationship between the user rights and decisions to be taken on property. Therefore, all bring us about to understand the concept of property rights in broad sense. Di Gregorio et al. (2008) link directly the property rights with the poverty reduction where institutions work hard to enforce and enhance property rights to individuals and groups of people in the society. Many authors and land administration practitioners have tried to update and upgrade the bundle of rights but, still

The 19th AfRES Annual Conference 473 the five fundamental rights as propounded by Schlager and Ostrom (1992) remained as the best reference.

Fig.1: revised bundle of property rights as propounded by Schlager and Ostrom

Source: https://capri.cgiar.org/2015/11/18/blog-reexamining-a-classic- an-update-to-schlager-and-ostroms-bundle-of-rights/; Re-examining a Classic: An Update to Schlager and Ostrom’s Bundle of Rights.

4.1 Types of institutions and property rights support Property rights need to be supported by institutions so that they can be enjoyed by property owners. Di Gregorio et al. (2008) state that ‘to be effective, property rights need recognition and legitimacy. This, in turn, implies the need for governance structures that enforce rights and the corresponding duties of others to respect those rights’ (2008, p 6). This shows how institutions play key roles in making sure property rights are available, enjoyed and render what is expected by property owners. In the same perspective, Wolfgang (2007, p. 4) supported Di Gregorio et al. (2008) that “property rights – like human life, liberty and other human rights – are protected primarily by internal institutions of society, rules which have emerged from experience and which are spontaneously enforced”. However, considering institutions at that level can create some confusion on the individual capacity to protect his or her property rights. What I understand is that institutions provide machinery and mechanisms for

474 The 19th AfRES Annual Conference harnessing property rights by using state law, police and courts to impose and punish lawbreakers which individuals may not afford. Also, institutions work in harmony with public interest and sustainable development when it comes to property issues. Finally, these institutions are not only state based structures, but, they include private and traditional institutions that can have any stake or contribution in providing and or harnessing property rights to local people.

Svitlana (2000) points out that private institutions play key role in enhancing property rights that lead to development and improvement of business among entrepreneurs and other actors; whereas Avis (2016) stresses on how private sectors work hard to address conflicts in fragile conflicted affected societies so that they can revive their wellbeing. Here, we can also include non-governmental organisations and development partners such as World Bank, African Development Bank, UNDP, FAO, UN- Habitat, African Union-UNECA and others that work closely with governments to make sure property rights and tenure security in general are enhanced in developing countries. In many countries especially in developing countries, all these institutions can work together or separately in addressing property rights issues.

Nonetheless, how much these institutions may be effective and efficient is still doubtless especially when they are in big number and varied. According to Tchatchoua-Djomo (2017) when he was exploring the linkages between land governance reforms, institutional pluralism and tenure security in Burundi, he revealed that the outcomes were ambiguous due to institutional multiplicity. This shows how the big number of institutions that were in the case study were not helpful in rendering the projected outputs. The reality is that some confusion may appear in terms of focus on issues. Also, there may be overlapping of responsibilities and difficult to control the accountability during technical, financial and human resource mobilisation. In land sector, property rights may not be provided adequately and with specificity.

4.2 Why property rights Property rights are directly linked to the capital generation (De Soto, 2000) and wealth creation (Wolfgang, 2007). This implies that addressing issues of property rights to many developing countries may be among the remedy to challenges that hamper the development of these countries. FAO (2002b) points out that property rights catalyse the economic growth and (Everest-

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Phillips, 2008) is convinced that production can be increased manifold once property owners have full rights on property. This situation will allow individuals to increase their incentives. Individual property rights encourage individual property owners to involve in various economic activities and spent much time looking how they can generate more profit from their properties. At community level, households are eager to work together and invest labour and other resources in land to make sure they make profit together.

Generally speaking, people whether in urban or in rural areas are conscious with security of tenure and rights on their property when it comes to investing in land. Of course, when property rights are secured, property owners save money and time that were to be used in defending their property rights in courts and other legal institutions. For example, the literature shows that among others challenges that poor and marginalised group of people are facing in Burundi, are the time and cost incurred when searching their rights in courts. Also, this group of people spent much while looking for formal way to own their properties especially in urban areas (GoB,2008). Having property rights and tenure security has been important in Burundi and in developing countries because many research findings show that women with full rights on land are no longer vulnerable or marginalised in their families. One of the reason is that they save time and cost as well as energy that are invested in other economic, social, cultural and political activities (Hemalatha, 1994 and Luna, 2014). Other implication is that, it is easy for them to form associations that are engaged in generating income, even allowing them shifting from on-farm to off-farm activities. In addition to that, other researchers bridge property rights to equity and poverty reduction when poor and marginalised people access to land and enjoy the bundle of rights.

5. Methodology and data analysis This paper explores the challenges emanating from existing institutional frameworks that are in place and in use when administering land related properties for the case of Burundi so that property rights can be enhanced. It addresses the following two research questions (i) what are existing institutional frameworks that are used in Burundi to address property right issues, (ii) who and how lack of property rights affect some groups of people in Burundi?

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To respond to these questions, a mixed research approach is applied to generate qualitative and quantitative data from different sources as secondary and primary data. A desk review of different government reports, academic and professional papers as well as books have been consulted. Also, structured and semi-structured interview have been used to collect primary data on property rights in Burundi. Therefore, 60 respondents have contributed in one way or another as information providers through the mentioned tools. Respondents in this paper included officials in land department, local leaders, investors in land and individual property owners. The paper applied nonprobability with snowball sampling method to identify these 60 respondents (40 for structure interview and 20 for semi- structured interview). The paper used descriptive analysis and inferential statistics in data analysis. Critical examination of respondents’ personal perceptions about property rights have been qualitatively analysed. Findings are presented in text form, figure and percentages;

Findings

3.1 An overview on Burundi Burundi is one of six East African Community members. It is bordered by Rwanda in North, Tanzania in East and South and Republic Democratic of Congo (DRC) in west. Burundi is among small countries with 27880 km2 and a population estimated at 10.8 million. It has a density is 451 per Km2. Also, it is a country that has been torn by civil wars from 1962 up to 2015 where many Burundians have fled the countries, sometime repatriating and then fleeing again. Among other sectors that have been affected by these frequent civil wars is land sector. According to (Tchatchoua-Djomo, 2018, p.1) “violent conflicts significantly affect land tenure and land governance”. This show how land has been one of central issue that is in need of intervention. Land tenure in Burundi is exercised in customary and statutory way.

3.2 Land tenure regimes in Burundi According to Polack and Cotula (2011) defines land tenure regimes as the reference of systems of rights, rules, institutions and processes under which land is held, used, managed and transacted. In the same perspective, Damonte (2016, p.10) defines land tenure regimes as “systems of individual or collective control and regulation (collective-choice level rights) of individual or collective access and use (operational level rights) of land”. There is a similar thought that land tenure regimes should be defined by

The 19th AfRES Annual Conference 477 looking on bundle of rights and relationships between people or group of people to a piece of land. For rural setting, the author specifies four land tenure regimes that are individual, family, community, and external. Burundi recognised three types of land regimes where we distinguish the public land that include lakes, rivers and marshes), state land which is land governed by government entities and private land that can be owned by individuals or group of people (Government of Burundi, 2011).

Land tenure in Burundi is guided by customary and state laws. Customary laws are used specially to administer land that is not registered and has no any legal documents. This includes land inherited from the parents or accessed via the gift from friends or families. Other land that falls under customary laws is land bought in rural or peri-urban areas where the documents attesting the transfer are signed by local leaders. The rest of the lands are those found in urban areas where the attribution was legal and documents provided to owners; these lands are governed by state laws. However, it does not mean that customary laws are stand-alone but when it is necessary state laws are applied especially when a serious conflict arises. Land has been a centre of importance for individuals or the state. As it is attributed to be a source of wealth and power, it needs a sound administration which will make the land be profitable and conflict-free.

3.3 Institutional frameworks in Burundi Land administration in Burundi is one of the tasks and responsibilities that are performed in four ministries: the first being the Ministry of the Environment, Agriculture and Livestock which is responsible for managing rural land and peri-urban land. The second is the Ministry of Transport, Public Works, Equipment and Land-Use Planning which is mandated to manage urban land and other issues related to urban land. The third is Ministry of the Interior, Patriotic Training and Local Development (MoIPTLD) concerned with land certification at local administration level (commune and village). It is responsible on certification of rural land and conflict resolution. The fourth and last is the Ministry of Justice and Seals Keeper (MoJKS) which is concerned with titling and other judicial issues related to land.

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First Vice-President + Second Vice- President

Ministry of Transport, Ministry of Public Works, Ministry of Ministry of the Equipment Justice and the Interior, Environment and Land-Use Keeper of the Patriotic , Agriculture Planning Seals Training and and (MoTPWELU (MoJKS) Local Livestock Development P) (Mo EAL) (MoIPTLD)

Private sector + NGOs + Civil Society; National Security council, Land commission, and CNTP

Department of Directorate General Directorate of Land Offices rural land of Regional registration and  Communal management: Planning: management of land land desks  Forest and  Urban titles:  Land water planning  Surveying and certificate manageme  Urban documenting  Village land nt management land properties council  Land use  Regional  Title provision planning planning  Soil protection

Fig.1: Organigram of institutions that are concerned with land issues in Burundi

Source: own construct in reference to field findings, 2019

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The figure shows the hardware as organisational structure of institutional framework in Burundi that deal with land issues from national level at village level. Land administration is performed in different ministries as it is presented in the figure. Each Ministry has one or more duties on land sector. What can be grasped as special in this structural organisation is the in-between position of private sector, NGOs, and civil society in dealing with land issues to provide property rights to property owners.

3.4 Legal frameworks in land administration These institutional frameworks are considered as software institutions that are formulated to guide, assist and govern land administration in Burundi. If there are among lucky countries that have enough legal frameworks in land administration, is Burundi. Land administration and property rights are mentioned and discussed in many legal texts that are used in the country. This section explores these legal texts in hierarchical order where the challenges or opportunities on property rights rendering are highlighted.

3.4.1 Constitution of Burundi The constitution of Burundi does not talk much on land issues except art.29 which stipulates that all Burundians have equal right to own property and enjoy rights on it. However, it does not specify the rights to enjoy among the bundle of rights as highlighted in the previous discussion. In few words, land and property issues are not constitutional as it may be observed in some countries (GoB, 2018).

3.4.2 Land policy (Code Foncier, 2011) Burundi is among African countries that have land policy for defining legal rights and conditions to access and/or to own this essential resource. It also regulates its distribution among multiple stakeholders in Burundi. On another hand, land policy reflects the relations and political choices regarding the distribution of power between the state, its citizens, and local systems of authority. Therefore, land policy of Burundi is the core document that states and determines all related land matters. It supports special laws governing certain aspects of activities such as urban planning, real estate development, land use, and other land management issues. It contains also specific laws that determine the respective regimes such as forests, protected areas, water as well as mining substances and oil. The document can be found in French as official language and in Kirundi as national language. It is the document that comprises all aspects of property rights from access to alienation as mentioned in fig.1. The document has the

480 The 19th AfRES Annual Conference following parties: Article 16-22: complete or full ownership, Art. 23-29: co- ownership, Art.44-56: emphyteosis, Art. 57-87: usufruct, Art. 88-90: right to use, 96-133: penalty/servitude, 134-186: mortgage.

However, the policy in all 189 pages, 460 articles, no single paragraph that states about redistribution of land so that landless people may access to land (Case of Batwa Community and returnees); issues of inheritance of land by girls and women is not there; property rights of poor and vulnerable groups of people are not mentioned; challenges faced by Internal Displaced People (IDPs), returnees from refugee camps in neighbouring countries and orphans who are declared and registered as “No father” in National Registry are not addressed. Also, the policy does not shed light on the rights of woman on alienation or disposition once they inherit land from their husband in case of death. It has to be noticed that the practice and traditional norms in Burundi do not allow women to sell or mortgage land inherited from their husbands. But she can use it until she dies as usufruct. Also, this usufruct is conditional or guaranteed normally if the woman has males’ children.

3.4.3 Code of Family and Persons of 1993 (code des personnes et de la famille) This code was supposed to specify the rights of women on inherited land in case of divorce or death of her husband. However, it is mute. Then, it supports the husband during divorce case to enjoy the full rights on property. The Code stipulates that in case of divorce, the two spouses may divide and share the accumulated wealth (GoB, 1993). But, the rights of the wife on these shared properties especially rights on land are not clear whereas for husband it is as ‘set by default’ to enjoy all rights on land. Also, the code does not say anything about the rights of widow in case the husband has died. This state of affairs smoothens the brothers’ in-law from the deceased husband to ill-treat the widow on family property left by her husband. Also, if the woman was not legally married, she has no right or share on the land. If she has no registered child (boy), she is automatically chased.

Urbanism, human settlement, and construction Policy 2016 (Code de l’urbanisme, de l’habitat et de la construction au Burundi) Concerned by fixing rules and regulations on urban land use, urban development, housing and shelter acquisition, the code is not specific on how women especially those who are head of households, poor and

The 19th AfRES Annual Conference 481 vulnerable people may access and exercise property rights in urban areas. The code fixes how land in newly planned neighbourhoods should be acquired and developed GoB, 2016). However, the rules and regulations generalise and do not consider any inconveniences on low and middle income earners they encounter when it comes to acquiring land for shelter and other development activities. As results, this category of people does not enjoy property rights in urban areas. Consequently, they find themselves in squatters and other informal settlements as well as hazardous areas.

3.4.4 Letter on Land Issues 2008 (Lettre de Politique Foncière) This is a document in terms of letter that highlights all if not some issues related to land. The following issues are identified (i) The land related problems as a central issue, (ii) Increasing pressure on land by different activities, (iii) Tenure and property rights security, (iv) Customary land management erosion, and (v) Failure of the State services in the follow-up of the lease of public lands. The problems related to property rights mentioned here are concerned with land boundaries between neighbours, authentication of transactions, and transfer or concession of state lands. By these means, households want the institutionalization and officialisation of their land rights. These problems are general and not specific whereas there are other groups of people that need other specific property rights that should be mentioned in the document such as women property rights (access, and alienation or disposal right). Therefore, the document reveals some consequences that are prevalent due to these issues such as (i) Security instability situation, (ii) Landless people and cramped agricultural land, (iii) Land degradation, (iv) Public and hazardous land encroachment, (v) Reluctance to investment, and (vi) Congestion of courts due to land conflicts (GoB, 2008). Among other consequences also, the document was supposed to include food insecurity among poor and household headed by women, repatriation of refugees in neighbouring countries, informal settlements in urban areas, street children, beggars dominated by women and physically challenged people, school dropouts and land related conflicts.

3.4.5 Forest policy 2011 and mining policy 2013 (code forestier et code minier) This paper has also included these policies because are linked to exploitation of natural resources that are land based. Also, they are among sectors that are basis for daily livelihood of many Burundian in finding food,

482 The 19th AfRES Annual Conference job, firewood and the like. Therefore, these policies do not give any attention to marginalised and vulnerable groups so that they can enjoy the rights of using the fruits from these resources. The Mining code does not specify how women and girls will be involved in mining activities, selling and buying given that these activities have been traditionally and practically attributed to men. This means that the existence of these legal frameworks does not change the traditionally and culturally norms set by the society that neglect the women on enjoy the use of natural resources as men.

3.5 The affected by less property rights As discussed previously, Burundi has many institutions (hardware and software) involving in property right provision as their core responsibilities. However, the existing situation does not witness and prove it. There are many groups of people who are urgently in need and request of property rights and the lack of these rights affects them negatively economically, socially, culturally, environmentally and or politically.

3.5.1 Women and property rights Women in Burundi contribute 55% of workforce. The agricultural sector employs 90% of this workforce especially in rural and peri-urban areas. However, accessing to land is not as easy as it was supposed. The root cause is that, there is no any legal documents among the cited above that acknowledges the women needs and importance of accessing to land and enjoying rights on it. The traditional norms do not recognise a woman/girl as one who can inherit land or own land directly. The practices are that there must be an intermediary person such as husband, brother, uncle or other male’s relative who can attend her. According to FAO (2012, p.14) ‘women have secondary user rights through male relatives”. This is the general situation in African and some other developing countries. Even the accessed piece of land by woman in Burundi is not for her completely; but, she has to use it for a limited time. She is denied the rights of selling and or disposition. For them, this asset becomes a ‘dead capital’ as Hernando Desoto said since she can generate income by selling or exchanging.

The last census of 2008 shows that women own 17.7%. of plots of land whereas 80.2% are under men ownership. Therefore, women are denied basic opportunity that is fundamental source of wealth, economic growth, social and political power. This is the situation whereas women are responsible for feeding, clothing, educating and entertaining children. It is hitherto proved that not only women who are affected by this situation,

The 19th AfRES Annual Conference 483 but, even children and other relatives who are close and depend on to them are victimised. The severely affected families are those households headed by women due to divorce or death of the husband. The school dropouts that are now observed in Northern region of Burundi (Ngozi, Kayanza, Muyinga and Kirundo) is linked to denied property rights for women (IWACU36, 2017).

Women in Burundi are significantly challenged with the minimum property rights they are having on land inherited from their deceased beloved husbands. They fail to register the land under their names as it was revealed by many findings in title registration offices as well as rural certification projects (Beaupre, 2015). According to the Land Officer in Bujumbura, Ngozi, and Gitega, only 10% of women registered their plots of land, whereas 90% of registered plots of land were on males’ names. It is also revealed that even the 10% registered plots of land were not inherited land, but 8% of it was land purchased by widows from their own efforts.

Findings from Swiss Development Cooperation (SDC) in Ngozi province between 2008 and 2014, show that plots of land that were registered under women names were low. The report specifies that in 2012, titles registered under women names were 6%, which in 2013 dropped at 5% (IDLO/ZOA 2016: 49). In the ZOA program, the findings show that even where the families managed to register the bequeathed land, some conflicts may arise from the husband’s brother especially if the land was inherited from the husbands’ father. These are evidences that show, still women are lagging behind in enjoying the property rights as it is for man. Therefore, it can be newsworthy to say that there is less property rights for women and this state of affairs affect them and their close family negatively.

3.5.2 Batwa community and property rights When we talk about property rights, we have to target the so considered isolated cases and elements that are not considered during decision making or policy formulation. The Batwa community contribute 1%37 of population of Burundi. It is one of ethnic group among three ethnics group that are found in Burundi. According to the history, they were the first settlers of Burundi land and other ethnics joined after due to fertile land and other

36 Local newspaper found on https://www.iwacu-burundi.org/englishnews/over-20- thousand-pupils-drop-out-of-school-in-ngozi/ 37 This is an estimated figure given that Burundi had not carried out any census about ethnic group

484 The 19th AfRES Annual Conference natural resources that were found in the territory. The term ‘Batwa’ or ‘Pygmies’ is used to describe hunter–gatherers, who are small in stature, live in small groups … known as ‘forest peoples’ ... with way of life based around hunting and gathering, moving here and there’ (Amani, 2009, p.3). This community evolved and started doing other activities like forgery for men, and pottery for women. All these activities were based on natural resources, land being the basic and fundamental source of raw material. Due to their instability in chasing their prey and livelihood, within the modernisation, institutionalisation, nationalisation and administration of natural resources, they found themselves landless.

There is no information about this community to involve in farming or livestock keeping, but, the members of this community were assuming the land to be theirs as they were known as Abasangwabutaka” or Abasangwasi which is literally translated ‘the first occupants’ (Amani, 2009). When other ethnic groups came, they farmed the land, fixed boundaries, and developed it in different ways, formed customary laws to protect their property rights, registered their land, inherited it to theirs and so forth. But now, when we talk about Batwa, we mean simply and deliberately, people with no land and living in extreme poverty, marginalized, with no legal land use recognition and protection (FAO, 2012).

How do they live now in Burundi? This community lives in the piece of land as a group given by local authorities without any guarantee of permanent settlement. They are chased at any time the local government needs the land for public interest (Case of Muyinga, 20012). In these given piece of land as sites, they are sometime not allowed to have houses in durable construction materials. Also, they are not allowed to sell or dispose. They live as a rent site or temporal sites like refugees or IDPs whereas they are in their peaceful country. As consequences, they cannot think of any durable and sustainable development, they are not educating their children; they suffer from hunger and malnutrition and other human vices.

3.5.3 Internal Displaced People and returnees This is another group of people that is facing challenges on property rights and being severely affected economically and socially. Due to several and consecutive civil wars that Burundi faced, many people left their former land to settle in some sites within the country where they may be physically protected. The land occupied during this period was either state land (80%) or private land 20%. Due to long time taken for peace re-establishment,

The 19th AfRES Annual Conference 485 these people developed the land by constructing their houses with durable construction materials. Then, it became difficult to leave the site whereas the government or the land owners were requesting their land. Also, there was no compensation or any assistance that was promised to these IDPs for reconstructing their livelihoods once they live the land. As results, they remained in those sites and are not now allowed to do any development. Therefore, they feel insecure for these developed properties. They are not able to come back in their former properties since there is no promise for support them to re-establishing their livelihoods once they come back to their former lands.

In the same basket, we find returnees who repatriated from neighbouring countries and failed to secure their properties. FAO highlights that:

There are challenges created by large number of returnees of refugees and internally displaced peoples such as tenure insecurity. Burundi is facing general difficulties to guarantee tenure security and facilitate the proof of land rights. Land registration procedures are complicated, long and expensive for refugees (2012, p.11).

However, the government of Burundi has tried at its best to solve the challenges met by returnees and IDPs, but still, these people are experiencing some problems especially on property rights. Some examples are amendment of the 1986 Land Policy in 2011 so that the formalized land registration in Burundi may be based on the land law (code foncier of 2011). This code tried to provide alternatives of titles to certificates for rural land registration to recognise customary land rights and decentralise land administration (Hilhorst/Porchet, 2012). The code recommends to establish communal land services (Service Foncier Communal – SFC) to deliver titles to land owners. It directs having communal land commissions as part of the SFC to facilitate the measurement of plots and deal with land related conflicts at local level (Commission de Reconnaissance Collinaire –CRC). Lastly, the government initiated the creation of national Commission for Land and other Properties/Asset (Commission Nationale des terres et autres biens – CNTB) to assist returnees, IDPs and other people that have problems on accessing to their property rights (Betge, Lippett, & Irutingabo, 2018). All these initiatives were undertaken to secure property rights to these groups of people. However, the outputs were not positive given that still, there are returnees who are still claiming for their property rights. They are facing complications and unfordable cost to secure their land and

486 The 19th AfRES Annual Conference properties as well as exercising their rights largely. Some returnees have opted to return back in their former refugee camps in Tanzania, Uganda, Rwanda, Congo and other counties. Those who persevere, are living in extreme poverty, marginalization, and vulnerability due to landlessness situation.

3.5.4 Poor and vulnerable people in regard to property rights The actual definition and concept of poverty according to World Bank is people living under US$1.9 per day as poverty line. According to World Bank report of 2017, 74.7% of Burundians live under poverty line. This shows how poor people in Burundi are in large number which makes some of them not afford their property rights if there is any monetary charge implicated in the processes. According to the results from different pro-poor projects that were initiated by the International NGOs to assist rural people to register their plots of land and be granted the certificates at the end of the process; it was revealed that 45.1% failed to collect their certificates in Makamba Province. The charges of these certificates were ranging from BIF 6490 ($3.6) to BIF 75949 ($ 42). For other case of Ngozi Province, on 106,000 plots of land identified and processed for registration in three years, only 17000 (16%) certificates were collected (Association Burundaise des Elus Locaux, 2014). The general objective of all these programs was that the owners of the targeted areas have sufficiently secure land rights to allow them to invest in their land and to intensify agricultural production. However, the owners did not embrace the initiatives. Not because they feel very secure but because of the low income that does not allow them to pay for the charges requested. As consequences, they cannot use their land as collateral in local microfinance institutions, they cannot sell their land on market value, they cannot rent it for long term, and, they cannot feel secure whereas they know that they failed to pay for certificates of ownership. Moreover, their property right enjoyment is minimised and are affected in one way or another economically.

4 Discussion and Conclusion The aim of this paper was to explore the challenges emanating from existing institutional frameworks that are in place and in use when administering land related properties for the case of Burundi and suggest how we can have focussed institutional frameworks that expand property rights to deprived group of people.

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Findings show that Burundi is endowed with many institutional frameworks (software and hardware) that are in place. The land administration issues are under four ministries which you find that some of them do not prioritise land issues. Therefore, these institutions become challenges to land administration processes and property rights to some groups of people since they are fragmented. Therefore, it becomes difficult to have a very committed institution that can prioritize land administration in its responsibilities. The evidence of this discrepancy is the dearth of any Ministry among four that is concerned with land issues in their responsibilities to coordinate little financial, technical and human resources available and implement different projects. Williamson, Enemark, Wallace, and Rajabifard (2010) argue that having hard institutions may lead to have land administration that can motivate the sustainable development. Then, Lee (2016) links the institutional framework on proper land management especially having laws, rules and regulations that are to coordinate the land administration. However, it is not the case of Burundi. The legal frameworks we have are not addressing the challenges faced by women, poor and vulnerable people, returnees and IDPs as well as Batwa community on enjoying property rights. No any law or rules that are on side of these groups of people to provide the complete kit of property rights as propounded by Ostrom and Schlager (1992) as bundle of rights. As results some may take their own decisions either to go to court or flee.

Land as property and asset according to (Platt, 2014; De Soto 2000; and McAuslan, 1987) has a key role in undermining the livelihood of the owners if rights on it are not enjoyed. The results from the findings show that women and Batwa community have been negatively affected with the lack of full rights on property. They are categorised among vulnerable and marginalised groups in the country. They cannot access easily to economic, social, cultural and political opportunities. Di Gregorio et al. (2008) is convinced that once rights on land and other property are provided and enjoyed, there is high probability the owners to profit from it by generating capital or eradicating poverty in their families. This is what the Batwa and women in Burundi are lacking in order to survive as other citizens in Burundi. Small plots of land owned by poor and vulnerable people as well as women and returnees are not yielding what was supposed to be produced due to less property rights. FAO (2002b) & Philips (2008) are in view that once these group of people are granted full property rights, there is a remarkable increased production and economic growth for the community and the country. But the findings show that the mentioned

488 The 19th AfRES Annual Conference group of people are suffering from food insecurity, malnutrition, school dropout of their children and an extreme poverty in such away they flee the country. However, those who flee the country do not disclose the really causes, but they normally state the “political crisis” whereas hunger, poverty, and hopelessness on their future and their descendants due to landlessness and minimised property rights are among the root causes.

Many humanitarian NGOs that operate in Burundi such as ZOA, GIZ, SDC and others have been intervening in land administration to support the government initiatives as acknowledged by Svitlana (2000) to make sure these groups of people can be assisted; but they have failed even to pay little charges that was requested to cover some services. Many tools and approaches similar to fit-for purpose (Zevenbergen, Augustinus, Danilo& Bennett, 2013) and pro-poor (Enemark, Clifford-Bell, Lemmen &McLaren, 2014) have been applied to fit with the beneficiaries’ income situation, but still, they failed due to extreme poverty that these people are living in.

Finally, we close the discussion by recommending that the government of Burundi has to revise its institutional frameworks (hardware) to have one ministry that will put together all land issues and deal with them effectively. Also, the legal frameworks are to be revised especially Land Policy (Code Foncier) or Code of Family and Persons of 1993 to insert property rights of women on inherited land from their husbands, inserting the article in land policy about the inheritance of land by women/or girls from the parents directly. Also issue of providing titles to land occupied by Batwa Community is crucial and for emergency so that they can have the same living standards as other communities in Burundi. Finally, returnees and IDPS should be restored in their properties and be assisted in their livelihoods in case they are moved from the land they have been occupied for long time.

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Government of Burundi (2016), Loi no.1/09 du 12 Aout portant code de l’Urbanisme, de l’habitat et de la construction au Burundi Government of Burundi (2008); Ministère de l’Environnement, de l’Aménagement du Territoire et des Travaux Publics : Lettre de politique foncière Hemalatha, D. (1994). Affordable Water Supply and Sanitation: Women in environmental protection, Sri Venkateswara University, India Hilhorst, Thea and Nicolas Porchet (2012). Burundi - FOOD SECURITY AND LAND GOVERNANCE FACTSHEET, Landgovernance.org, http://www.landgovernance.org/system/files/Burundi%20Factsh eet%20-%202012.pdf Accessed: 18-03-2019 IDLO/ZOA (2016). Rapport de l’Etude à mi-parcours, Report conducted by the International Development Law Organization (IDLO) on behalf of ZOA, unpublished.. Kwabena, A., Bennett. R., & Zevenbergen, J.A. (2017). Lands: A Practical VGI Experiment in Nanton, Ghana Lee, B.G., et.al (2016), Meeting Report Of Cadastre and Land Management , Kuala Lumpur, Malaysia. Not published McAuslan, P. (1987). ‗Land Policy: A Framework for Analysis and Action‘, Journal of African Law, Vol. 31, No. 1/2 (Spring, 1987), pp. 185-206. Meinzen-Dick, R. S. and M. Di Gregorio (eds.) 2004. Collective Action and Property Rights for Sustainable Development. 2020 Focus 11. Washington, D.C.: International Food Policy Research Institute. http://www.ifpri.org/2020/focus/focus11.htm Oosteroma, P., & Lemmen, C. (2015), The Land Administration Domain Model (LADM): Motivation, standardization, application and further development, Enschede, The Netherlands Platt, R. H. (2014), Land Use and Society: Geography, Law, and Public Policy, Third Edition (Island Press), Ch. 1, pp. 13-19. Polack, E., & Cotula, L. (2011). Land Tenure Regimes -How prepared is rural Africa for land based investments, International Institute for Environment and Development (IIED) Schlager, E. and Ostrom, E. 1992. "Property-rights regimes and natural resources: a Svitlana, T. (2000), Property Rights, Institutions And Private Sector Development In Transition Countries, A thesis submitted in partial fulfillment of the requirements for the degree of National University of “Kyiv-Mohyla Academy”, not published. Accessed on

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https://kse.ua/wp-content/uploads/2019/02/Taran-1.pdf June 4th, 2019 9:50 Tchatchoua-Djomo, R. (2018). Improving local land governance? Exploring the linkages between land governance reforms, institutional pluralism and tenure security in Burundi. Journal online https://doi.org/10.1080/07329113.2017.1419403 Williamson, I.P.; Enemark, S.; Wallace, J.; Rajabifard, A (2010), Land Administration for Sustainable Development; ESRI: Redlands, CA, USA, Wolfgang, K. (2007), Secure Property Rights The Foundation of Prosperity and Freedom in Africa, Mont Pèlerin Society, Regional Meeting: The Institutional Framework for Freedom in Nairobi. Ykhanbai, H. J. (2008), Experiences of Land Administration and Management in Mongolia. Institutional arrangements. International meeting in Kula Lumpur. Zevenbergen, J.A., Augustinus, C., Antonio, D., Bennett, R.M (2013). Pro- poor land administration: Principles for recording the land rights of the underrepresented. Land Use Policy, 31, 595–604. https://capri.cgiar.org/2015/11/18/blog-reexamining-a-classic-an-update- to-schlager-and-ostroms-bundle-of-rights/; Re-examining a Classic: An Update to Schlager and Ostrom’s Bundle of Rights https://www.iwacu-burundi.org/englishnews/over-20-thousand-pupils- drop-out-of-school-in-ngozi/ http://www.worldbank.org/en/country/burundi/overview, accessed on June 6th, 2019

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FACTORS INFLUENCING THE CHOICE OF AUTOMATING SYSTEMS USED IN HIGH-RISE BUILDINGS IN LAGOS, NIGERIA

Cyril Ayodele Ajayi1 and Orayinka Stephen Awosode2 Contact:[email protected], [email protected] Department of Estate Management, Obafemi Awolowo University, Ile-Ife, Nigeria

Abstract The consistent change and functions of building systems coupled with the level of sophistication of users of high-rise buildings require that facility managers find innovative ways to control and manage facilities. In this while, the use of automation systems presents facility managers innovative ways of ensuring functionality of the built environment through the integration of people, place, process and technology. These systems must however be selected with care and operated with dedication to achieve desired results. This study examined factors influencing the choice of automating systems in high-rise buildings in Lagos, Nigeria with a view to providing information that could enhance facility management practice. The study selected 53 high-rise commercial buildings based on their high occupancy ratio. Total enumeration of the identified 53 resident facility managers of these high-rise buildings was carried out. Information collected included types of automating system used by facility managers, time of acquisition of automating systems used among others. Descriptive and inferential statistics such as frequency tables, mean ranking and factor analysis were used to analyse the result.

Findings of the study revealed that the choice of automating systems used by facility managers was significantly influenced by the cost of acquisition of the automating system, while the need to protect buildings against failure was considered as the most significant factor influencing the adoption of automation in the management of facilities in high-rise buildings. The study concluded that cost of acquiring automating system is the most influencing factor when considering the choice of automation, while the need to protect buildings against failure was considered as the most significant factor influencing the adoption of automation.

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Keywords: automation, automating system, facility management, high-rise buildings, resident facility managers.

1.0 Introduction The realities that buildings-built decades ago are aging and that they need more upkeep, recurrent repairs and upgrades pose serious challenge to building operators (owners and facility managers). Also, the nature and function of building facilities continues to evolve in the face of technological innovation and overall digitalization of our modern space. This evolution is constantly changing the roles of facility managers and making building operators (buildings owners/facility managers) to continuously find innovative ways of controlling and managing facilities. These roles could get more complex for facility managers of high-rise building. This is because high-rise buildings are special type of construction based on their height, structural stability and various mechanical and electrical systems needed to make occupation conducive. Hence, facility mangers are increasingly striving for better control over resource utilization rates of their facilities for a more economic, environment-friendly and optimized facility management experience through the use of information technology herein referred to as facility management automation (East, Bogen, and Rashid, 2012; Parasanazhad and Tarandi, 2012).

Facility management automation provides the facility manager with the tools and methods that aid control over facility management process which can be said to be complex in nature. It spurs facility management implementation and also serves as an integrating factor for people, place and facilities (Lunn and Stephenson, 2000; Madritsch and May, 2009). Studies have revealed that data repository technology (BIM), interoperability software (IFC), work flow system (CAFM), facility intelligence software (BMS) sensor mobile (augmented reality AR) and field capture technology (drone) are the common automating systems used in facility management practice (Wang, Wang, Yung and Jun, 2013; Coenen and Felten, 2014; Scupola, 2014; Ebbesen 2015; Lok and Baldry, 2015). Automation is not a new term in facility management because the term “facility management” originated from the hi-tech world and it was adapted into the built environment by space planners and office manufacturers (Owen 1995). It has since evolved in the last four decades from pneumatic and mechanical devices into direct digital controls and then later into

The 19th AfRES Annual Conference 495 electronic devices with microprocessors and communication capabilities (Lunn and Stephenson, 2000; Ebbesen 2015; Golabachi and Kamat, 2016).

According to Azarh (2011), the introduction and adoption of new technology usually require factors which may affect the use of such technology for its successful take off and subsequent benefits to be derived thereof. Hewawasam, et al (2016) identified high initial cost, lack of knowledge and competencies, technical faults and design failures, staff attitude and resistance to change as factors affecting adoption of automating system in the construction industry. Hassainain, et al. (2017) also identified inappropriate selection of facility management personnel, inadequate training of facility personnel and poor operation and maintenance activities as factors affecting the adoption of automation in the construction industry. Studies on automation have been broadly discussed in relation to construction industry. This study attempts to narrow it down to facility management and to examine it in the context of a developing control so as to provoke advancement in facility management practice in Nigeria.

The major research question that will be addressed by this paper is; what are the factors influencing the choice of automating systems used in high- rise buildings? With a view to identifying factors that are peculiar to developing countries like Nigeria and providing information that could enhance advancement in facility management practice.

To achieve the aim of this study, literature was reviewed along topical issues, while method of data analysis was explicitly stated, analysis and findings of the study were well articulated giving conclusion and recommendation that stem from the research findings.

2.0 Review of Literature 2.1 The Concept of High-Rise Buildings The Council of Tall Buildings and Urban Habitat (2004) defined high-rise buildings as building that create distinct conditions in terms of design and construction when compared to other buildings in a certain region and specific period as a result of its height. The definitions of high-rise buildings have been on the basis of height and number of floors. These definitions differ based on time, region and technological innovation. For instance, Nigeria had no high-rise building when the western world decided on

496 The 19th AfRES Annual Conference vertical transformation of horizontal expansion in the 1870’s ((Ajayi and Awosode, 2019). This is obvious in the definition given by Awotona (1987) which defined high-rise building as any building that is higher than a three storey walk up. Lagos state planning regulation considers any building with minimum of five floors as high-rise buildings (Ezema and Olutayo, 2014). This is quite different from the definition of National Fire Protection Association in United States (NFPPA, 2016) which identified high-rise building as a building that has a minimum overall height of 28 meters from the ground level to the highest floor. High-rise buildings were firstly built in the United States of America in the 1870s, while tall buildings began to surface in cities of Shangai, Hong Kong, Sao Paulo and other important Asian and Latin American cities in the 1930s, Europe and Australia decided to go vertical in the middle of twentieth century. According to High-Rise Security and Fire Safety (2009), three key inventions that gave birth to the construction of high-rise buildings are: the invention of the world’s first safety elevator in 1853; the replacement of the fragile combination of cast iron and wood with steel frame in 1870s and the invention of air conditioning in 1902.

It is worthy of note to state that high-rise buildings were firstly built as a response to continuous industrialization and swift population growth of the late nineteenth century which led to a large demand of office space. Early high-rise buildings were targeted to meet the increasing demand for office space, while the first residential high-rise building (Ritz Tower) with 41 stories and 165 meters height was built in 1926. The cost of developing high- rise building is often high when compared to low line buildings. To ensure long term sustainability of investment made in these structures, there is need to protect such investment through maintenance of the building fabrics, building systems and building services which will make occupation conducive for users.

2.2 Concept of Facility Management Automation Maintenance of building fabric and its services (which is an aspect of facility management) during the operation phase of the building contributes immensely to the sustainable performance of the building (Ding et al., 2009). Good maintenance culture is needed for a nation to maintain the value and amenity of its building stock; however the consistent change in the nature and function of building systems coupled with the level of sophistication of users of high-rise buildings require that facility managers

The 19th AfRES Annual Conference 497 find innovative ways to control and manage facilities. More so, facility management requires in-depth knowledge of skills and tools for building operations, maintenance, engineering, forecasting, budgeting, health, safety and security, however, the use of information and communication technology tools herein referred to as automation has influenced facility management in recent years (Thompson, 2000). Facility management automation which is defined as the use of computerized system to perform or supplement facility management functions spurs facility management implementation. It also serves as an integrating factor for people, place and facilities (Lunn and Stephenson, 2000; Madritsch and May 2009).

Roles of automation in service industry have been discussed under three broad headings (Broadbent and Weill, 1997; Mele, Spena and Colurico, 2010). The first role describes information communication and technology (ICT) as an enabler of a service innovation. New inventions in service industry are usually rooted in hi-tech; this may take the form of introducing new technology entirely or changing the way an existing technology is being used (Barras, 1986). The role of e-banking and various e-government services is a typical example. The second role refers to ICT as a support infrastructure for a service innovation. Examples of this can be an online help desk or the use of the internet to collect ideas about new service offerings (Prandelli, Sawhney and Verona 2008). The third role relates to ICT as a utility for a service innovation. This implies the use of ICT mainly to reduce costs, such as the adoption of many facility management systems at the operational level to increase the coordination of activities which are either internal or external to the organization. Service innovation is thus often based on investments in ICT, the adoption of new ICT platforms and their subsequent adaptation to produce new products and services or improve business processes (Potts and Mandeville, 2007). It has been established that facility management is a service industry and it can be said that automation has played the above discussed roles in facility management practice (Scupola, 2014; Coenen and Felten, 2014; Lok and Baldry, 2015). As an ICT enabler, different automating systems (data containers and workflow systems such as: BIM, CMMS, CAFM and IWMS) has been developed to enhance facility management practice (Lunn and Stephenson, 2000). As a support infrastructure for a service innovation; facility management automation supplements facility management functions. While as a utility for service innovation facility management automation has positive impact on cost and time savings, minimizing errors,

498 The 19th AfRES Annual Conference omissions and rework (Carbonari et al, 2014; Bryde et al 2103; Barlish and Sullivan, 2012).

2.3 Empirical Studies Wang et a.l (2013) classified information technological tools used in facility management into two: data containers or ata repository technology (FTP servers, BIM and GIS etc) and workflow systems (CMMS, CAFM and IWMS). While Ebbesen (2015) gave an elaborate list of the commonly used automating systems in facility management: data repository technology (BIM), interoperability software (IFC), workflow system (CAFM), facility intelligence software (BMS) sensor mobile (augmented reality AR) and field capture technology (drone).

Ebbesen (2015) reviewed literature on information technology in facility management. The study considered the current state of research on the use of information technology in facility management. The study revealed that data repository technology (BIM), interoperability software (IFC), workflow system (CAFM), facility intelligence software (BMS) sensor mobile (augmented reality AR) and field capture technology (drone) are the common automating systems used in facility management practice. It further stated that BIM is the most researched technology while CAFM is the most used technology. The study is not empirical and thus based on the author’s opinion rather than replicable data also the study focused on facility management practice in Europe. This study however focused on Nigeria where facility management automation is relatively new and also make use of empirical data.

According to Azhar (2011), introduction and adoption of new technology usually requires factors which may affect the adoption of such technology for its successful take off and subsequent benefits to be derived thereof. Factors affecting facility management automation in high-rise buildings can be grouped into: those specific to the nature and level of sophistication of high-rise buildings; those specific to different models and software adopted in facility management automation while others are general to the diffusion of information technology into facility management practice. Hewawasam, et al. (2016) identified high initial cost, lack of knowledge and competencies, technical faults and design failures, staff attitude and resistance to change as factors affecting adoption of automating system in the construction industry. Hassainain, et al. (2017) also identified inappropriate selection of

The 19th AfRES Annual Conference 499 facility management personnel, inadequate training of facility personnel and poor operation and maintenance activities as factors affecting the adoption of automation in the construction industry. All these studies were carried out in developed countries, although these factors can be ubiquitous there is the need to identify those that are peculiar to developing countries like Nigeria where this study is domiciled.

3.0 Research METHOD In a bit to provide answers to factors influencing the choice of automating system adopted in facility management of high-rise buildings in Lagos, the study adopted survey research where 53 high-rise commercial buildings were identified in Ikoyi, Lagos Island and Victoria Island; all in Lagos State Nigeria. Primary data sourced from questionnaire which was administered on facility managers of high-rise buildings was used for the study. A total number of 53 questionnaire were administered while 41 copies of the questionnaire were returned and found useful for analysis. Information collected included types of automating system used in high-rise buildings, time of acquisition of the system, factors that influenced the choice of the systems used and the factors influencing the adoption of automation in facility management automation. For appropriate data analysis of the information gathered from respondents, both descriptive and inferential statistical techniques were employed.

3.1 Data Validity Test Table 3.1 illustrates the test of assumptions on the adequacy of the matrix and the significance of the factors influencing the adoption of automation in the management of high- rise buildings in the study area. With a determinant level .001, the assumption that the listed factors affect the adoption of automation in the management of high-rise buildings in the study area. More so, with KMO of .770 which is greater than 0.70, this indicates that enough items were predicted by each (principal factor component). And since the Bartlett’s test has a significant value of .000 which is less than .05; this implies that the variables (factors affecting the adoption of automation in high-rise buildings in Nigeria are correlated highly enough to provide a reasonable basis for factor analysis.

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Table 3.1: KMO and Bartlett’s Test Kaiser-Meyer-Olkin Measure of 0.770 Sampling Adequacy Bartlett’s Test of Sphericity Approx.Chi-Square 433.488 Df .91 Sig. 0.000

4.0 Analysis and Results This section presents findings from field survey, and they were presented in line with objective of the research while inferences were drawn from the data gathered.

Table 4.1 shows that 19(46.3%) of the sampled commercial high-rise buildings had property maintenance or management department that performs the traditional role of property managers, while 17(41.5%) had structured facility management department or unit. This corroborates the findings of Aliyu et al (2015) that operators of public and private corporations consider facility management as an effective tool for the management of their buildings. Although the application of facility management in the management of high rise buildings in Lagos is still below average. However, owners/operators of high-rise buildings hold them as an investment, hence the need for proper maintenance. Also, one can infer that there is no significant relationship between ownership of high-rise buildings and the presence of facility management department. The Table also indicated that 21(51.2%) of the sampled buildings had in house facility management department while 10(24.4%) adopted outsourced facility management strategy and the remaining 10(24.4%) adopted hybrid facility management strategy. A keen look at the facility management strategy and ownership of the buildings shows that a larger percentage of the public buildings 13(76.5%) adopted in house facility management strategy as against outsourcing management. This indicates that public building operators prefer employing staff that will be treated as civil servants in the facility management department than contracting their services out to experts who are constantly kept abreast with development in facility management industry. This could explain the reason why majority of our public buildings were in state of disrepairs (Iyagba 2005).

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Table 4.1: Facility management strategies adopted in high-rise buildings Facility Management Department Frequency Percentage (%) Property/Maintenance department 19 46.3 Facility Management Department 17 41.5 None 5 12.2 Total 41 100.0 Facility Management Strategies In house facility management 21 51.2 Outsourced management 10 24.4 Hybrid facility management 10 24.4 Total 41 100.0 Facility Management Strategy* Ownership Ownership Total of Buildings Public Private In house facility management 8 13 21 Outsourced management 7 3 10 Hybrid facility management 9 1 10 Total 24 17 41

Table 4.2 indicates that facility managers were more familiar with computer aided facility management (CFAM) with 26(19.8%) followed by computer maintenance management system (CMMS) 23(17.6%) and building information model (BIM) 20(15.3%). Industry foundation class (IFC) and integrated workspace management system (IWMS) has the lowest frequency 8(6.1%). Computer aided facility management (CFAM) has been around for a while and its ease of use makes it more popular while building information model (BIM) is the latest technology in the built environment that every facility manager wants to have an idea of what the model is all about.

Table 4.3: Types of Automating Systems That Facility Manager Are Familiar With Automating System FrequencyPercentage (%) Building Automating (BAS) 19 14.5 Building Information Model (BIM) 20 15.3 Building Maintenance System (BMS) 16 12.2 Computer Aided Facility Management (CAFM) 26 19.8 Computer Maintenance and Management 23 17.6 System (CMMS)

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Construction Operation Building Information 11 8.4 Exchange (COBie) Industry Foundation Class (IFC) 8 6.1 Integrated Work Space Management System 8 6.1 (IWMS) Total 131*** 100.0 A Note: *** this figure exceeded the number of respondents because of multiple responses was allowed

As indicated in Table 4.3, 19(48.7%) of the facility managers use computer aided facility management (CAFM) in the management of their facilities while 9(23.10%) 7(18.0), 3(7.7%) and 1(2.5%) used computer maintenance and management system, building automating system, building maintenance system and building information model respectively. Automating systems such as Construction operation building information exchange (COBie), industry foundation class (IFC) and integrated workspace management system (IWMS) are not being used by facility managers in the study area. Integrated workspace management (IWMS) performs similar functions with CAFM. Most facility managers choose CAFM because it aids the capturing, usage and electronic analysis of all data that is applicable to the life cycle of facilities. According to (GEFMA, 2007) CAFM provides numerous key functions to meet required standard expected by its users (building owners and facility managers) satisfactorily and these functions include lease administration, project management, space management and maintenance management processing and resource planning. Hence making CAFM interesting for real estate and facility management companies. And this could be the reason why most facility managers chose CAFM over other computerized system. This corroborates the view of Ebbesen (2015) that CAFM is the only technology that was actually being used in facility management organizations and implementation of BIM technology in facility management industry is at the initial stage. Building information Model is a data repository technology which is relatively new to Nigerian construction industry. It is being used traditionally right from the design stage of the construction considering the huge amount of information needed to manage the life cycle of a building. However, 29(76.3%) of the sampled high-rise buildings were constructed between 11 and 50 years ago. This makes it difficult for facility managers to use BIM for facility management and this explains why only 1(2.5%) of the facility managers adopted BIM and this could be because building (Heritage Place

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Building) is relatively new and also considered as the only fully automated building in Nigeria. The ratio of response on the awareness facility managers about different automating systems to the use of these systems is 3:1 (0.3). This means that other factors aside the level of awareness of facility managers about these systems affects the choice of computerized systems used by facility managers.

Table 4.3: Types of Automating System used by Facility Managers Types of automating system used by Frequency facility Percentage (%) managers Computer Aided Facility Management (CAFM) 19 48.7 Computer Maintenance and Management System 9 23.1 (CMMS) Building Automating (BAS) 7 18.0 Building Maintenance System (BMS) 3 7.7 Building Information Model (BIM) 1 2.5 Construction Operation Building Information - - Exchange (COBie) Industry Foundation Class (IFC) - - Integrated Work Space Management System - - (IWMS) Total 39*** 100

As presented in Table 4.4, a total number of 22 (53.7%) high-rise buildings are being managed with the use of computerized system, majority of which were acquired between 5 and 9 years ago. The result indicates that the use of computerized system in the study area became popular in the last decade. And that automation is still in its early stage in Nigeria. More so, 6(27.3%) of the sampled facility managers stated that the computerized system were acquired at the construction stage of the building and those high rise buildings were built in the last five years. Computerized systems were installed at the operation stage of 16(72.7%) high-rise buildings. Based on these findings one can infer that professionals in the built environment in Nigeria are gradually catching up with the happenings in the global built environment in the last decade.

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Table 4.4: Acquisition of Automating System Time of Acquisition of Computerized System Years Frequency Percentage (%) 1-2 1 4.5 3-4 9 41.0 5-6 8 36.4 7-8 3 13.6 9-10 1 4.5 Total 22 100.0 Stage of Acquisition of Computerized System Design and Construction Stage 6 27.3 Operation and Management 16 72.3 Stage Total 22 100.0

Table 4.5 shows factors that influence facility management departments’ choice of computerized systems. Cost of acquisition/maintenance ranked 1st with a mean of 4.04. It shows the cost of acquiring computerized system is significant in the choice of computerized system acquired by organization. Technical capability of personnel, organization strategy, and availability of the system, organizational need and ease of use ranked 2nd, 3rd, 4th, 5th and 6th. Organizations prioritized the cost spent in the acquisition of automating systems and often than not preferred systems that are cost effective in terms acquisition, installation, use and maintenance. This could explain why the latest technology (Building information Model) did not have general acceptance among facility managers because it’s not only expensive but also in levels. Since 69.2% (18) of the users of automating systems had stationed staff that controlled or managed the automating systems, this implies that the technical capability of the personnel in the facility management department is often put into consideration before the acquisition of automating system. This is further explained in Table 4.19 where users of computerized systems considered technical capability as being significant. Ease of use of automating system ranked 6th, when organizations are considering the type of automating systems to be acquired. The perception of the organization on the ease of use of the computerized system was neutral with a mean of 3.58. This could mean that board of directors of organization seldom consults users of automating system (facility/maintenance department) whenever they want to acquire these systems. Considering the fact that each of the factor had a mean

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greater than 3.0, one can conclude that cost of acquisition, technical capability of personnel, organization strategy, availability of the system , organization need and ease of use were all significant factors that determined the choice of computerized systems.

Table 4.5: Factors Influencing the Choice of Computerized Systems Factors VI (1) I (2) N (3) S(4) VS(5) Mean RII Rank Cost 2 1 - 14 9 4.04 0.81 1st Technical 2 - 1 18 5 3.92 0.78 2nd capability of personnel Organization 2 2 1 14 7 3.85 0.77 3rd strategy Availability of 2 1 5 11 7 3.77 0.75 4th the system Organizational 2 2 2 14 6 3.77 0.75 5th need Ease of use 5 3 11 7 3.58 0.72 6th

Note:* Variables in each of the seven factors influencing the choice of computerized system was rated by facility managers of high-rise buildings using Five point Likert’s scale of ‘Very insignificant’, ‘insignificant’, ‘Neutral’, ‘Significant’ and ‘Very Significant’ and denoted as VI, I, N, S and VS respectively. To arrive at the facility managers’ aggregated view on each item. Each of the rating above was respectively assigned a value of 1, 2, 3, 4 and 5.

Table 4.6 and 4.7 show how the variance was divided among 29 possible factors. It showed four factors with initial eigenvalues of 2.153, 5.683, 7.449 and 12.098. Factor 1 accounted for 31.25% of the total variance explained in the original set of data; Factor 2 accounted for 29.86%; Factor 3 accounted for 24.64%; Factor 4 accounted for 8.67% respectively. Each factor has eigenvalue (i.e. a measure of explained variance) greater than 1.0, which serves as a common criterion for a factor to be useful.

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Table 4.6: Total Variance Explained Component Initial Eigenvalues Rotation Sums of Squad Loadings Total % of Cumulative Total % of Cumulative Variance % Variance % 1 12.098 41.717 41.717 9.064 31.254 31.254 2 7.449 25.686 67.403 8.869 29.857 61.11 3 5.683 19.596 87.000 7.146 24.642 85.754 4 2.153 7.424 94.423 2.514 8.670 94.423

Extraction Method: Principal Component Analysis

Table 4.7: Rotation Sums of Squad Loading Component Rotation Sums of Squad Loadings Total % of Cumulative % Variance Nature and Management styles of 9.064 31.254 31.254 the organization Diffusion of information technology 8.869 29.857 61.11 in facility management Nature and level of sophistication 7.146 24.642 85.754 of the building Type of software used by facility 2.514 8.670 94.423 managers

The Rotated Component Matrix presented in Table 4.8 shows loadings of the variables on each Factor and this is paramount in understanding the results of the analysis. All the 29 variables were sorted into four overlapping groups of factors which are (Nature and Management styles of the organization, diffusion of information technology into facility management, nature and level of sophistication of the building and type of software used by facility managers). Factor 1 accounted for 31.3% of variance, Factor 2 accounted for 29.9% of variance while Factor 3 and Factor 4 accounted for 24.6% variance and 8.7% variance respectively. Each of these variables has a loading greater than .50 which shows the reliability of the test. Conclusively, principal component factor analysis with varimax rotation was conducted to assess the underlying structure for the twenty-nine items of the factors influencing the adoption of automation in the facility management of high-rise buildings. These items were aggregated into four principal factor components: Nature and Management styles of the

The 19th AfRES Annual Conference 507 organization, diffusion of information technology into facility management, nature and level of sophistication of the building and type of software used by facility managers.

The first factor accounted for 31.3% of the variance, the second factor accounted for 29.9% of the variance while the third and fourth factors accounted for 24.6% and 8.7% of the factors respectively. The first component had nine (9) variables loaded highly on it. These variables were rate of churn (0.977), employee expectation (0.977), lack of skilled personnel (0.977), inappropriate selection of facility management staff (0.982), strategic resource (0.982) ineptitude of decision makers (0.982), age of organization (0.982), management strategies (0.982), staff strength (0.982). This factor was named nature and management style of the organization. The second component factor also had nine (9) variables highly loaded on it. These variables include: high implementation cost (0.952), lack of demand by building owners (0.961), cost of mistakes (0.961), adaptation to change (0.961), global competition (0.964), availability of information technology (0.965), initial cost of installation (0.965), low level of awareness (0.967), demand for information (0.967). This factor was named diffusion of information technology into facility management. The third component factor had eight (8) variables highly loaded on it. These variables are high cost of facilities and space (0.761) design standards and inventory (0.946), need for reduced maintenance and logistics (0.946), poor operation and maintenance activities (0.946), age of building (0.967), management strategies (0.967), number of floors (0.967), protection against failure of buildings (0.978). This factor was named nature and level of sophistication of the building. While the fourth component factor had three (3) variables highly loaded on it. These variables are lack of graphical interface (0.959), interoperability (0.959) and faulty designs and failures. This factor was named type of software used by facility managers. The result presented in the table shows that all these factors have significant effect on the adoption of automation in facility management of high-rise buildings in Lagos, Nigeria.

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Table 4.8: Rotated Component Matrixes ROTATED COMPONENT MATRIX COMPONENT 1 2 3 4 Rate of churn .977 Employee expectation .977 Lack of skilled personnel .977 Inappropriate selection of facility .982 management staff Strategic resource .982 Ineptitude of decision makers .982 Age of organization .982 Management strategies .982 Staff strength .982 High implementation cost .952 Lack of demand by building owners .961 Cost of mistakes .961 Adaptation to change .961 Global competition .964 Availability of information technology .965 Initial cost installation .965 Low level of awareness .967 Demand for information .967 High cost of facilities and space .761 Design standards and inventory .946 Need for reduced maintenance and .946 logistics Poor operation and maintenance .964 activities Age of building .967 Management strategies .967 Number of floors .967 Protection against failure of buildings .978 Lack of graphical interface .959 Interoperability .959 Faulty designs and failures .751 Eigen value 9.064 8.869 7.146 2.514 % Variance Explained 31.254 29.857 24.642 8.670 Cumulative % Variance Explained 31.254 61.11 85.754 94.423

Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization a. Rotation converged in 5 iterations

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6.0 Conclusion Factors influencing the choice of automating systems in high-rise buildings were examined with the aim of identifying factors that are peculiar to developing countries and providing information that could enhance advancement in facility management practice. The study revealed that CAFM is the most popular and the most used automating system, while the choice of automating systems was significantly influenced by cost of acquisition, technical capability of personnel, organization strategy, availability of the system, organization need and ease of use. It was also revealed that the need to protect buildings against failure is the most significant factor influencing the adoption of automating system in the management of facilities in high-rise buildings.

The study concluded that cost of acquiring automating system is the most influencing factor when considering the choice of automation, while the need to protect buildings against failure was considered as the most significant factor influencing the adoption of automation. Building operators should ensure that their choice of automating systems is not solely determined by initial cost of acquisition. Staff expertise, level of compatibility of the system among others should be considered.

7.0 References Atkin, B. and Bildsten, L. (2017). A future for facility management. Journal of automation. Journal of Facilities Management, 18(7/8), 312 – 323. Awotona A. (1987). Nigerian institute of architecture journal, 3(3) 23-34 Coenen, C., Von Felten, D. (2014). A service-oriented perspective of facility Construction Innovation. 17(2), 116-124. Craighead, G. (2003). High-rise security and fire life safety (2nd ed). Butterworth-Heinemann,Woburn, MA. Delivery in Public and Private High-Rise Residential Buildings in Nigeria: A Case Study of Eko Court Complex and Niger Towers. Paper Presented at MATEC Web of Conferences on October 15, 2014 Ding, L., Drogemuller, R., Akhurst, P., Hough, R., Bull, S., and Linning, C. (2009). Ebbesen, P. (2015). Information technology in facilities management- a literature eBusiness in Architecture, Engineering and Construction. ISBN 978-0-415-62128-1.

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Elmualim, A., Pelumi-Johnson, A. (2009). Application of computer-aided facilities Management FM for intelligent buildings operation. Journal of facilities Hassanain, M.A. (2009). On the challenges of evacuation and rescue operations in high-rise buildings. Journal of Structural Survey, 27(2), 109 – 118. Madritsch, T. and May, M. (2009). Successful IT implementation in facility Maintenance. Elsevier Butterworth-Heinemann, Burlington McGrail, D.M. (2007). Firefighting operations in high-rise and standpipe- equipped buildings. PennWell, Tulsa, UK. Oladokun, T.T. 2011. An examination of the practice of facilities management in Olanrele, O.O., Ahmed, A., Smith, H.O. (2014). Facilities Management Service Parsanezhad, P. and Tarandi, V. (2012). Is the age of facility managers’ paper boxes over? people making facilities management. Retrieved from orbit.dtu.dk on February 01, 2017. Practice in high-rise commercial properties: Jos in perspective. Civil and Environmental Research, 7(4), 10-19. Thompson, B. (2005). Information and communications technologies and industrial Towards sustainable facilities management. Technology, Design and Process Innovation in the Built Environment, 6(4), 373- 392. Wang, Y., Wang, X., Wang, J., Yung, P. and Jun, G. (2013). Engagement of facilities Yau, Y. (2011). Homeowners' participation in management of multi-storey residential buildings. Journal of Property Management, 29(4), 345 – 356.

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AN ASSESSMENT ON THE LEVEL OF COMPETENCY OF ESTATE AGENT’S EMOTIONAL INTELLIGENCE IN LAGOS PROPERTY MARKETING

AKINWAMIDE, David Oluwatofunmi1, 2*; BELLO, Victoria Amietsenwu2 1Department of Estate Management and Valuation, Auchi Polytechnic, Auchi, Nigeria 2Department of Estate Management, Federal University of Technology, Akure, Nigeria

Abstract In real estate service, emotions underpin all client’s action in decision making. However, the understanding of client’s emotional needs require some degree of competencies to achieve customer’s satisfaction in property marketing. As a result, emotional intelligence competencies are essential in real estate agency to understand customer’s behaviour in property market. This study therefore assess the level of competency of estate agent’s emotional intelligence in Lagos property marketing. Structured questionnaires were randomly administered on 236 registered estate firms while 205 (86%) questionnaires retrieved were found suitable for analysis. Data collected were analysed using descriptive statistics. Findings indicated that empathy, self-awareness and motivation ranked high among the competencies in emotional intelligence adopted by estate agents in estate agency service. However, it was observed that 54% of respondent within 6 – 10 years of experience in real estate agency possess a moderate level of emotional intelligence. The study recommends that estate agents should improve on their level of competency in emotional intelligence to understand customer’s behaviour and emotional needs in decision making.

Keywords: Emotional Intelligence, Estate Agent, Emotion, Decision Making, Property Market, Lagos *Corresponding Author: [email protected]

1. Introduction Achieving a successful property transaction depends on building relationships and trust through effective two-way communications, and creating products that will help to solve customers’ problems (Olukolajo, Ojo & Akinwamide, 2018). According to Su (2004) customers’ satisfaction and service quality have increasingly been identified as key factors in the

512 The 19th AfRES Annual Conference battle for competitive differentiation in solving customers’ problems in various organisations. However, service quality has been proven to have significant influence on the level of customers’ satisfaction (Preko, Agbanu & Feglo, 2014). It is common to measure service quality using the traditional attributes of how service is delivered such as hours of availability, use of up- to-date technology, and agent professionalism. Although the benefits are clear, and while there is a consensus surrounding the need for a consistent measurement instrument, there is still much debate over how to best measure service quality (Parasuraman, Zeithaml & Berry, 1994; Seiler, 2004).

According to Bettencourt (2010) different traditional attributes adopted in various studies to measure customers’ satisfaction constrains thinking because it fails to understand why these features are valuable to customer in terms of their functional and emotional needs. Considering the emotional needs in building an excellent relationship with customers, Yaya, Akintayo and Uzohue (2016) refers to Emotional intelligence (EI) as a psychological term that enables an individual to know and manage his or her feelings and emotions and use this information to guide his/her thinking and action while relating with other people in the workplace.

However, the application of Emotional Intelligence have been proven in most professional fields to be an effective tool in providing positive benefits in the workplace (Kidwell, Hardesty, Murtha & Sheng, 2011; Swanson and Zobisch, 2014; Yaya et al, 2016). Naghavi and Redzuan (2011) stated that EI has been associated with overall intelligence, adaptability, personality, satisfaction, and emotional disorders. Emotional Intelligence competencies are essential in determining not only employee job commitment and job satisfaction, but also includes the level of customers’ satisfaction in a workplace (Masrek, Abdullah-Sani & Jamaludin, 2012). EI enhances higher level of inter-relationships, mutual understanding and greater productivity at the work place (Yaya et al, 2016; Akinwamide & Idris, 2019). The study of Akinwamide (2019) employed exploratory factor analysis to determine the impact of emotional intelligence on the performance of Consultant Estate Surveyors and Valuers in Nigeria. Findings revealed that critical factors such as empathy skill, self –awareness and management skills, social skills, and motivational skill has an influence on the performance of consultant Estate Surveyors and Valuers in service delivery.

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Therefore, the aim of this paper is to assess the level of competency of estate agent’s emotional intelligence in Lagos property marketing. The study focuses particularly on the application of Emotional Intelligence in service quality to promote customer’s satisfaction in real estate service delivery. This is achieved by investigating into the views of real estate agents on customer’s expectation to develop an Emotional Intelligent quality instrument for measuring real estate service quality in Lagos property market. While some real estate professionals have the knowledge of Emotional Intelligence applicability for quality service delivery in business and workplace, others are yet to reach such understanding.

2. Literature Review Despite extensive studies that have been carried out by many scholars on EI in several professional fields like sales (Rozell, Pettijohn & Parker, 2004), digital marketing (Akinwamide and Bello, 2019) and global sales channel (Sjöberg et al., 2005), unfortunately, it is very rare to find study on EI in real estate field. No doubt, several past studies have attempted to study the EI among real estate professionals e.g. Swanson and Zobisch (2014) assessed the understanding of EI in the field of real estate while Swanson, Hamilton and Zobisch (2015) study was based on establishing best practices for including EI in real estate professionals.

Generally, the EI is made up of the following five main components: Self- Awareness, Self-Management, Motivation, Empathy and Relationship Management (i.e social skill) (Goleman, 2002; Yaya, 2007). Emotional Intelligence is the ability to identify and manage your own emotions and to harness those emotions when applying them to tasks like thinking and problem solving (Yaya, 2007). Goleman (1995) declared Emotional Intelligence tools as follow: i. Self-awareness: refers to knowing one’s internal states, preferences, resources and intuition. ii. Self-management: refers to the ability to manage one’s internal states, impulses and resources. iii. Motivation: refers to the emotional tendencies that guide or facilitates reaching goal. iv. Empathy: refers to awareness of other’s feelings and perspectives. v. Social skills: refers to adeptness at inducing desirable responses in others.

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The study of Blocker (2010) stated that the use of emotions was one of the three most popular methods chosen by real estate professionals to influence clients. It was also concluded in the study that 46% of real estate agent-client relations lacked an appropriate emotional communication while only 26% of the real estate agents knew how to adapt to the emotional state of the client. The study of Mount (2006) found that cognitive ability (IQ) only accounted for 19% of overall work performance, EI competencies accounted for 44% while skills and knowledge accounted for 38%. However, superior performers scored higher than average performers on many of the emotional intelligence competencies results generated. The study of Rode et al. (2007) found that the presence of both EI and conscientiousness established a strong positive relationship with individual performance while EI alone was not a strong predictor of individual performance. The study of Akinwamide and Idris (2019) found that majority of respondents (22 out of 25) agreed that training in emotional intelligence would benefit them in real estate practice. Furthermore, emotional intelligence is most relevant in estate agency and marketing, real estate consultancy, and arbitration and alternative dispute resolution among other real estate service in the profession.

3. Research Methodology The target population for the study are the real estate agents in Lagos Metropolis. The estate agents considered in the study area are the registered Estate Surveyors and Valuers (ESVs). The rationale for the adoption of ESVs lies in the fact that they are the professionals created by law to carry out real estate duties, with stamp and seal, for execution of real estate service jobs in Nigeria. They are members of Estate Surveying and Valuation Registration Board of Nigeria (ESVARBON) who possess the required skills and undergo the necessary training that qualifies them to practice real estate in Nigeria. Lagos metropolis was chosen because real estate service is highly active in the city and has shown consistent development in commercial real estate, as such requires the professional quality services of the ESVs (Olukolajo, et al., 2015).

The sample frame for the study constitute the 375 NIESV membership of Lagos state branch obtained from the 2018 NIESV directory (NIESV, 2018), of which about 270 of them are in Lagos’ metropolis (Iroham, Oloyede, Ajibola, & Durodola, 2014). The study of Bamidele, Adenusi, and Osunsanmi (2018) selected 100 ESVs known for agency practice in Lagos Metropolis.

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Therefore, 100 ESVs known for agency practice in the proximity of the research were randomly selected. Out of the selected estate agents, 85 responded satisfactorily, showing consistency in their response. This study also adopted self-administered questionnaire and personal interviews as its data collection instrument.

Mangeli, (2013) and Ehiemere, Ogbuefi and Awum (2016) suggested 22- item wording, five-dimension questionnaire for Service Quality (SERVQUAL) questionnaire consisting of a 7-point response format for measuring customers’ expectations with anchors of “strongly agree” and “strongly disagree.” Therefore, this study is well within the range suggested for unit of measurement while using customer satisfaction variables classified under four Emotional Intelligence Competencies (self-awareness, self- management, motivation and social skills). The quantitative data collected were analysed using descriptive statistics such as mean item score and frequencies while remarks were generated based on the result.

4. Results and Discussion 4.1. The Association between demographic factors and Estate Agents’ Competency level in adopting Emotional Intelligence for Estate Agency Service

Table 1. Association between emotional intelligence and demographic variables Demographic Variables Level of Emotional Intelligence Total N (%) High Moderate Low N (%) N (%) N (%) Gender Male 28 (57.1) 20 (55.6) 0 48 (56.5) Female 21 (42.9) 16 (44.4) 0 37 (43.5) Total 49 (100.0) 36 0 85 (100.0) (100.0) Age

18-25 Years 18 (36.7) 0 0 18 (21.2) 26-35 Years 31 (63.3) 14 (38.9) 0 45 (52.9) 35-45 Years 0 12 (33.3) 0 12 (14.1) Above 46 Years 0 10 (27.8) 0 10 (11.8)

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Total 49 (100.0) 36 0 85 (100.0) (100.0) Year of Experience 1-5 Years 17 (34.7) 0 0 17 (20.0) 6-10 Years 14 (28.6) 32 (88.9) 0 46 (54.1) 11-15 Years 18 (36.7) 0 0 18 (21.2) Above 15 Years 0 4 (11.1) 0 4 (4.7) Total 49 (100.0) 36 0 85 (100.0) (100.0) Professional Qualification Probationer 0 15 (41.7) 0 15 (17.6) Graduate 0 19 (52.8) 0 19 (22.4) ANIVS 44 (89.8) 2 (5.6) 0 46 (54.1) FNIVS 5 (10.2) 0 0 5 (5.9) Total 49 (100.0) 36 0 85 (100.0) (100.0) Academic Qualification ND 4 (8.2) 0 0 4 (4.7) HND/Bsc 45 (91.8) 9 (25.0) 0 54 (63.5) Msc. 0 23 (63.9) 0 23 (27.1) PhD 0 4 (11.1) 0 4 (4.7) Total 49 (100.0) 36 0 85 (100.0) (100.0) Source: Field survey, 2018

Table 1 above reveals that 48% of the respondents were Male while 57% of male had a high level of emotional intelligence. However, 52% of the respondent were within the age bracket of 26 – 35 years while 63% within this age bracket has a high level of emotional intelligence. Considering the year of experience, 54% of the respondent had 6 – 10 years’ experience in agency service while the large number (i.e 32 out of 46) of respondent with this year of experience had a moderate level of emotional intelligence. It was also observed that 18% of the respondents were probationer while 22% were graduate member of NIESV. However, 46% of respondents were Associate member (ANIVS) while 89% of ANIVS member had a high level of emotional intelligence to execute estate agency practice. Large percentage (54%) of respondent were holder of HND/Bsc. while 92% of HND/Bsc. holder had a high level of emotional intelligence. Therefore, it could be said that

The 19th AfRES Annual Conference 517 the respondents had the required working experience with adequate knowledge of research on real estate agency practice that could make the data reliable. Thus, the credibility of the data is sustained and the information obtained actually reflects the view of estate agents in the subject under studied.

4.2. Assessment of Estate Agents’ Competency level in adopting Emotional Intelligence for Estate Agency Service The total scores from the rating scale were calculated for each respondent with each service attribute. Averages were then obtained from each attribute and respondent. These individual average scores were then used to derive the EI competency average mean scores for the entire sample. The average mean scores for each service attribute was based on real estate agents’ perception shown in the Table 2 below.

Table 2. Perception of Estate Agents on Customer expectations in Estate Agency Service. EI Competencies Mean Score Empathy Real Estate customers need personal attention. 5.87 Real Estate firm should operate in convenient hours to clients. 6.58 Real Estate firm should have client’s best interest in mind. 6.45 Real Estate agents should understand clients’ specific needs 6.44 Real Estate firm should keep client informed about matters of concern 6.16 to them. Average Dimension Score 6.30 Self-Awareness Real Estate agents should have a realistic evaluation of clients’ strength 6.26 and limitation Real Estate agents should align established value with service 6.21 excellence. Real Estate agents should have strong and positive sense of self-worth. 6.27 Real Estate agents should understand organizational politics to make 6.35 decision. Real estate agents should sense clients’ emotions and understand their 6.15 perspective Average Dimension Score 6.248 Self-Management Real Estate agents should have the ability to manage oneself and 6.10 responsibility to its clients at all time

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Real Estate firm should ensure a seamless customer experience across 5.95 various interaction opportunities (e.g purchase and sales transaction of properties). Real Estate agents should keep disruptive positions and impulses under 5.83 control Real Estate agents should be able to adjust to the changing situation 6.13 and overcome obstacles Real Estate firm should meet their internal standard of Excellence 6.13 Average Dimension Score 6.028 Motivation Real Estate agents should be inspired with a compelling vision 6.16 Real Estate agents should have a wield range of persuasive tactics to 6.25 initiate estate agency jobs. Real Estate agents should be sufficiently motivated to improve 6.18 customer’s satisfaction and loyalty. Real Estate agents should have the necessary interpersonal skills and 6.13 latitude to deliver superior service Real Estate firm should have the readiness to seize opportunities to 6.21 ensure that customers are ready, able and willing to do what is expected of them. Average Dimension Score 6.186 Social Skills Real Estate agents should have an up-to-date understanding of how 4.46 well they are serving customers. Real Estate agents should consistently display honesty and Integrity in 6.30 transaction. Real Estate agents should be good at cultivating and maintaining a web 5.47 of relationship. Real Estate agents should have detailed information about individual 6.30 customers to support service delivery. Real Estate firm should be doing everything needed to ensure 5.85 coordination of service activities across individuals and allocation. Average Dimension Score 5.676 Source: Field Survey, 2018

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Table 3. Ranking Order of Emotional Intelligence Competencies Competencies Average Mean Score Ranking Empathy 6.300* 1st Self-Awareness 6.248* 2nd Motivation 6.186* 3rd Self-Management 6.028 4th Social Skills 5.676 5th Source: Field Survey, 2018

Table 3 above shows the ranking order of emotional intelligence competencies as identified by average mean score of perception of estate agents on customer expectations in estate agency service. It was found that service empathy has a mean score of 6.300 ranked first followed by self- awareness with 6.248 mean score, and motivation with 6.186 mean score were ranked second and third respectively. Other service competencies with the least mean scores are self-management with 6.028, social skills with 5.676.

Based on perceived customers expectation in estate agency service; empathy, self-awareness and motivation classified as emotional needs were ranked much higher than other service competencies. However, this finding confirmed the submission of Araloyin and Olatoye (2011) that despite real estate professionals attempt to improve their service delivery in customers satisfaction, their conduct in their first impression with customers has a long way to go in affecting real estate customers’ opinion about them. In this wise, the adoption of emotional intelligence instrument for service quality delivery would help real estate firms to improve customers’ satisfaction on the demand for emotional needs.

5. Conclusion and Recommendations This research has assessed the level of competency of estate agent’s emotional intelligence in Lagos property marketing. The study focused particularly on the level of competencies of estate agents’ Emotional Intelligence in real estate agency with a view to foster client-customers relationship that promote customer’s satisfaction in service delivery. Based on perceived customers expectation in estate agency service; empathy, self-awareness and motivation classified as emotional needs were ranked much higher than other service competencies. Therefore, an increase in emotional intelligence competencies of estate agents would help to

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enhance customers’ satisfaction on the demand for emotional needs in service delivery. This study therefore recommends that; 1. Estate agents should improve on their level of competency in emotional intelligence to understand customer’s behaviour and emotional needs in decision making. 2. Real estate agents also need to concentrate on improved customers’ satisfaction based on service empathy, self-awareness, and motivation in real estate agency service.

References Akinwamide, D. O., and Bello, V. A. (2019). Relationship between Digital Emotional Intelligence and Performance of Real Estate Digital Marketing in Nigeria. International Journal of Psychology and Cognitive Science. Vol. 5 (2), 70-78. Akinwamide, D. O., (2019). THE IMPACT OF EMOTIONAL INTELLIGENCE ON THE PERFORMANCE OF CONSULTANT ESTATE SURVEYORS AND VALUERS IN NIGERIA. Collaboration for Sustainable Development in the Built Environment. International Conference of Environmental Sciences, ICES 2019. 1st International Conference of the Faculty of Environmental Sciences, University of Ilorin, Nigeria, 29th - 30th April 2019. Akinwamide, D. O., and Idris, O. B. (2019). The Perception of Real Estate Professionals on the Relevance of Emotional Intelligence in Nigeria Real Estate Practice. Journal of THE NIGERIAN INSTITUTION OF ESTATE SURVEYORS AND VALUERS. 42 (1), 94 – 100. Araloyin, F. M. and Olatoye O. (2011). An analysis of real estate consumers’ perception of service quality in estate agency practice in Lagos Metropolis, Nigeria. Journal of Economics and International Finance, 3(3), 139-145. Bamidele, A.O., Adenusi, R. D., & Osunsanmi, T.O. (2018). Towards Improved Performance in Marketing: The Use of Property-Based Websites by Estate Surveyors and Valuers in Lagos, Nigeria. Journal of African Real Estate Research, 1(1), 81-93. DOI: 10.15641/jarer.v1i1.451. Bettencourt, L. A. (2010), Service Innovation: How to Go from Customer Needs to Breakthrough Services, New York: McGraw-Hill. Blocker, C. P. (2010, Dec).Are we on the same wavelength? How emotional intelligence interacts and creates value in agent-client encounters. Retrieved

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fromhttp://www.baylor.edu/business_new/kellercenter/doc.php /194282.pdf Braidfoot, R., & Swanson, A. (2013, Feb). Emotional intelligence of financial planners in mediation. Review of Business & Finance Studies (RBFS), 4(2), 11-20. ISSN 2150-3338. Ehiemere, N. D., Ogbuefi, J. U., and Awum, B. (2016). Customer Satisfaction amongst Users of Estate Surveying and Valuation Professional Services: Does Firm Size Matter? ATBU Journal of Environmental Technology 9, (2), 75-85. Goleman, D. (1995). Emotional intelligence: Why it can matter more than IQ. New York, NY: Bantam Dell. Goleman, D. (2002). “An EI-based theory of performance”. In the Emotionally Intelligent Workplace edited by: Cary Cherniss and Daniel Goleman. Consortium for Research on Emotional Intelligence in Organizations. Available online at: www.eiconsortium.org. Iroham, C. O., Oloyede, S. A., Ajibola, M. O. & Durodola, O. D. (2014). Towards an effective real estate agency education: A stride to efficiency. Procedia social and behavioural sciences, 191(14), 2687- 2692. Kidwell, B., Hardesty, D. M., Murtha, B. R., & Sheng, S. (2011). Emotional intelligence in marketing exchanges. Journal of Marketing, 75(1), 78. Retrieved from ProQuest database. Mang’eli A. M., (2013). An Investigation into Service Quality Determinants and their Effectiveness in Real Estate Agency in Nairobi. Unpublished Msc. Valuation and Property Management Project Paper, University of Nairobi. Masrek, M. N. Abdullah-Sani, M. J. & Jamaludin, A. (2012). Emotional Intelligence and Occupational Performance among Malaysian Librarians. Malaysia: Research Management Institute (RMI) Universiti Teknologi Mara. Mount, G. (2006). The Role of Emotional Intelligence in Developing International Business Capability: EI provides Traction. In Druskat, V. U., Sala, F. & Mount, G. (Eds.), Linking emotional intelligence and performance at work (pp. 97 – 142). New Jersey: Lawrence Erlbaum Associates, Inc. Naghavi, F., & Redzuan, M. (2011). The relationship between gender and emotional intelligence. World Applied Sciences Journal, 15(4): 555- 561.

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Olukolajo, M.A, Ojo, B. and Akinwamide, D.O. (2015). Assessment of use of social media in real estate transactions in Lagos property market. American Journal of Economics, Finance and Management, 1(2), 63-68. Parasuraman, A., Zeithaml, V. A., & Berry, L. L. (1994). Research Note-More on Improving Service Quality Measurement. Journal of Retailing, 69(1). Preko, A., Agbanu, S. K., and Feglo, M. (2014). Service Delivery, Customer Satisfaction and Customer Delight in the Real Estate Business. Evidence from Elite Kingdom Investment and Consulting Company Ghana. European Journal of Business and Management, 6(3), 71- 83. Rode, J. C., Mooney, C. H., Arthaud-Day, M. L., Near, J. P., Baldwin, T. T., Rubin, R. S. & Bommer, W. H. (2007). Emotional intelligence and individual performance: evidence of direct and moderated effects. Journal of Organizational Behavior, 28, 399-421. Rozell, E. J., Pettijohn, C. E. & Parker, R. S. (2004). Customer‐oriented selling: Exploring the roles of emotional intelligence and organizational commitment. Psychology & Marketing, 21(6), 405-424. Seiler, V. L. (2004). Examining Service Quality for Homebuyers in the Residential Real Estate Brokerage Industry. Unpublished PhD Thesis, University of Western Sydney. Sjöberg, L., Littorin, P., and Engelberg, E. (2005). Personality and emotional intelligence as factors in sales performance. Journal of Organizational Theory and Practice, 2, 21–37. Su, A. Y. L. (2004). Customer satisfaction measurement in Taiwan hotels. International Journal of Hospitality Management, 23; 397-408. Swanson, A. & Zobisch, P. (2014). Emotional Intelligence Understanding among Real Estate Professionals. Global Journal of Business Research, 8 (5), 9-16. Available Online at: www.Theibfr.Org Swanson, A., Bowler, B., & Zobisch, P. (2015). An assessment of emotional intelligence understanding in the field of real estate. Internet session presented at the 2014 Spring Global Conference on Business and Finance (GCBF), San Jose, Costa Rica. Retrieved from www.theibfr.com/.../CR011515759- Swanson%20Presentation.pdf. Yaya, J.A. (2007). Job Motivation and Emotional Intelligence as correlates of Librarians’ Job Performance in selected University Libraries in

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South West, Nigeria. Unpublished Dissertation, University of Ibadan, Oyo State, Nigeria. Yaya, J. A., Akintayo, O. A., and Uzohue, C. E., (2016). Emotional Intelligence and Productivity of Librarians in Public Universities in Nigeria: A Correlational Approach. European Journal of Open Education and E-learning Studies. 1(1), 75-127.

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USING THE PROPERTY REGISTER TO ENABLE MUNICIPAL SUSTAINABILITY

Janet Channing [email protected] METGOVIS- Integrated Property Solutions, South Africa

Abstract Section 23, Local Government: Municipal Property Rates Act, 6 of 2004, (hereafter MPRA) prescribes for the establishment and maintenance of a property register for every local municipality within South Africa. Internationally the property data base which includes values for the purposes of property rating is known as the fiscal cadastre. Limitations to the current legislative provisions, contradictions within the institutional arrangements especially within the national tier of government and various interpretations at the operational or local government level result in the property register falling short of global good practice.

This study investigates the linkages between the property register, effective property taxation and municipal sustainability in local government in South Africa

1. Spotlight on financial accountability The central message of South African Auditor-General’s (hereafter AG) latest report is that local government ‘accountability for financial and performance management continues to deteriorate’. The AG points out that: ‘While the poor economic climate does play a role in the deterioration of municipalities’ financial health, many are just not managing their finances as well as they should’. For example, there are audited reports for fruitless and wasteful expenditure amounting to R1,3 billion for the period under review. The AG’s audits highlighted two key areas of impact:

 The financial health of municipalities  The delivery and maintenance of municipal infrastructure.

Accountability failures negatively affect the lives of citizens. The financial health of municipalities or their inability to collect debt from municipal consumers is widespread. In these circumstances it is inevitable that municipalities will struggle to balance their books. In total, 34% of the

The 19th AfRES Annual Conference 525 municipalities disclosed expenditure that exceeded their income (deficit) – the total deficit for these municipalities amounted to R5,8 billion. According to National Treasury, 60 of the 62 defaulting municipalities in 2017/18 tabled unfunded budgets. This means they committed to spending more than they can generate as revenue or government’s allocation to them. In most cases, operating expenditure was greater than revenue.

The financial woes of local government also weigh heavily on municipal creditors. The impact of this inability to pay creditors was most evident in the huge sums owed for the provision of electricity and water to ESKOM, the electricity utility, and the various district water boards respectively. Five provinces responded to the impending financial crises through provincial intervention by placing a total of 18 municipalities under administration within the 2018/19 financial year.

2. Property tax coverage and the property register Sustainable local government requires adequate financial resources. Countries around the world use recurrent property taxation as a source of revenue for local governments (Kelly, 2000). Property taxes are popular ‘because they produce reliable, stable, independent revenue for the governments closest to the people and there is no clearly superior alternative for providing fiscal autonomy.’ (Mikesell 2003). Mathur et al (2009), in their study of India, describe recurrent property tax as a key ingredient of fiscal empowerment for municipal governments. Property tax is an important, possibly the most important, revenue source for local governments in much of the developing and developed world.

Property tax is difficult to avoid and, if well administered, can represents a non-distortionary and highly efficient fiscal tool (McCluskey 1999; Slack 2013). All governments need money in order to pay for the cost of infrastructure and public services. For property rates to be administered equitably all the properties within an identified jurisdiction must be included within the tax net. This aspect of property taxation is referred to as coverage. The completeness of the application of property tax is premised on coverage. The municipal register of properties is the property data base used for the purposes of rating. Yet the legislative provisions for the property register within the MPRA could be reformed to contribute to the sustainability of local government. My research will recommend that the municipal register of properties required for property rating may also

526 The 19th AfRES Annual Conference be used as a revenue management tool to support municipal sustainability. This approach provides local government with a readily accessible geospatial data base against which to report their financial performance.

3. The business of local government A key problem affecting the efficiency and effectiveness of property tax administration in most developing countries is poor record-keeping. According to Mathur et al (2009) the first determinant of revenue performance is the percentage of properties that are on the municipal tax register. This drives the percentage of properties that are assessed for tax purposes and hence the percentage of tax-paying properties. In their study of India, Mathur et al (2009) found that the absence of a formal count of properties for the purposes of property taxation was a major handicap in accurately estimating property tax potential.

The conclusion is that municipal financial sustainability is largely determined through accurate data. The business of local government is no different to any other business. It is primarily transaction driven: Expenses out and revenue in. The challenge facing most of our municipalities is cash flow and accounting for expenses. The latest reforms introduced by South Africa’s National Treasury prescribe a Municipal Standard Chart of Accounts, mSCOA. These regulations prescribe the municipal reporting formats. Each financial transaction within local government must be reported against a series of prescribed accounting segments. The one which is most important for geospatial reporting is the regional segment. The regional segment enables decision makers to view reports on a spatial platform.

Generally, municipalities have run their various business units as separate entities, each with their own data sets. National Treasury’s mSCOA business reforms also prescribe seamless integration between the municipal financial system and the respective sub systems to the general ledger. The financial system, the property register, and the valuation roll management system are all linked through an automated programmatic interface (hereafter API). The regulated municipal business streams positions the property register within the valuation roll management system. This is a logical selection as the property register is provided for within the Local Government, Municipal Property Rates Act, 6 of 2004, section 23, (hereafter MPRA). The challenge is that most municipalities have not yet elevated their existing tabular registers to the geospatial property registers required for

The 19th AfRES Annual Conference 527 the transactional reporting against the locational or regional segment. Geospatial registers enable mSCOA compliancy. Tabular registers fall short of this requirement. Accurate geospatial property registers predicate tax efficiencies for local government.

4. Maintenance of property registers Property registers require continuous maintenance and updating. Property is bought and sold, sub divided, consolidated, buildings are completed, and re-zoning applications are approved. All these section 78 (MPRA) movements trigger a change in the value of the respective properties. These changes are required for the supplementary valuations and valuation roll maintenance. Supplementary valuations require a re-valuation of the properties to reflect the adjusted market value as a result of the changed attributes. The MPRA amendments enforce roll maintenance to smooth incoming rates revenue for municipalities and to incur the least prejudice to the ratepayers through the raising of rates arrears.

Good data is a process. It doesn’t just happen; it requires a consistent investment and maintenance by each respective municipality. A record by record alignment between the property register, the valuation roll, and the financial system will provide an immediate escalation in revenue for any municipality.

Incomplete and inaccurate data sets which aren’t maintained are a liability to the municipality. Municipalities should guard against using flawed datasets to inform their decision-making processes. For example, unless property data is accurate electricity disconnections and other unpopular enforcements may be misdirected. This is a real risk to the municipality.

5. Data accessibility and municipal accountability There have been various initiatives to professionalise the local government sector. ‘This requirement was unfortunately repealed by legislation and there is a need to review this position and re-introduce this as a requirement (Peet du Plessis, CIGFARO President, 2019). The reality is that certain strategic decision makers within municipalities don’t necessarily have financial qualifications. Yet these decision makers are continually required to make strategic decisions which impact on the sustainability of their municipalities sometimes under pressured time and resource constraints. The challenge is to present data, both financial and non- financial, on an accessible and clear dashboard, placing accurate

528 The 19th AfRES Annual Conference information at the relevant fingertips. The hypothesis is that if our municipal managers and our honourable mayors are able to see the data they are working with then decision making would be better informed and the decision makers more accountable.

This is achieved if accessible customized reports themed according to the business of local government were developed for the relevant strategic officials. For example if you work within the Water Department you may wish to see revenue for water services per erf, the debtor age analysis for the water services, water meter reading data (actual vs estimated) data about where to locate tampered or damaged water meter units or to locate areas within your municipality where no water meters are installed and no water services are rendered.

Another example is returned accounts. This is an escalating phenomenon for municipalities as the economy slows and the ratepayer capacity to pay shrinks. Decision makers require a reliable report on which registered owners or ratepayers are returning their municipal accounts. Are these account holders the registered owners of the respective properties? With this data at hand the municipality may proceed with collections from the defaulting ratepayers without risk.

Experience shows that service availability charges are often inaccurate. A simple tool to match the respective erf with the relevant charges to ascertain whether billing is both complete and accurate. The data needs to be scalable and immediately accessible from individual owner queries to provincial and national reporting.

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Screen Shots from A Geospatial Reporting Dashboard

Figure 1: Billing vs tariff discrepancies: Mismatches between tariff codes and rating category

Figure 2: This dashboard tracks the project progress of a General Valuation project. Users may view the project progress in terms of the data collected, values modelled and finalised. The status of each property is viewable. Municipalities can use this application to verify the invoices received from their appointed service providers or to monitor internal processes.

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Figure3: The spatial representation of the municipal indigent registers

Figure 4: Debtors age analysis 30 / 60 / 90 / +120 days / overdue / handed over details as requested

6. Measuring municipal sustainability Benchmarking or compare current performance with historical performance as a means of informing expectations of future performance is common practice in many spheres e.g sport, medicine, business and governance. This is true for both relative and absolute performance evaluation that is the comparison with between peer groups and also

The 19th AfRES Annual Conference 531 against historical measurements, objective benchmarks or targeted outcomes.

National Treasury assesses the state of local government finances and financial management that is the financial health of all South Africa’s 8 metros, 19 secondary cities, 186 local municipalities and 44 district municipalities - in total 257 municipalities – through the following eight indicators:

1) Cash availability to meet its fixed operating expenditure requirements; 2) Persistence of negative cash balances (bank overdrafts); 3) Overspending of original operating budgets; 4) Underspending of original capital budgets; 5) Debtors as a percentage of own revenue; 6) Year-on-year growth in debtors; 7) Creditors as a percentage of cash investments; and 8) Reliance on national and provincial government grants.

Municipal Money (https://municipalmoney.gov.za) is an initiative of the National Treasury which hosts extensive amounts of municipal financial data. It is a free, impartial, politically neutral, online tool which discloses how municipal funds are spent. It allows comparisons between different municipalities and also by municipalities with their own historical records.

This data has been used to create a Municipal Sustainability Index (“MSI”) by equally weighting the National Treasury indicators to assess local government’s finances and financial management. These results illustrate the difference between those municipalities demonstrating fiscal prudence and responsible revenue management and those that are not.

While there are many possible applications for such an index it is anticipated that the initial applications will be for: 1. Private sector decision making about property investments e.g where to develop property or locate businesses, and 2. The municipalities themselves, in anticipation of their return to the capital markets The Minister of Finance, Tito Mbomweni, states ‘There is ample scope for creditworthy municipalities with strong financial management to increase local capital investment by expanding

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municipal borrowing ... Reforms over the medium term will enhance the ability of municipalities to raise revenue to invest in their own development’.

Figure 5: Municipal Sustainability Index

7. Conclusion This paper concludes that the MPRA provides for a basic tabular property register. This is insufficient for mSCOA and the prescription for regional segment reporting for municipal every revenue and expense transaction. Policy reforms are required if South African local government is to align with global good practice.

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The establishment of a geospatial property register requires an investment in extensive data cleansing. The achievement of an accurate geospatial property register requires ongoing maintenance as the attributes of properties change. This geospatial data base is able to provide invaluable business intelligence to both financial and non-financial strategic decision makers within local government to enable better accountability and improved governance. These factors will enhance municipal sustainability which may be measured through the municipal sustainability index, MSI.

Link to the InSight website https://hexagon.metgovis.co.za:8888/Apps/?tenant=MunicipalSustainabili tyIndex#login

User = MSI_User Password = MSI_demo

Contact details: Janet Channing, E-mail: [email protected]; www.metgovis.co.za

References Babawale. G, (2013) "Valuation accuracy – the myth, expectation and reality!", African Journal of Economic and Management Studies, Vol. 4 Issue: 3, pp.387-406. Bahl. R, Martinez- Vazquez. J and Youngman. J, (March 2008), Making the Property Tax Work, Experiences in Developing and Transitional Countries. Institute of Land Policy. Fjeldstad O, Ali M and Kater L, (accepted 15 January 2019) Journal of Financial Management of Property and Construction, Forthcoming. Franzsen R.C.D, (2003) Alternative Approaches to Value-based Property tax in Africa: An Exploratory view of options. African Tax Institute University of Pretoria. South Africa. International Association of Assessing Officers (January 2014), Guidance of International Mass Appraisal and related tax policy Kelly R, (1999), Property Taxation in East Africa: The Tale of Three Reforms, Annual Conference on Taxation and Minutes of the Annual Meeting of the National Tax Association Published by: National Tax Association, Vol. 92 pp. 443-450. Mathur O.P, (2009). Urban Property Tax Potential in India. National Institute of Public Finance and Policy, New Delhi.

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McCluskey W.J, Slack. E, (1999-2013) International Handbook of Land and Property Taxation, University of Toronto, Enid Slack Consulting, Inc. Edward Elgar Cheltenham, UK Northampton, MA, USA. Mikesell J. L, (2003). Fiscal Administration: Analysis and Applications for the Public Sector. Belmont, California: Thomson Learning, Inc. National Treasury (2018), In South Africa the recurrent property tax called property rates is a critical source of revenue for municipalities to achieve their constitutional objectives. Royal Institute of Chartered Surveyors and International Valuations Standards, (2017). The Red Book on Global Valuations Standards. Sepulveda C., Martinez- Vazquez. J., (May 2011). Explaining Property Tax Collections in Developing Countries: The Case of Latin America. International Studies Program. Working Paper 11-09. https://www.esi-africa.com/industry-sectors/finance-and-policy/how-18- municipalities-achieved-clean-audit-results/

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LAND RIGHTS GOVERNANCE IN PRESENT DAY AFRICA AND IT'S EVOLUTION

HRH Drani, Stephen Izakare Lopirigo / Paramount Chief of the Madi people, Uganda

Most of the Land in Africa is owned under the customary land tenure system with the various traditional leaders as custodians of these huge chunks of land on which subjects have and hold land rights.

As traditional leaders, it is our duty to see to it that the land rights of our subjects are fully attained in an equitable manner that would then spur on economic growth and development in the different parts of Africa whilst also ensuring environmental protection and sustainable and eco-friendly development. In this regard, we the traditional leaders in Africa stand together with our various heads of state in reaffirming the commitments made by the heads of state of the African Union in July 2009 to eradication of poverty and raise the living standards for all African people and in particular specific commitments under the declaration on land issues and challenges in Africa which calls for the use of Frameworks and guidelines on land policy in Africa.

To this end specifically in Adjumani District of Uganda, we have embarked on a huge drive towards land rights registration for customary land rights owners to ensure that they receive a certificate of customary ownership thus offering protection and enabling business with these certificates of customary ownership as security in any future financial transactions with monetary institutions. This will also minimize the potential negative impacts of large scale land acquisitions, land dispossession and environmental degradation whilst enabling us to archive equitable and sustainable agricultural development and economic transformation that will ensure water security, food security and protection of our forests and ecosystems.

However, during the course of making these much needed changes, we have encountered many legislative huddles in the design of current legislation which is mostly colonial by design and does not favor the African dream and also a policy issues that would bring the traditional institutions at loggerheads with the local government structures.

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There is need to ensure that the activities of the traditional institutions are lawfully embedded in the national constitutions and that traditional leaders receive the ideological recalibration to lead for the African dream

In the main, the reforms have involved to verify extents (dependent on country contexts) five specific processes. First is privatization of ownership which often involves eventually enabling individual title although initially allowing for other shades of formalization and securitization of customary tenure, typical reform countries like Ghana, South Africa, Kenya, South Sudan, Tanzania, Burkina Faso, Uganda and Zambia have built this into their reforms. Clearly this move toward privatization of what was effectively traditional customary land has been aided by reforms moves that on the face of it are designed to secure tenure. Specific actions like documentation and registration of customary land users, adjudicating and assigning land rights to individuals or collectives, physically surveying boundaries make customary tenure more legible. While in some contexts formalization of tenure means a little more than endorsing existing practices, this process formally recognizes an individual or a collective’s right not only to use and profit from but in some case also dispose of land much in the same way as envisaged. However, the question remains, does customary land remain the people’s protector and insurer against disenfranchisement or is it being capitalized through blind folding and renaming that loses its protective meaning? Or perhaps has it become more necessary to do so due to the population explosion and the fact that traditional leaders have become out of touch with the customary land question and people needs? Either way, the issue of customary land tenure needs to be further looked into in order to remove the multiple negative stumbling blocks and red tape through further consultations and sensitizations of all the traditional leaders and the people that live and have rights on these lands.

A typical example in many of the reform countries are civil society organizations either offering a platform for consultations on contentious issues or helping citizens register their claims to land. Mozambique’s terras Comunitarais working with communities to ensure they register their land grabs by foreign sovereign and corporate investors by the 2000s. On the one hand by helping to secure tenure they protected people in precarious and insecure tenure from the impact of this rise in global demand for land by both local and international investors. On the other they make customary tenure more legible especially to investors and therefore create

The 19th AfRES Annual Conference 537 conditions that are more likely to result in the loss of the land. The potential contradiction here lies in the fact that by making land a formally tradable commodity in this way, many of the rural poor can find themselves landless after all (see the example Collins and Mitchel, 2017). It is clear from the forgoing that there are elements of the reforms that conform to the classic neo-liberalization of customary land.

Security of tenure here refers to the formalization or statuary recognition of rights. Although experiences are varied, on paper at least the ‘new’ Africa customary tenure offers graduated shades of tenure security that ranges from simple registration of rights to dispensations offering recognition of customary tenure as property in some countries. In an analysis of 46 African countries shows that 30 of these the reforms have brought better protection of rights through formalization compared to the situation before. There is little work done to document whether formalization actually works to protect the implementation gap. There are still cases where collusion between the state and the external investors can undermine this security to tenure.

Overall it is reasonable to assume that when individuals are given formal reorganization of their right to occupy and use a piece of land, their welfare condition can improve. Evidence of the welfare effects of this is still scant but some work demonstrates that in places were customary institutions still work well, formalization itself may not change the way individuals decide on their investments in land. Although there is mixed evidence on this, evidence suggest countries or areas customary institutions are under pressure and where the rules and norms governing land have broken down, security of tenure that comes from formalization does make a difference. In such contexts formalization allows individuals to make investment decisions that recognize the guarantee of rights of use. There is some evidence also pointing to the positive correlation between titling and investments although work in Ethiopia suggests that it may only make a difference with respect to long term investments for example tree crops. Consensus points to the suggestion that recognizing customary rights as property makes difference in the nature and form of investment decisions people under the new customary tenure make perhaps more significantly so in areas where rules and norms of customary tenure have broken down.

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Formalization of rights has begun a process of gentrification of customary tenure practices and land governance institutions. Many of the land governance institutions formed to underpin the new customary tenure are a hybrid bringing together elements of traditional authority and fusing this with some of the values of statuary institutions they interface with as in the case with Ghana (see Biitir et al. 2017) and in Rwanda (see Schrieber, 2017). The import of the changes is not only to make them land administration more predictable and legible to outsiders but to ensure that they facilitate the property transactions more efficiently (Lemmen et al., 2017). They have therefore become more professional in the way that they administer and manage land in some cases more egalitarian in the way decisions about land governance are made (Boone, 2017), see also on Uganda, Tanzania, Ethiopia and Ghana). For example rather than relying on oral institutional memory, many of the reform countries have professionalized land titling and registration introducing appropriate level of technology to capture this at local level. Rwanda demonstrates what can be achieved through more professional land administration. Not only has the country managed to set up a computerized system to manage 10.4 million properties, it has also reduced the transaction cost drastically and it now takes just three days to register title and by 2017 some 7.16 million land owners had collected their titles. Customary tenure as we know it now looks very different in Rwanda compared to what it was at the turn of the century. Similar land administration reform programmes have been or are being undertaken in Cameroon, Ghana, Malawi, Mozambique, Namibia, Tanzania, Burkina Faso, Uganda and Zambia with emerging evidence suggesting similar effects.

Conculusion The inability of post-colonial government in Africa (with the exception of Ghana) to put in place a mechanism that would seek to transform traditional institutions of Africa in their transformation process thus integrating the development processes of both traditional and liberalization of land rights and facilitating them to concurrently evolve thus meaning that traditional mechanism also evolve, leaves a huge gap in the agrarian development questions.

African traditional institutions should be developed into what they are supposed to be and have them take their rightful place in society and not demonized into what they are not. The colonial agrarian way was and is never intended to benefit the African masses but rather the colonial

The 19th AfRES Annual Conference 539 expatriates to have and hold un-natural powers over land that cannot provide for a natural and sustainable agrarians development path way for the African population. In the end, the lack of traditional ethics in the agrarian question will eventually lead to the economic disenfranchisement of the poorer African masses to the benefit of the few financially and politically connected individuals.

The question of land and agrarianism should be directed towards responsible, equitable and economically viable needs meeting and strengthening the evolutionary process of customary land tenure in regard to management and administration and not to further empowering of economically abled individuals to hold land in perpetuity. It is a question of land and agrarian needs development to suit the African population needs. We only have one planet to live on and the needs of many have to be provided for and this regard, the African customary tenure system is best placed to meet this need provided it is facilitated with the environment to grow and evolve as it continues to meet the challenges that it faces.

Under customary tenure, it is the chief and his council that plan and regulate land usage. The land out lay was in such a way that land for arable farming was known, land that was rich in specific mineral deposits was known, land that was more suitable for purposes of grazing cattle was known, land for forestry hand hunting was known, land for housing needs was known and land specifically gusseted as wetland was also known etc. It was then the chief that allocated these various lands to the individuals or the community for the necessary purpose. Today due to migration and varying needs in order to carry out these tusks, you would also have to evolve as a traditional land holding institution to accept the fact that peoples may hold multiple inter clan loyalties and that it might be necessary to accept people for the particular loyalty and homage that they paid to you rather than have and hold the land simply for your clansmen only.

Today however, individuals in a society grant themselves individual rights to ownership that includes the right to transact or sale a piece of land without the communities or the chiefs’ permission. This is a direct result of colonial agrarian distribution that came about as the implementation of Lord Macavleys address to the British parliament on the 2nd Feb 1835 in which he said “I have travelled across the length and breadth of Africa and I have not seen one person who is a beggar, who is a thief. Such wealth I

540 The 19th AfRES Annual Conference have seen in this country, such high moral values, people of such caliber, that I do not think we would ever conquer this country, unless we break the very back bone of this nation which is her spiritual and cultural heritage and therefore, I propose that we replace her old and ancient education system, her culture, for if the Africans think that all that is foreign and English is good and greater than their own, they will lose their self-esteem, their native culture and they will become what we want them to become, a truly dominated nation”.

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THE PROCUREMENT PRACTICES FOR PROPERTY MANAGEMENT SERVICES BY PUBLIC INSTITUTIONS: THE CASE OF TWO PUBLIC INSTITUTION IN KENYA

Catherine Kariuki and Nicky Nzioki University Of Nairobi Email: [email protected] Abstract Real Estate is an important resource in the delivery of public services and needs to be well managed. To enhance the quality of service provided or to enable these institutions concentrate on their core mandate, they have recently looked to the private sector to provide certain management functions. This is in the hope of delivering better quality service and reducing costs. The paper will capture the African context through an exploratory study

Outsourcing strategies have been adapted by many public institutions in Kenya. The main reasons for such decisions have been stated as the poor quality of services provided by in house staff and the high cost of such a service. The advantages and disadvantages of outsourcing has been debated in many scholarly journals. Public procurement is regulated by legislation, in Kenya by the Public Procurement and Asset Disposal Act of 2015 and internationally by the United Nations Commission on International Trade UNCITRAL Model Law on Public Procurement. This is because public procurement must be transacted with other considerations in mind, other than the economy. These include accountability, non- discrimination and respect for international obligations.

The paper is exploratory and looked at best practices that exist in chosen public institutions that outsource several of their real estate services. It has been identified that public institutions procurement process is governed by a legal framework and the study will find out if the institutions adhere to this legal framework, in an effort to give value to their consumers and the suppliers.

Methodology Data was collected using questionnaires and interviews. The questionnaires were distributed to estate and property departments and the procurement departments in the institutions chosen. Data was analyzed to provide

542 The 19th AfRES Annual Conference information on whether the institutions adhered to the best practice areas identified in literature and also to show the highest violation and risk areas.

The recommendations were be that these institutions will need to adhere to standards set through legislation. If need be that the existing legal framework and policies should be reviewed. It is also recommended that training may be considered for improved procurement services.

Key words: Procurement, public institutions, improved service, training, legal framework

Background Information Management of real estate is important in the delivery of public services. To enhance the quality of services provided by public institutions, the need to engage the private sector has become apparent. This is in the hope of delivering better quality services and reducing costs. To do this, outsourcing strategies have been adapted by many public institutions the world over. There is evidence that governments in developed countries spend at least 10% of their GDP on public procurement. In developing countries some spend between 40% and 70% of their GDP in public procurement (Development Assistance Committee, 2005). For instance, a study done by Makabira et al (2014) stated that procurement is an important and expensive business with at least 70% of revenue being spent on the purchase of goods and services. This points to a need for a well-functioning public procurement system. It was noted by Agaba and Shipman (2007), that though developing countries did not need to conform to international obligations, requirements now set by the World Bank and other donor organizations have set conditions for providing development aid. A well- functioning procurement system must therefore be identified as essential if funds are be used effectively to promote development where such a system is not provided by host countries. As a result of this need and other factors countries within the East Africa region, namely Kenya, Uganda and Tanzania reformed their procurement systems.

The Research Problem The provision of poor real estate service delivery was identified in many public corporations and as a result they have looked to the private sector to provide these services. These services are provided under a legislative framework, that has sometimes proved slow and open to corruption. There have also been cases of corruption and bribery attributed to the high value

The 19th AfRES Annual Conference 543 of transactions in the public sector and the pressures to lower costs (Amemba et al, 2015). The main obstacles to procurement reform have been mentioned as deeply vested interests, lack of political will, lack of technical knowledge and capacity and the complexity of the substantive issues involved (Agaba et al, 2007). In Kenya, reports from the Auditor General consistently revealed irregularities in the use of public funds. Most of these misappropriations were linked to breaches in procurement requirements (Kagume and Wamalwa, 2018). In their study, they also noted that financial losses add up to billions of Shillings as seen in the financial years 2014-2016 for the Ministry of Health and Education. This was also noted by Onyango et al (2018) who stated that inefficiency and incompetence of overall administration and management of the procurement function in many public institutions contributes to great financial losses annually.

Objectives 1. To find out if public institutions adhere to the legal framework provided 2. Identify the best practice 3. Identify the high risk stages of the public procurement process

Literature Review The literature reviewed was on general public procurement with few studies looking at procurement of real estate services. Agaba et al (2007) on public procurement reform in developing countries and concluded that though there are now laws in place, enforcing compliance and eradicating institutionalized corruption are the more difficult steps left to take.

Bwoma (2013) found that the Public Procurement and Disposal Act of 2005 in Kenya was the right step forward. But this Act affects provision of real estate services by causing delays because of the long procurement procedures. There is also poor contract management and recommended a review of the Act and capacity building and the upholding of ethical practices.

In a discussion of the development and reform of the Kenyan Public procurement systems by Ochieng and Muehle (www.ppa.org/images/proceedings/IPPC5/Part/Paper 7-7), they concluded that the Kenyan Government has committed to reform and improve the public procurement system. They said, however, there are insufficient

544 The 19th AfRES Annual Conference implementation laws and regulation in daily administrative actions and the culture of impunity and wide spread corruption. Makabira (2014) argued that procurement is an important and expensive business with at least 70% of the revenue being spent on purchase of goods and services. The study revealed that procurement planning, controls, monitoring and staff training in procurement had a key part to play in successful procurement. Amemba et al (2015) concluded that the high value of transactions in the public pocurement process along with pressures to lower costs can result in bribery, corruption and other practices deemed to be unethical. Kagume et al (2018) in an effort to improve the public procurement process recommended the need to strengthen the oversight of public procurement to help raise the effectiveness of public service delivery. Most of the fixes, they stated did not require significant technical amendments to the law but a mere adherence to transparency and open contracting in Kenya.

In the mid-1980s, the need to reform the public procurement in the three East African countries of Kenya, Uganda and Tanzania became urgent, as there was growing scrutiny and pressure from within and outside. The push for reform came mainly from domestic procurement stakeholders. The stakeholders complained of misallocation of resources, inadequate infrastructure, inefficient services, high taxes and growing indebtness. There was also external pressure from donors and multilateral organisations. Public procurement reforms were a condition for lending. The global trend towards trade liberalization has also made it inevitable to review procurement procedures. As a result of this, the three countries have put in place public procurement legislation. Which seeks to define the organization carrying out the public procurement, sets out how tasks are performed, assigns responsibility to procurement officers and staff and prescribes the regime for decision making and control. Countries that do not have their public procurement legislation can use the United Nations Commission on International Trade Law, The Model Law on Public Procurement 2011.

In provision of the different goods and services public institutions can use different procurement options. These options include inhouse provision of goods and services, outsourcing or a mix of the two. Outsourcing as a way for firms to concentrate on their core functions. Gilber and Black (2004) concluded that the optimum level of outsourcing may require a core corporate real estate staff that understands the overall corporate strategy. Meaning that complete outsourcing of all real estate services may create an

The 19th AfRES Annual Conference 545 agency problem that reduces the efficiencies and productivity the firm hoped to achieve in the first place.

Outsourcing has also been seen as a way to improve productive efficiency and service quality in the public sector. Construction, property management and professional services are part of the key public services that are outsourced. Research work shows that there are several benefits of outsourcing. These include cost reduction, faster project completion, high level of expertise and technology and flexibility. There are however cases identified that have led to poor service delivery when the outsourcing option is taken. These include coordination breakdowns, lack of control by the client company over the outsourced employees. There are sometimes conflicts, especially where the outsourced company and the client do not share the same values. Security issues and leaking of trade secrets can happen when certain services are outsourced.

The selection of contractors is a fundamental part of the procurement process. The contractor ideally should have a combination of technical skills and financial resources. Hence the need for contractors to submit the financial and the technical proposals. However, the principle of proportionality should be adhered to. This is where the demands placed upon suppliers should be both relevant and directly related to the contract being awarded.

The Nature of Outsourced Real Estate Services Many public institutions in the world for a long time relied on in house management in the provision of real estate services. The provision of real estate services in house is done by a department created for this purpose. These systems have been found lacking because of low quality, high costs and time taken is too long. The idea is that goods and services which should be of high quality should be provided at the lowest cost and at the shortest time. It has been felt that this can be provided through outsourcing these services. Outsourcing also referred as contracting out, which involves placing of provision of real estate services in the hands of an external service provider. The two options have their advantages and disadvantages. Outsourcing is supposed to allow organizations to focus on their core business and create a competitive advantage by reducing operational costs. One can outsource an entire function or part of it.

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Real estate services that can be outsourced include, cleaning, security, garbage collection, firefighting equipment and servicing, lift and generator maintenance. Other services include ground maintenance, borehole drilling and maintenance, as well as window cleaning. Ndede et a; (2010) believe that there can be significant cost savings when a business function is outsourced. Benefits have been identified to include flexibility thus avoiding fixed costs and bureaucratic processes.

Outsourced services mean contracts and contract management must be considered. The main stages in the procurement process according to Kagume et al (2018) are the pre-tendering phase, tendering and post award stage. From their work they identified that the majority of the procurement violations happen at the post award stages at 82% followed closely by the pre-tendering stage. Most of the cases were related to order and payment at 61%, contract management at 19% and contract award at 2%. Violations include abuses of the supplier performing the contract in term of quality, time and pricing. Others are product substitution or sub-standard work and service and lack of supervision from public officials.

Public Procurement in Kenya According to Kagume and Wamalwa (2018) public procurement is the means through which government spends revenue for the implementation of public service delivery. To ensure that such a process adheres to the principles of transparency and integrity, there is legislature laid down to protect it. In this regard, there is the law and the institutional framework. The spending by the public sector is high and adherence to the rules of procurement are essential in reducing corruption.

The way the public sector procures goods and services in Kenya has undergone significant developments over the years. In the 1960s, there were no regulations. While in the 1970s, 80s and 90s the National Treasury regulated the system by using circulars. In the mid-1980s, the need for reform in the public procurement was already evident in the three East African countries, that is Kenya, Uganda and Tanzania. This was as a result of growing scrutiny and pressure from within and internationally. The push from within came from stakeholders, where they were complaining of misallocation of resources, inadequate infrastructures, inefficient services, high taxes, growing indebtedness and high risks. External push was from donors and multilateral organizations who made procurement reform a condition for lending money to many developing countries. The demand

The 19th AfRES Annual Conference 547 was to have national procurement systems to be in harmony with international procurement guidelines. Thus, making them more transparent and accountable.

To meet the requirements of stakeholders, donors and multilateral organisations, there now exists from 2005 a law in Kenya on public procurement. This is the Public Procurement and Disposal Act of 2005 and revised later to the Public Procurement and Asset Disposal Act 2015. In Uganda, there is the Public Procurement and Disposal of Public Assets Act 2003. The Public Procurement and Assets Disposal Act 2015 is an Act of Parliament to give effect to Article 227 of the Constitution: which states “To provide procedures for efficient public procurement and for the Assets Disposal by public entities and for connected purposes (GOK, 2010). It also requires Parliament to prescribe a framework within which policies relating to procurement and asset disposal shall be implemented. The Public Procurement and Asset Disposal Act was enacted to regulate and guide on how procurement processes are carried out within public entities in a bid to minimize challenges within this sector.

The 2015 Act prescribes the methods of procurement and the institutional framework. It establishes several oversight bodies and mechanisms, the office of the Auditor General, the Parliamentary Oversight Authority and the Ethics and Anti-Corruption Commission.

Best Practices in Procurement Reed et al (2005) admits that though industry best practices have great potential for government acquisition, a careful analysis of the differences between public and industry procurement is essential before attempting to implement them.

Agaba and Shipman (2007) in their discussion on public procurement reform, suggested the following as a desired outcome – Transparency that needed to be characterized by regulations and procedures that were well defined. These should also be open to public scrutiny. The importance of clear standardized tender documents containing complete information for ease of tendering. There was to be an equal opportunity for all in the bidding process. Secondly, a more effective means of fighting waste and corruption and improving financial accountability, thirdly integration of the public procurement system with national budgeting procedures A fourth aspect being to have a more attractive investment climate lowering risk.

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Fifth, to have greater competitive pressure to satisfy customer needs and finally a streamlined procurement process through greater use of electronic commerce.

Further benchmarks establishing the elements of a well-functioning public procurement system are based on four pillars;

Pillar 1: Legislative and regulatory framework

All those speaking under this pillar agree that public procurement must adhere to public procedures if public funds are to be used in the best way possible. Crucial in this respect is a sound enforcement mechanism.

The enactment of the Public Procurement and disposal Act and the subsequent enactment of the Public and Procurement and Asset Disposal Act of 2015 has led Kenya to be assessed slightly stronger on this pillar.

Pillar 2: The recommendations will be that these institutions will need to adhere to standards set through legislation. If need be that the existing legal framework and policies should be reviewed. This is to incorporate emerging issues in African continent. It is also recommended that training may be considered for improved procurement services.

Pillar 3: Procurement operations and market practices – In this case there should be efficiency of procurement operations and practices. There should be functionality of the public procurement market and the existence of contract administration and dispute resolution provisions.

Pillar 4: Integrity of the public procurement system which has an effective control and audit system. It must also have an efficient appeals mechanism, as well as access to information. Along with this the existence of ethics and corruption measures.

Best practice here means that a department in charge of the management of estate or property can use this as a check list to gauge their performance.

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Findings Case Study – Two public Institutions The research centered on procurement by two public institutions, one offering higher education learning and another reinsurance company based in Nairobi, Kenya. It was felt that it gave a good reflection of the public procurement of real estate services, which amounted a sizeable number of 13 for both institutions. The amounts paid to suppliers in this sector was also sizeable, almost in the region of Kshs. 70 million. (approximately US Dollars. 700,000) for the higher learning institution. The Departments that are charged with the provision of real estate services are an Estates Department and the Construction and Maintenance Department and a property management department. Both have heads of department trained in a real estate discipline. These departments, like any other rely on the Procurement Department to purchase goods and services for them.

Data for this work was collected from both primary and secondary sources. The questionnaires were distributed to the estate and property managers in the two institutions and to the procurement officers. The questionnaires to the estates and property departments in the two institutions were filled and returned, the procurement section did not respond. It was however, felt that the data collected was adequate for this paper. Data collected was cross checked against the four pillars identified under best practices and to show areas of the highest violations.

On the objective to find out if public institutions adhere to the legal framework provided these were the findings.

Pillar One: Legislative and regulatory framework There was evidence that the two institutions adhered to the laid down legislative and regulatory framework. The two institutions follow the Public Procurement and Asset Disposal Act, along with the Public Procurement Regulation 2016 and the Institution’s own procurement manual.

The staff interviewed stated they were aware of the Acts relevant to procurement in this country. These include the Public Procurement and Asset Disposal Act of 2015, The Finance Act, The Public procurement Regulations and the institution’s procurement manual. The department used the procurement manual before the Public Procurement and Disposal Act was enacted in 2005. Meaning they were aware that public procurement must have certain guidelines. The two institutions trained

550 The 19th AfRES Annual Conference their staff members especially when they procure new laws and new equipment. This is a clear indication that the institutions know the consequences of not using the Act in the procurement of goods and services.

It was however found out that on occasions, public institutions have been able to circumvent the law by raising the mandatory requirement which play into the hands of particular suppliers. For example, on the procurement of security services, the Protective Security Association (PSIA), protested to the University of Nairobi procurement manager over the tender process. The Vice Chancellor was reported to have said, “We were looking for a company with a sound financial position and which can pay its guards even before receiving payment from the University. We are facing serious cash flow challenges”. The PSIA, faulted the university for trying to circumvent the law so as to get into a contract with a firm that can bail it out of its financial problems. This kind of arrangements locks out the small firms. Another anomaly noted in this award, was the contract period which was for three years as opposed to the one year contracts that is the practice.

E-procurement and green procurement One of the two institutions was using e-procurement and training for suppliers especially on the use of e-procurement was given by the procurement department. There is the use of electronic procurement Information system (EPMIS) to procure goods and services. E-procurement is encouraged by the Public Procurement and Asset Disposal Act 2015 and is defined as the process of procurement using electronic medium such as the internet or other information and communication technique. Some of the reasons given for not using e-procurement was lack of awareness and cost. (GoK, 2015 section 2)

Green procurement is being used in the institution of higher learning and not the reinsurance one. Green procurement is a means of improving products and operations from an environmental perspective, it means a reduction in energy consumption by using natural lighting or energy saving bulbs. The need to have a production process of cleaning materials that are not only environmentally friendly but ones that conserve the natural resources. Poor maintenance of plumbing systems that reduce water leakage and misuse. Here there was the policy of take back, whereby suppliers take back the goods on expiry of their life e.g. computers and toners. An effort is made to procure goods and services which are

The 19th AfRES Annual Conference 551 environmentally friendly. Suppliers are required to confirm that they are caring for the environment by providing their policies as part of the tender requirements.

Pillar Two: Institutional Framework There was a clear institutional framework with fully fledged departments concerned with real estate services and a separate procurement department that served this department as well as other departments.

Real estate functions are supervised by the Estates Department or the property management department. While procurement of goods and services for this department are carried out by the Procurement Department. The Department of procurement at both Institutions is under supervision of the Public Procurement and Oversight Authority.

From the human aspect, challenges experienced include resistance to change. To overcome this the institutions gives training and workshops whenever there are changes in legislation both locally and internationally. Training is done through workshops and group trainings where an expert is invited.

Pillar three: Procurement operations and market practices The functions identified in real estate in the two institutions are similar. These ranged from cleaning, maintenance of lifts, general repair, boreholes, garbage collection, security and maintenance of grounds among others. Training has also been given on routine services such as firefighting and security preparedness. Table 1.1 below shows what options of procurement were used institution 1 and 2.

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Table 1.1 Real Estate Functions Institution Institution Institution Institution Institution Institution Institution Institution 1 2 1 2 1 2 1 2 Function Inhouse Outsource Mix of the two Period of contracts in years Cleaning X X 2 2

Security X X 5 2 Lift X X 1 2 Maintenance Bore hole X X 2 Drilling Bore hole X X 1 2 maintenance Window X X 2 2 Cleaning Generator X 2 provision Generator X X 1 2 Maintenance Grounds X X 2 2 Maintenance Plumbing X X 2 Fire X X 2 equipment Garbage X X 2 Collection Cold rooms X X 1 2 Wastewater X X 1 2 management Source: Field Survey, 2019

From Table 1.1 above, the two institutions outsource most of their real estate functions. The main reasons for using outsourcing was cited as lack of technical expertise within. It was found cheaper to outsource. It was also thought that the institutions would be better off concentrating on its core business. Functions like cleaning were done using the mix of in-house and outsourcing. In this case the outsourced service cleaned the common areas, while in-house staff cleaned the offices and classrooms (often for security reasons). Security was also mixed for the same reasons. Some of the other services were specialized and were left to the experts.

The challenges for outsourcing that were stated included: Poor supervision leading to poor workmanship, quality sometimes is comprised, goods of low quality are provided. Some of the services are quite expensive. In other cases where a supplier had monopoly, prices were high since there was no competition.

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One of the property managers says “Service providers initially introduced staff are competent but are gradually replaced. The Institution is now given substandard goods and services midstream by bringing in cheaper workers who lack training.”

This means, though the Public Procurement and Asset Disposal Act was used initially the public institutions suffer eventually if there is lack of supervision or corruption is involved.

Mixed Inhouse and Outsource The use of the mix of the two procurement models was said that some services require a mix so as to ensure efficiency and close monitoring, for example the security management. Other areas require privacy and confidentiality thus access to some areas by outsiders is limited. Such areas include staff offices. This option has the benefit of cost cutting, though the research did not look at the actual cost reduction. Sharing of risks and costs was also said to be a benefit.

The challenges included: lack of boundaries as to who is to do what task. Difficult to appraise staff since targets are shared.

In House The Inhouse only option is used where the institutions felt the expertise is there and jobs are repetitive. This is also link to savings in cost. Other benefits of this option were said to be good record keeping, cheaper in the long run, a sense of belonging is instilled in the employees. Reduced response time, especially in times of emergencies.

Challenges for inhouse included: a lack of commitment by members of staff. The cost was high for training staff when new technology or methods are introduced. Employee turnover is high, with staff looking for greener pastures.

From the requirement under Pillar Three, there was evidence that the institution had chosen to use all the procurement options available and there was existence of a contract that was properly administered and there were dispute resolution provisions.

The contract periods are varied for the different services and no explanation was given to this variation. This lack of a standard contract was queried by

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the Protective Security Association (PSIA). There was no clear explanation on this.

Pillar four: Integrity of the public procurement system How the institution deals with issues of integrity was handled under the human resource policy for inhouse staff. Where disciplinary measures were taken. Any contractor not adhering to the requirements of the contract they had signed breached it and it was terminated. Any dispute arising was handled as per the contract. In some of the cases the requirement is to handle disputes amicably. If this does not happen then the dispute can be referred to the Arbitration tribunal.

On the second objective was to identify stages where most violations in procurement occur Since the Acts of Parliament were enacted, public institutions had to follow the rules as required. Where departments are dealing with the private sectors on matters of procurement. The Act requires that tenders should be done by the Act and the University uses the methods given by the Act, which include open tendering, two stage tendering, design competition (the institution used this for one of the buildings), restricted tendering, direct tendering, request for quotations, low value, force account and electronic reverse auction. As a result of the Act, the institution under study has been able to procure transparently in most cases and is accountable to the public.

The contracts seen indicate that public institutions are able to open the public marketplace to the private sector and engage.

The research also identified the different contracts signed as seen in Table 1.2 below.

Table 1.2 Contracts with service providers Contract 1. Contract for comprehensive service and Several contracts with maintenance of generator different contractors 2. Window cleaning contract One contractor 3. Comprehensive cleaning and ground One contractor maintenance 4. Contract for preventive maintenance of One contractor power factor correction equipment 5. Fire equipment provision and servicing One contractor

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Contract 6. Lift maintenance – contracts with several service providers 7. Waste water treatment Two contractors 8. Borehole service agreement of 14 One contractor boreholes Field survey, 2019

The lowest price was not the only criteria used in selection of contractors. However, there will always be a request for a technical and financial bid. There was evidence from both institutions that there is a criterion used. It was noted that several contractors were awarded contracts for similar tasks. Some of the explanation for this included the fact that there many campuses spread out in the country for the higher learning institution. The geographic base and current project commitment were a factor that was considered in this. If a contractor has too many other assignments, then he will not give your project full attention.

Just as from the study done by Kagume et al (2018) violations in the institutions studied here occurred after the contract award which relate to the ordering, payment and contract management. This was evident from the property manager’s statement that “Some services are over-priced. Service providers offer substandard goods and services midstream by bringing in cheaper workers who lack training. Initially the introduced staff are competent but are gradually replaced. There is Lack of control when services are substituted with substandard service”

There were instances where the criteria was changed to favour bigger firms on the account that they are not relying on the payment by the institution to meet their financial obligations.

The paper has identified what is the best practice, with the four pillars being used to gauge how well the institution has adhered to the suggested reforms; under legislative and regulatory framework, the institutional framework, the operations of procurement and integrity. The institutions have shown evidence of changes to try and fit into these four pillars. The riskiest stage in the procurement process was identified as the post award stage.

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There are consequences of violation which include poor performance of the contract and delays in implementation. Where there is breach of contract, termination will occur leading to nonperformance of tasks which will have an impact in the day to day smooth running of the institution. In some cases will stop the institution’s delivery of its core mandate.

Conclusions The paper concludes that public procurement is now subject to the various legislation and regulations that have enacted. These laws and regulation were enacted to assist public institutions procure transparently and reduce corruption in the public sector. The two institutions though different in what they do adhere to requirements of the Public Procurement and Asset Disposal in the same way. Meaning that the two institutions chosen for this study represent what happens elsewhere in the public sector. All public institutions must therefore follow these laws and regulations to be able to carry out its mandate. The four pillars play an important role in assisting these institutions keep to what is ideal. The two institutions have shown that laws are there to be implemented and enforced, but there are cases where the law can be circumvented. Cases were noted where the criteria were changed to favour suppliers who had financial strength. There was also evidence of violations of the procurement process after the contract was awarded. In these cases, service providers were found to deviate from the original contract by supplying sub-standard goods and services.

It is recommended that the institutions continue to adhere to those standards set through legislation. If need be that the existing legal framework and policies should be reviewed to incorporate emerging issues in African continent. It is also recommended that training may be considered for improved procurement services. Since there was a gap in the understanding of e-procurement and green procurement. Training in e- procurement and green procurement for procuring departments and for the suppliers should be done.

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References: Agaba E. and Shipman (2007) Public Reform in Developing Countries: The Uganda Experience: in G. Piga and K.V. Thai (eds) Advancing Public Procurement: Practices, Innovations and Knowledge Sharing, Boca Ration, FL: PrAcademics Press Agaba E. and Shipman (2008) Public procurement Reforms in Developing Countries: The Uganda Experience Government of Kenya (2015) The Public Procurement and Asset Disposal Act, Government Printers Horace Odiambo Oyuke and Noor Shale (2014) European Journal of Business Management Johan Kangoog, Ednah J. Kiptoo (2013) Factors affecting Ethical Standards in Public Procurement in Kenya. International Journal of Management Science Vol 1 No. 3 of 2013 Kagume J. and Wamalwa N. (2018) Public Procurement in Kenya, Analysis of the Auditor General’s Reports, Institute of Economic Analysis Karen M. Gilber and Roy T. Black (2004) Outsourcing, Journal of Real Estate Research, Vol. 26 No. 2 pp137 - 160 Marika Tuomela-Pyykkkonen, Kirsi Aaltonen and Harris Haapasalo (2015) pp. 264-270 in Procedia Economics and Finance Makabira D.K. and Waiganjo E., (2014) The Role of Procurement Practices in the Performance of Corporate Organisations in Kenya: A case of The National Police Service, International Journal of Academic Research in Business pp. 369-385 Vol 4 No. 10 Ndede, A. (2010) Benefits of contracting out non-core functions of an organization, The Standard Newspaper

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HOW REAL ESTATE INVESTMENT TRUSTS (REITS) MAKE PROPERTY INVESTMENT DECISIONS: A REVIEW OF THE LITERATURE

Itua Omokhomiona, Prof. Charles Egbub, Prof. Herbert Robinsona,b,*, a,b,cDepartment of Built Environment and Architecture, London South Bank University, 103 Borough Road, SE1 0AA, London, United Kingdom

Abstract Real estate investment trusts (REITs) are companies that invest in income- producing real estate. REITs, unlike other listed companies, are required to distribute a high percentage (70%-90%) of taxable income to shareholders. The acceptance and increase in the use of REITs as a means of investment have increased over time with REIT regimes in over 30 countries and a global market capitalisation of $1.10 trillion by the end of 2018 (EPRA, 2018). REITs provide investors with the ability to invest widely across various property sectors, providing investors with diversification, liquidity, transparency, regular income, and tax efficiency. However, even as REIT regimes continue to receive significant coverage, research on the investment decision-making process undertaken by REITs has mostly been drawn from the United States with limited research done to understand this concept in other REITs regimes.

By using a systematic review of existing literature, this paper aims to document how REITs make property investment decisions by identifying the various steps, stages or sequences adopted when REITs carry out investment decisions. Findings show that normative investment decision- making models guided by a rationalistic theory that assumes the investment decision making is highly structured and formalised are prevalent in research the property investment decision making of developed REITs regimes such as those in the US, UK, France and Germany. Also, there is a growing recognition that property investment decision making is far from rational with an appreciation of the role behavioural biases play in property investment decision making. The behavioural perspective has been recognised to present a more realistic view of a rationalist approach to investment decision making with investment decision making occurring in imperfect and sometimes chaotic markets. This is primarily observed in emerging REIT regimes such as those in South Africa and Nigeria were steps and processes taken to achieve a final decision may deviate from a

The 19th AfRES Annual Conference 559 rationalist approach. The findings of this study suggest that more work is required to explore REITs investment decision-making steps and process in both developed and emerging regimes.

Keywords: REIT, Investment Decision, Property Investment, Decision Models, Real Estate.

Background Information Using a comparison of the market capitalisation reported by MSCI as at May 31st, 2018, MSCI World Real Estate Index ($1.2 trillion) and MSCI World REITs Index ($8.8 billion) it is possible to observe the importance of the REITs to the global listed real estate sector. As REITs are now present in over 30 countries, its attractiveness as an alternative means of investment in real estate remains popular. It has become an essential part of global real estate and listed real estate in both developed and emerging markets globally. REITs now makes up 41% of global listed real estate market, comprising of the developed regimes contributing 51.7% and emerging regimes contribute 7.2% (EPRA, 2017). With recent figures at the end of 2018 showing the 13 developed European REIT regime now accounting for 84% of the EU GDP (EPRA, 2018). While emerging REITs such as those in South Africa, Mexico, Greece, Nigeria, Thailand etc. operated in jurisdictions with high country-level risks, low real estate market maturity, low real estate transparency and ease of doing business index, inadequacies in the strength of corporate governance and listed sector. Developed REITs such as those in the United Kingdom, Netherlands, France, Belgium etc. on the hand are characterised by having large matured real estate sectors, liquid capital markets, high corporate governance and ease of doing business and comprise of both international and domestic investors.

Further observed in the market capitalisation of most developed REITs being generally above $10 billion while emerging REITs are in the range of $2-$10 billion (Ernst & Young, 2016; FTSE, 2017). China classification as emerging is the only exceptions with it accounting for 57.2% of the emerging REITs index due to its extensive real estate market but remains shrouded with issues consistent with an emerging REIT. Table 1 below shows the most recent market capitalisation of REITs on the FTSE EPRA Nareit Global Index as at 31st of July 2019 to help understand the market capitalisation sizes of REITs irrespective of REIT regime maturity.

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Table 1: Global REIT Index

Using a depth analysis of 23 Developed Markets, REITs sub-industry (specialized, retail, residential, office etc) weight distribution as published by MSCI World Real Estate Index, account for 74.08% while other sub- industries (listed real estate development companies, real estate operating companies) account for remaining 25.92% of all listed real estate securities. However, REITs significance in the 24 Emerging Markets observed by the MSCI Emerging Markets Real Estate Index is overshadowed by other listed real estate securities. With REITs (diversified and retail) only accounting for 11.58% of the overall index and predominated by South African REITs at the core level (this excludes real estate services and real estate financing companies, that do not own properties) (MSCI, 2018d, 2018c, 2018a, 2018b).

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Figure 1: Significance of REITs sector Significance of REITs sector to listed Worl Real Estate 100% 80% 60% 40% 20% 0%

MSCI Emerging Markets IMI Core REIT Index (DEC 31, 2018) MSCI Emerging Markets Real Estate Index (DEC 31, 2018) MSCI World REITs Index (DEC 31, 2018) MSCI World Real Estate Index (DEC 31, 2018)

Overall, REIT as an investment option in both developed and emerging regimes play a crucial role in financing property investment through direct or indirect construction development and management through subsidiaries all undertaken with each country’s regulatory setting. Regulations of REITs which distinguish it from other listed shares have close similarities with only slight county-level variations; this presents an avenue for researchers to comparative study issues around; corporate governance, investment decision and firm performance (Omokhomion, Egbu and Robinson, 2018). Schulte (2008) expresses this as the openness, interdisciplinary character and multidimensional nature of the real estate. Table 2 below uses classification provided by MSCI to carry out a comparison of the REIT regulations of two emerging REITs (South Africa and Nigeria) and two developed REITs (United Kingdom and United States) to highlight the close similarity in rules.

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Table 2: REITS Structure of the United Kingdom and United States & South Africa

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While similarity exists amongst most regimes, the empirical research on the property investment decision-making process of REITs in both developed and emerging regimes has received limited attention, given its significance in listed real estate sector. Sah, Gallimore and Clements (2010) rightly state that there is an absence of a normative framework for real estate investment decision-making, with researchers proposing different stages that are used. Majority of these researches examine property investment decision-making generally, though not exclusively from a REIT property investment decision-making process. Following the research by Parker (2014), REITs property investment decision-making process is contextualised as the holistic approach for converting $1 of unitholder capital into an equivalent $1 investment in property.

This research is motivated by the need to investigate the various researches on REIT property investment decision making. This will provide a better understanding on of the property investment decision making process of REITs with the potential to improve transparency, especially for emerging REIT, better capital allocation and identify the stages to the investment process. This study prioritises academic research focused on REITs property investment decision-making process to document how real estate investment decision making is carried out in developed and emerging REITs reaching a valid conclusion.

The objective of this review paper is to identify from the literature the steps or stages employed by REITs when carrying out property investment decision making; this is achieved using a systematic review of the existing literature on REITs and property investment decision making. Using similar methodology applied by Tsai & Wen (2005) and Tober (2011) various popular search engines (Google Scholar, ScienceDirect and Scopus) were initially used to search the critical keywords of “REIT”, “real estate investment trust” and “investment decision making” for relevant secondary sources (journal papers, textbooks, conference papers etc). Google Scholar was selected as it provided more relevant publications related to the keywords. A total of 724 research results were initially identified. Sorted by relevance and not by date, the first ten pages of the search results from Google Scholar are used for this paper with selection based on the criteria of identification of keywords. For this paper, a systemic review of literature services to provide crucial theoretical underpinning and an updated picture of the property investment decision-making process undertaken by REITs.

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The remaining sections of this paper will look at REIT regulation and structure, the property investment decision-making models identified in literature, the literature on REITs property investment decision-making and finally summarise the conclusions drawn from the systemic literature review of the existing literature.

Reit Regulation and Structure The legal and organisational settings under which REITs operate globally are relatively similar; REITs are expected to invest a minimum of 75% of total asset in real estate and derive a minimum of 75% of gross income from rental property, mortgage interest by real property; are required to distribute a minimum of 60%-90% of taxable income to shareholders; listed on public stock exchanges regulated by the Securities and Exchange Commission (SEC) or similar bodies; undertake financial disclosure and meet corporate governance obligations if publicly listed on the stock exchange.

REITs regulatory environment differentiates it from other listed firms and real estate companies. Fiduciary responsibilities result in the property investment decision-making process of REITs having some similarity, though some variations occur due to the environment of operation, highlighting the importance of investigating differences in the country-level property investment decision-making process. Eichholtz & Yönder (2015) points out that when investigating corporate property investment decision-making activities, REITs offer the unique advantage of the ability to identify individual property investment decisions. These observations can be carried out at a company or asset level on a going concern basis with performance evaluation undertaken to measure how well property investment decisions perform as a result of its capital-intensive nature, investment by REITs usually revolves around acquisition, operation, sales and occasionally development (Glaser and Weber, 2007).

Additionally, the limited supply of investable grade real estate makes REITs property investment decision even more observable. The importance of construction management and REITs meet at the activity restriction requirement where REITs through there subsidiaries carry out property development to meet property demand, reduce cost, ensure timely delivery and meet quality. It is possible from an academic perspective to study the steps taken and factors that affect decision-makers to reach final property

The 19th AfRES Annual Conference 565 investment decisions. However, empirical research is limited as the majority of academic studies on property investment decision come from a property valuation perspective done in developed markets such as US and UK (Diaz, 1989; McAllister et al., 2003; Sah, Gallimore and Clements, 2010; Crosby, Devaney and Law, 2012).

Property Investment Decision-Making Model Harrison (1999) explained that the term ‘decision’ varies widely across studies focused on the decision-making process, the decision-maker or the decision itself to be made. Studies have defined, ‘decision’ as an ongoing process evaluating alternatives to attaining an objective, where the desired outcome from a selection of alternatives makes the decision-maker pick a course of action that meets the desired objective. Similarly, French (2001) indicates that the literature on decision-making draws from various theories and principles such as economics, mathematics, operational research, organisational theories and statistics. Over time, from decision-making theories, three distinct models have emerged which are predominately used by the academic researcher on property investment decision-making; normative, descriptive, and prescriptive decision-making models. Normative decision-making models are concerned with ‘how decisions should be made’. These models follow a rigid rule like approach to decision making, based on the theoretical underpinning of measurability of decisions against performance. Referred to a rationalistic perspective, it follows models like traditional finance. Decisions are made under the assumptions that markets are efficient; enough time is taken in arriving at a final decision; information is rationally evaluated using tools such as the modern portfolio approach, capital asset pricing models and option-pricing theories to arrive at final decisions (Einhorn and Hogarth, 1981; Baron, 1985; Pyhrr, Cooper and Wofford, 1989; French and French, 1997). This model is criticised as departing from real-world situations due to the difficulty in covering every circumstance, time factor to decision-making and human actions or inactions (Weber and Coskunoglu, 1990; Weirich, 2004).

Descriptive models focus on ‘how decisions are made', as decision-makers depart from the normative models what is observed fall within descriptive models. This draws on the subjective and intuitive nature of the decision makers in carrying out investment decision, thereby challenging normative models by behavioural theorists. Kahneman & Tversky (1979) explain this using the “Prospect Theory” that decision-makers have different acceptable

566 The 19th AfRES Annual Conference risk levels when faced with opportunities. Using the certainty effect, they explained that when faced with a decision, there is a tendency for decision- makers to pick sure outcomes over probable ones, resulting in a selection of different choice frequencies over expected rational utility calculations.

Additionally, Simon (1955) developed the ‘bounded rationality’ as a way of looking at normative models differently. Under the bounded rationality, decisions are made under the limitations (information processing and access and time constraints) of the decision maker. A critical flaw of descriptive models is that they are mostly a description of how a process was applied (Weber and Coskunoglu, 1990).

Prescriptive models take in the reality of decision making, acknowledging that it is nearly impossible to cover most eventualities in the selection of the ideal decision. Decisions taken using prescriptive models follow guidance around normative and descriptive models. These models following advice are more applicable to actual complex investment decision making taken by REIT and construction managers (Baron, 1985; Tiesmeier, 2016). Additionally, it accepts the notion that decision makers are ‘satisfiers’, once a decision which satisfies all necessary criteria is found, search for the optimal conditions stops. When prescriptive models are developed, they should follow some normative foundations to provide theoretical solutions alongside behavioural inputs identified from descriptive models (Köksalan, Wallenius and Zionts, 2013; Tiesmeier, 2016). However, Wierzbicki (1997) states that though prescriptive models attempt to change the rigid notions of normative models, the possibility for experienced decision makers to reject prescriptive models but adopt decisions based on intuition and past experiences exist. On the other, prescriptive models with guidance are more appealing to new decision makers as seen by finding by Roulac (2000) showing that investment decision making evolves and the findings from past and present literature will defer as decision makers within the prevailing dynamics of the time they operate. Agreeing with earlier work of French & French (1997) which concluded that investment decision making should not be viewed as a single outcome but evaluated on the process undertaken by decision-makers to reach a decision; following rational consistency and result from the decision is averagely acceptable.

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Reits Property Investment Decision Making While studies on property investment decision making have remained relatively limited, the bulk of research done so far draw from the United States and the United Kingdom focused mostly on rationalist rules and techniques applied using normative models (Gallimore, Hansz and Gray, 2000; Roberts and Henneberry, 2007). Parker (2012) reviewing publications from US and UK on property investment decision, summaries that in the US property market, investment decisions are driven by portfolio concerns based on traditional finance and commerce theories while UK property investments are based on individual asset evaluations. He also identifies from a review of publications on property investment decision making that no clear distinction is given as to what approach REITs follow, and in some cases, REITs fall under institutional investors. The limited number of empirical studies on emerging markets can be attributed to the maturity level of these markets, associated with an understanding of the role of risk, and assumed higher application of heuristic-driven bias in property investment decision-making. Below, we review some important journal publications on property investment decision making to identify the process, stages or steps documented in these studies. Additionally, input on the role of behavioural-bias in property investment decision making is recognised.

Within the context of strategic property investment decision making of REITs, Table 2 below summarised context identified from the literature. Given the assumptions of an unproblematic perfect market system; information is readily available at the initial stage with enough time given to scrutinise alternatives and readily available funding. A critical issue with documenting property investment decision-making process is the inconsistency of steps and ambiguity in terminology, which is observed in Table 3. Parker (2014) research of the Australian REITs’ property investment decision making process provides a suitable solution by expressing the process into four stages comprising of 20 steps. Roberts & Henneberry (2007) (Table 3) also provides a composite model derived from literature to investigate the property investment decision-making process of investment managers in France and Germany. They conclude that these models can be reduced to five stages (strategy setting phase, search phase, analysis and investment phase, the consultation phase and the last phase investment selection). In the UK, an additional phase (define detailed strategy phase) comes after the general strategy setting phase linking this

568 The 19th AfRES Annual Conference phase to the requirement for benchmark decisions against larger institutional investors showing that investment managers are likely to exhibit herding behaviour in the UK. Their study points to the heuristic behaviour of REIT investment managers and construction managers to arrive at investment decision-making. Summarising, the studies in Table 3 document empirically evidence of the investment decision making the process of developed REITs regimes in the US, UK and Australia.

From emerging REIT regime point, empirical research is almost absent. Studies examining the property investment decision making process mostly approach this by; determinants of property value that affects real estate stakeholder’s decisions to invest in selected region or state drawing from works of (Adair et al. 1996; Baum et al. 2000; and McAllister et al. 2003); the heuristic behaviours of anchoring, adjustment and herding on property valuation and the likely influence on investment decision making process (Diaz, 1989; Kahneman & Tversky 1979); macroeconomic factors within the framework of strategic, political, socio-cultural, legal, and economic analysis that attracts large institutional investors to emerging economies (Jaffe & Sirmans, 1995; Pyhrrn et al. 1999; Lieser & Peter Groh. 2011; and Lim et al. 2006). The literature documenting the property investment decision making steps or stages undertaken by investment managers and REITs managers remains limited.

From an emerging context, Lowies et al. (2016) examined behavioural biases of anchoring, adjustment, and herding behaviour of fund manager of listed property fund managers in South Africa. The result from a questionnaire survey on anchoring and adjustment heuristic-driven bias showed that respondents anchored their decisions to invest in a selected property with the most optimistic forecasts and when new information with more favourable outcome was introduced, they still anchored on to original selection. Additionally, no statistical evidence of herding was observed by listed property fund managers. These behaviours they attributed to socio- political factors that create uncertainty in the South African property market and not a lack of understanding of new information by listed fund managers. This is assigned to the conservative nature of property investment decisions makers due to the fear of making wrong decisions. Recently, Nsibande & Boshoff (2017) examined the investment decision- making frameworks applied by South African REITs when carrying out investment in commercial retail properties. They document that investment

The 19th AfRES Annual Conference 569 models vary widely and when used in retail investments decision making, it occasionally disregards the effect non-financial drivers such as anchor tenants, centre management and tenant mix have on decision making.

Additionally, empirical research on foreign direct investments (FDI) in the listed real estate and real estate sector of emerging markets show large institutional investors applying macroeconomic factors. These studies provide useful insight into the investment decision making phases and steps involved when deciding to invest in emerging markets. Kukovetz (2002) studying the emerging Chinese market, conceptualised the decision-making process to consist of two main phases- Preparation Phase (related activities, experience generation, and project start-up steps) and Project Decision- Making Phase (development, selection and implementation). He concludes that for emerging markets, extensive preparation and organisational systems that allow for the application of experienced-based intuition and speed are critical when carrying out investment decision-making. He also identified as emerging markets become more matured as in the case of Hong Kong, the decision-making process becomes more sophisticated and quantitative. While emerging REITs regimes such as China and South Africa continue to grow in number operating REITs and market capitalisation, an understanding of how these markets function, processes and steps were taken for investment decision making overall is still empirically studied not fully understood.

Discussion Even as REITs in both developed and emerging regimes continue to grow, empirical studies on the investment decision making steps taken by REITs exclusively remains limited and inconclusive. As the debate on investment decision-making models continues, country and market conditions change, investment decision making process, steps or stages still would not be able to state the best fit for developed and emerging REITs comprehensively. Theories and empirical studies have helped develop three predominant models of decision-making; a normative model which is the ideal worldview of decision making; a descriptive model which attempts to describe how decisions are made from the observation of outcomes and finally the prescriptive model which provides decision-makers insights and guidance to inform decision. Furthermore, the behavioural perspective of decision making has been recognised to present a more realistic view of a rationalist approach to

570 The 19th AfRES Annual Conference investment decision making. It is accepted that decision making occurs in imperfect and sometimes chaotic markets populated by irrational decision makers; hence, the steps and processes taken to achieve a final decision may deviate from rationalist/normative models. Additionally, emerging REITs regimes so far exhibit high levels of economic uncertainty and lack underlying historical property information, which affects the way investment decision making is carried out; also based on capitalisation and size will likely carry out investment decision making like small companies when compared to larger REITs in developed regimes. The findings of this study suggest that more work is required to explore REITs investment decision-making steps and processes in both developed and emerging regimes and forms part of an ongoing PhD research.

The 19th AfRES Annual Conference 571 Table 3: Normative model steps of REITs and Property Investment Decision Making

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The 19th AfRES Annual Conference 573 References Adair, A. S., Berry, J. N. and McGreal, W. S. (1996) ‘Hedonic modelling, housing submarkets and residential valuation’, Journal of Property Research, 13(1), pp. 67–83. doi: 10.1080/095999196368899. Baron, J. (1985) Rationality and Intelligence. Cambridge: Cambridge University Press. Baum, A., Crosby, N. and Gallimore, P. (2000) ‘The influence of valuers and valuations on the workings of the commercial property investment market’, RICS Cutting Edge, London. Crosby, N., Devaney, S. and Law, V. (2012) ‘Rental depreciation and capital expenditure in the UK commercial real estate market, 1993-2009’, Journal of Property Research, 29(3), pp. 227–246. doi: 10.1080/09599916.2012.679009. Diaz, J. I. (1989) ‘How appraisers do their worka test of the appraisal process and the.pdf’, The Journal of Real Estate Research, 5(1), pp. 1–15. Eichholtz, P. and Yönder, E. (2015) ‘CEO Overconfidence, REIT Investment Activity and Performance’, Real Estate Economics, 43(1), pp. 139– 162. doi: 10.1111/1540-6229.12054. Einhorn, H. J. and Hogarth, R. M. (1981) ‘Behavioral Decision Theory: Processes of Judgement and Choice’, Annual Review of Psychology, 32(1), pp. 53–88. doi: 10.1146/annurev.ps.32.020181.000413. EPRA (2017) Global REIT Survey. Available at: http://www.epra.com/media/EPRA_REIT_2016_EUROPE_147922 5268350.pdf. EPRA (2018) EPRA Global REIT Survey 2018. Available at: http://prodapp.epra.com/media/Global-REIT- Survey_Web_20180830_1535727364551.pdf. Ernst & Young (2016) ‘Global Perspectives: 2016 REIT Report’. Available at: http://www.ey.com/Publication/vwLUAssets/global-perspectives- 2016-reit-report-ey/$File/ey-global-perspectives-2016-reit- report.pdf. French, N. (2001) ‘Decision Theory and Real Estate Investment: An Analysis of the Decision-Making Processes of Real Estate Investment Fund Managers’, Managerial and Decision Economics, 22(7), pp. 399– 410. doi: 10.1002/mde.1029. French, N. and French, S. (1997) ‘Decision theory and real estate investment’, Journal of Property Valuation and Investment, 15(3), pp. 226–232. doi: 10.1108/14635789710184943. FTSE (2017) ‘FTSE FACTSHEET FTSE EPRA / NAREIT Global REITs Index’, FTSE

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Russell, (April), pp. 1–3. Gallimore, P., Hansz, J. A. and Gray, A. (2000) ‘Decision making in small property companies’, Journal of Property Investment & Finance, 18(6), pp. 602–612. doi: 10.1108/14635780010357569. Glaser, M. and Weber, M. (2007) ‘Overconfidence and trading volume’, GENEVA Risk and Insurance Review, 32(1), pp. 1–36. doi: 10.1007/s10713-007-0003-3. Harrison, F. E. (1999) The managerial decision-making process. Jaffe, A. . and Sirmans, C. . (1995) Fundamentals of Real Estate Investment. Prentice-Hall, Englewood Cliffs. Kahneman, D. and Tversky, A. (1979) ‘Prospect Theory: An Analysis of Decision under Risk’, Econometrica, 47(2), pp. 263–292. doi: 10.2307/1914185. Köksalan, M., Wallenius, J. and Zionts, S. (2013) ‘An Early History of Multiple Criteria Decision Making’, Journal of Multi-Criteria Decision Analysis, 20(1–2), pp. 87–94. doi: 10.1002/mcda.1481. Kukovetz, K. (2002) ‘Decision-Making processes in emerging markets’, Unpublished Doctoral Dissertation, University of St. …, (2630). Available at: http://verdi.unisg.ch/www/edis.nsf/SysLkpByIdentifier/2630/$FIL E/dis2630.pdf Lieser, K. and Peter Groh, A. (2011) ‘The Attractiveness of 66 Countries for Institutional Real Estate Investments.’, Journal of Real Estate Portfolio Management, 17(3), pp. 191–211. doi: 10.2139/ssrn.1638286. Lim, C., Mcgreal, S. and Webb, J. R. (2006) ‘Perception of Real Estate Investment Opportunities in Central/South America and Africa’, Journal of Real Estate Portfolio Management, 12(3), pp. 261–276. Lowies, G. A., Hall, J. H. and Cloete, C. E. (2016) ‘Heuristic-driven bias in property investment decision-making in South Africa’, Journal of Property Investment & Finance, 34(1), pp. 51–67. doi: 10.1108/JPIF-08-2014-0055. McAllister, P. et al. (2003) ‘Appraiser behaviour and appraisal smoothing: Some qualitative and quantitative evidence’, Journal of Property Research, 20(3), pp. 261–280. doi: 10.1080/0959991032000162347. MSCI (2018a) ‘Msci Emerging Markets Imi Core Reit Index (Usd)’. Available at: https://www.msci.com/documents/10199/0a7cfabe-f4f2- 4233-8114-c16b06fd82e6.

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10.1080/09599916.2010.518402. Schulte, K.-W. (2008) ‘Immobilienökonomie: Betriebswirtschaftliche Grundlagen’, Immobilienökonomie Band I, pp. XXII, 1062 S. Simon, H. A. (1955) ‘A Behavioral Model of Rational Choice’, The Quarterly Journal of Economics, 69(1), pp. 99–118. doi: 10.2307/1884852. Tiesmeier, D. (2016) MCDM Problem-Structuring Framework and a Real Estate Decision Support Model A Thesis submitted to the University of Manchester for the degree of Doctor of Philosophy in the Faculty of Humanities. University of Manchester. Tober, M. (2011) ‘PubMed, ScienceDirect, Scopus or Google Scholar – Which is the best search engine for an effective literature research in laser medicine?’, Medical Laser Application. Australasian Society of Cardiac and Thoracic Surgeons and The Cardiac Society of Australia and New Zealand, 26(3), pp. 139–144. doi: 10.1016/j.mla.2011.05.006. Tsai, C. and Wen, L. M. (2005) ‘Research and trends in science education from 1998 to 2002: a content analysis of publication in selected journals’, International Journal of Science Education, 27(1), pp. 3– 14. doi: 10.1080/0950069042000243727. Weber, E. U. and Coskunoglu, O. (1990) ‘Descriptive and prescriptive models of decision-making: implications for the development of decision aids’, IEEE Transactions on Systems, Man, and Cybernetics, 20(2), pp. 310–317. doi: 10.1109/21.52542. Weirich, P. (2004) Realistic Decision Theory, Realistic Decision Theory: Rules for Nonideal Agents in Nonideal Circumstances. Oxford University Press. doi: 10.1093/019517125X.001.0001. Wierzbicki, A. P. (1997) ‘On the role of intuition in decision making and some ways of multicriteria aid of intuition’, Journal of Multi-Criteria Decision Analysis, 6(2), pp. 65–76. doi: 10.1002/(SICI)1099- 1360(199703)6:2<65::AID-MCDA143>3.0.CO;2-Q.

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HOUSING AFFORDABILITY AS A CHALLENGE IN IMPLEMENTATION OF THE SUSTAINABLE DEVELOPMENT GOAL NO.11

Boniface Yumba [email protected] MSc Student, Ardhi University, Dar es Salaam

Abstract Tanzania is one among countries that experience rapid urbanization in the world with estimated growth rate of 5.4% per annum. Its urban population experience among other things, shortage of adequate, safe and affordable housing and basic services as well as development of slums. In responding to these experienced problems as a result of urbanization, on 25th September 2015, United Nations member countries of which Tanzania is a member signed an agreed on the 2030 Agenda for Sustainable Development aimed at transforming World from the challenges that it faces. Seventeen development agenda goals were agreed and adopted for implementation by the year 2030 of which among is goal No.11 for Sustainable Cities and Communities. Under this agenda, a series of targets have been outlined to indicate how sustainable cities should look like to ultimately overcome shortage of adequate, safe and affordable housing and basic services and development of slums.

This paper analysed the extent to which Tanzania is prepared in implementing the Sustainable Development Goal No.11 for Sustainable Cities and Communities targeting access for all to adequate, safe and affordable housing and basic services and eradication of slums. Principally, the key purpose of the study was to evaluate the Tanzania housing finance projects of 2010 in relation to affordability of the constructed houses. The discussion centered on the 1,000 units of housing project for National Housing Corporation, 815 units of housing projects for the Tanzania Building Agency to be built at Bunju area in Dar es salaam and 481 units of Watumishi Housing projects in Dar es Salaam.

Keywords: Sustainable Development Goal, Sustainable Cities, housing affordability

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Background Information International human rights law recognizes everyone’s right to an adequate standard of living, including adequate housing. In due regard, owning a home is one of the strategies to increase wealth (UN Habitat, 2015). However, Universal Declaration of Human Rights under article 17 provided for the Adequate Housing as a fundamental human right (Ibd). Housing accounts for more than 70 per cent of land use in most cities and determines urban form and densities, also providing employment and contributing to growth (World Cities Report, 2016). That is why the fate of housing largely determine the fate of our cities.

United Nations (UN) and over 190 member countries on 2015 ratified seventeen (17) Sustainable Development Goals (SDG) of which one among the goals is the sustainable development goal No.11 which advocated among other things for the increased access to sufficient, safe and low cost housing for the world poorest people residing in slum areas by the year 2030. In due regard, Jaiyesimi (2016) maintained that, the goal is said to be a remarkable success for urbanisms and local stakeholders worldwide as it put urbanization at the heart of sustainable development. More important, the sustainable development goal No.11 contains ten (10) targets that require action from each national urban government.

More than half of the world’s population now lives in urban areas (Lucci et al, 2015; UNDP, 2018). It was envisaged that, by 2050, that figure will rise to 6.5 billion people – two-thirds of all humanity (Lucci et al, 2015). Additionally, sustainable development cannot be achieved without significantly transforming the way we build and manage our urban spaces (UNDP, 2018). This is to say, sustainable future of cities and benefit accrued from urbanization highly depends upon future approaches to housing. In due regard, making cities safe and sustainable means ensuring access to safe and affordable housing and upgrading slum settlements. Sustainable development cannot be achieved without considerably transforming the way we build and manage our cities and urban living spaces. Therefore, policy to increase housing supply will need to set clear targets and strategies based on sound assessment of needs and trends and the capacities of existing housing resources (UN-Habitat 2012).

Despite the large scale housing development project that was evidenced to increase the supply of residential housing, a gap is still noticeable in the

The 19th AfRES Annual Conference 579 supply of affordable housing as an indicator for sustainable development. The same may be as a result of the inexistence of the affordable housing finance. This paper explored ways in which the supply of affordable housing can be enhanced to cater for the ever increasing demand for the low income group and the use of extensive microfinance as source of affordable housing finance. The paper further explored the ways to monitor housing needs for delivery of effective solution which the government has already begun addressing by embarking on the design of information center with purpose of collecting, storing and analysing housing data for forecasting housing demand, supply and price level.

This paper analysed the extent to which Tanzania prepared in implementing sustainable development goal No.11 targeting access for all to adequate, safe and affordable housing and basic services and eradication of slums. Principally, the key purpose of the study was to evaluate the Tanzania housing finance projects of 2010 in relation to the affordability of constructed houses. The discussion centred on the 1,000 units of housing project for National Housing Corporation, 815 units of housing projects for the Tanzania Building Agency built at Bunju area in Dar es Salaam and 481 units of Watumishi Housing Projects in Dar es Salaam. Thus, challenges with regards to the achievement of the goal and recommendation on the best ways to reduce risk of failure in implementing the goal by 2030 have been provided.

Urbanisation Trends Tanzania The study by UN Habitat (2012) as cited by Singh and Pandey (2012.p.8) indicates that, developing nations accounted for less than 40% of the world population, a figure which reached to 70% in 2005. It was projected that by 2030 the urban population in developing nations will continue to grow reaching 80%. In the same line, Agwanda and Amani (2014) indicated that, during the last population census in 2012, Tanzania’s population had reached 44.9 million people, with 13 million living in urban areas which is 29.1% (Elias K. 2016). However, with an urban population growth rate of 5.4% per annum, Tanzania had the sixth highest rate of urban population growth globally in 2015. This means,Tanzania urban population is expected to reach 50% by 2030. Also, a survey conducted in 2015 reveals that, 61.4% of the urban dwellers migrated from rural areas against 38.6% who are borne in urban areas (Elias K. 2016).

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Yet, Tanzania is now experiencing rapid urban population growth, the equivalent of 1.4 million people will be added to the country’s urban population every year between 2012 and 2050. The urban population is projected to grow at twice the rate of total population growth, meaning that over half of Tanzania’s population will lives in urban areas within 25 year (Elias, 2016). Conversely, By 2050, Tanzania’s urban population is expected to reach 68.6 million people meaning that, more than a fivefold increase in a 40 year period. Aligning with such urban population growth, the implementation of SDG No 11 in Tanzania is all about dealing with the urban demographic issues and sustainable life for future. The extent to how Tanzania dealt with such population growth and making urban sustainable are provided in the section below.

Housing Supply in the Urban Areas in Tanzania Center for Affordable Housing Finance in Africa (2018) indicated that the current housing deficit in Tanzania is estimated at three million housing units valued at US$180 billion coupled with a 200 000 unit annual demand with a projected combined cost of US$12 billion,with a rapidly growing urban population forabout 75 percent of Dar es Salaam residents living in an informal settlement (Resmusen, 2013). Furthermore, in Tanzania the latest household budget survey for year 2011/12 published in July 2014 by the National Bureau of Standard revealed that, nearly 68 percent of the households lived in houses with modern roofs (55 percent in 2007). Similarly, 46 percent of households lived in houses with modern walls in 2011/12 and 35 percent in 2007 (Resmusen, 2013). Thus, the realities stated above are an indication that, Tanzania still suffers from a shortage of good quality and affordable housing.

In due regard, Komu (2016) indicated that, when one investigates the house tenure system in Tanzania, it is realized that majority of housing stock are indeed found in informal settlements where the rental units are in the form of rooms and not complete dwelling units. Therefore, considering the realities on the ground and with this fact of urbanization and its consequence, it is necessary to have policies for sustainable housing that address better the problem of housing and balance between implementation of sustainable development sustainable development goal No.11 and problem of affordable housing. This involves not only developing affordable housing sustainable to low income households but also developing sustainable management of urban housing for low income

The 19th AfRES Annual Conference 581 household on affordable, safe and sustainable housing and investment in public transport, green public spaces and urban development planning. Based on the essence of sustainability, sustainable development and sustainable housing, cities planners and decision makers ought to consider housing development that incorporates the quality of life of the present and future generation considering the aspect of social, environmental and economic dimension of sustainability (Yip et al, 2017).

Housing Affordability Kiwara (2016) stated that, with increased urbanization around the world, accessing land as well as housing in urban areas presents huge development limitations. These limitations are also associated with the increase and growth of economic and commercial activities in cities that accelerate demand for affordable housing and thus development of slums. It is therefore wise to consider development of affordable houses for the poor people to avoid slum proliferation. However, enhancement of affordable housing delivery as well as control of the growth of slums is linked and much dependent to the country housing policy that consider satisfaction of community welfare. It should be understoodthat, housing affordability, being a complex phenomenon and its assessment should consider not only financial attributes and economic viabilitybut it should also consider quality of life, community sustainability and socio sustainability of housing (Singh, 2012)

Additionally, an affordable housing should be a house that is adequate for human shelter that specifies the number of conditions to be met before particular form of housing is being provided. In Tanzania, still there is no established standard for housing provisions that have to be followed to attain adequate housein consideration of affordable housing as it is being promoted under the National Human Settlement Development Policy (2000). The policy advocate for the development of sustainable human settlements with a remit to make serviced land available for shelter and human settlements development to all sections of the communities through the improvement and provision of infrastructure and social services. Although, it does not cover housing adequately, it remains the principal legislation governing housing in Tanzania. A Tanzania Housing Policy, currently in final draft, will be enacted with specific reference to the housing situation in Tanzania, in parity with this prevailing policy. However, the issue of affordable housing and indicators for evaluation criteria for

582 The 19th AfRES Annual Conference attainment of affordable housing remain to be in dilemma with a new policy in pipeline.

For housing to be adequate there are minimum standard criteria to meet as provided by Mulliner and Maliene (2012) who asserted that, housing affordability can be measured using household income with other indicators other than financial aspect such as location related attributes and neighborhood characteristics. The criterias identified includes; House price in relation to income, interest rate and mortgage availability, safety crime, access to employment, access to public transport facilities, access to good quality school for good education, as well as access to healthcare facilities. (Mulliner and Maliene, 2012)

In Dar es Salaam, the aspect of housing is not satisfactory because most housing units are sub-standard, in terms of quality as well as quantity. The report by Center for Affordable Housing Finance in Africa (2018.p.23) has established the data regarding the standard of housing in Dar es Salaam as shown in statistics as quoted below:

The 80% households do not have toilets, 34% of housing stock in the city need to be upgraded and an additional 36% are not permanent (DISH, undated). Furthermore, 65% of Dar es Salaam residents are accommodated in rental houses, with 71% living in rooms instead of houses. 54% of the residents in the city are living in tenements, 12% are accommodated in stores as well as garages, and a large portion of the housing is non- upgradable because the materials used are semi-permanent. Poor living conditions are more common amongst residents of Kigogo, Kisiwani, Mwananyamala, Tandale and Manzese.

Methodology This study used secondary data as relevant in developing an understanding of the sustainable housing in Tanzania. The housing constructed by the Tanzania Building Agency and Watumishi Housing Company (WHC) was used to gather evidences of the situation relating to the provision of affordable housing in Tanzania as a challenge to the achievement of sustainable development goal no.11.

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ANNUALAfRES CONFERENCE

Developing New Frontiers for the African Real Estate Sector

TUESDAY 10 - FRIDAY 13 SEPTEMBER, 2019 ARUSHA INTERNATIONAL CONFERENCE CENTRE, ARUSHA, TANZANIA ISBN 978-9987-01-008-0