Abstract:
The study investigated the pricing decisions of property investments in Enugu with particular reference to their risk-return characteristics. The objective was to establish whether there is a differential between the Expected and Required Rates of Return, and the Expected and
Implied Rental Growth Rates, and if so whether the difference is statistically significant.
Multi-stage and stratifi ed random sampling techniques were used to select the sample
properties. Self-administered questionnaires and face-to-face interviews were used to elicit
data from respondents chosen by purposive sampling technique . The Paired Difference
Experiment (Dependent Samples), Capital Asset Pricing Model, and Marshall' s Equated
Yield Analysis were used for data analysis. Two hypotheses were postulated and tested to
confirm the Expected and Required Rates of Return differential, and the Expected and
Implied Growth Rates differential. The t - test, F - test, and "/ - test were used to test the
hypotheses at 5% significance level. The major findings were: mean of over-all difference,
!-lD, between the Expected and Required Rates of Return for Achara Layout 0.48% p.a., New Haven 4.85% p.a., and Independence Layout 5.38% p.a. None of the !-lDs was statistically significant. These results were consistent with those obtained under the Growth Rate criterion, except for Achara Layout where !-lo was found significant and the null hypothesis rejected. The conclusion was that property investment decisions in Enugu were, on the average, made at market prices that were lower than the investment values. This implies no significant risk but rather the prospect of earning an upside potential return.
