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This research has investigated in to a comparative analysis of rental variation in residential and commercial properties in Ogui New Layout, Enugu Nigeria. The researcher used both questionnaires, interview and self observation as method of data collection. The data was collected among some landlords, Estate agents of the selected properties. The data collected was analyzed based on interpretation and conclusion made. Chapter one treats the introduction of the project work, chapter two Literature Review, chapter three. Research methodology, chapter four data presentation, analysis and interpretation and chapter five finding, recommendation and conclusion. Finally, rental variation in commercial and residential properties have been discovered to be influenced by certain factors affecting the rents passing on these properties.



  • Background of the study

The   Shelter is a basic necessity in life. An individual can satisfy this need by either occupying his own (owner’s occupier) property or renting another persons property. In our traditional society, the need for shelter is mainly met through the first alternative, that is owner occupation. With the emergency of urban centres, the situation has changed. Many people are no longer about to own property because of the difficulty in the acquisition of land and the high cost of building construction. Therefore, they are left with the alternative of renting other people’s properties in order to satisfy their need for shelter. Consequently two classes of urban resident have emerged, the landlord and the tenant under this arrangement the tenant pays to the landlord a certain amount of money in consideration for his use of the landlord’s house. This amount is popularly known as rent. The study of performance of real estate investment, whether residential or commercial, is very important at this time when emphasis is on investment performance analysis in many parts of the world. This is even more important in Nigeria where only few studies have been carried out on the level of performance achieved by property investment. Moreover the impact of the ongoing changes in the global and local economy on the performance of real estate investment is serving to highlight the need for its careful consideration in the investment decision making process. Since 1990s, the demand for retail commercial outlets has risen astronomically in most urban centers in the country. This is as a result of the economic recession which compelled the unemployed and public servants to explore trading activities in addition to their normal jobs. The investors’ reaction to this development has been to increase the number of retail commercial outlets at the expense of residential property developments. Therefore in many towns and cities of Nigeria, open spaces within the vicinity of public institutions have been irrationally developed to accommodate shops and other retail outlets. The situation is further compounded with the perceived notion among Nigerian property investors that commercial property performs better than residential property investment. However, the investors can no longer base their decision on intuitive grasp of the market which Ajayi and Fabiyi (1984) considered inadequate for success in property ventures. During the civil war the Nigeria that is 1966 to 1970 many landed properties in the urban areas of the former Eastern Region of Nigeria, including Enugu, were destroyed. Consequently, there was a sharp decline in the supply of landed properties after the war. Furthermore, the post – civil war period witnessed an unprecedented number of the rural population trooping into the urban centres due to the conspicuous prosperity brought about in the urban area by the oil boom. This resulted to high demand for the existing limited supply of landed properties. Consequent upon these, rent for landed properties increased considerably.

This trend has continued with the effect that “the average worker is paying between 30% to 40% of his salary as rent ” (Oshadiya, 1985). Thus the increase in rents on the properties has led to the variation of rent on properties.

In urban area due to location advantage (for example prime location) which some properties offer above others for commercial and residential uses, rent tend to very on account of the type of use which a property can offer.




Location of economic properties has been a difficult concept to understand. Although the primary objective of commercial properties is the derivation of financial gains, while that of residential properties is for habitation, shelter and comfort, the demand for land is a refection of the profitability or utility derivable from it use. The greater the benefit to be obtained from a particular use, the higher the rent that the user will be willing to pay for it.

There appear to be wide ranging differences in the levels of rent passing on residential and commercial properties in Enugu and Nigeria generally.

This research is seeking among other things to find out the causes of rental variation in commercial and residential properties in Nigeria, Ogui New Layout as a case study.


The main purpose of this research is to examine the reasons for rental variation in commercial and residential properties with a view to provide tool to be used in catching issues related to rent on these properties in Enugu and Nigeria generally.

In order to achieve the standard goals, the following objective are to be undertaken;

  1. i) To identify the current level of rents for commercial and residential properties in the study area.
  2. ii) To ascertain and examine the factors influencing the rents being commanded by these properties.

iii) To specify the implications of rental variation on decisions to acquire those properties.

  1. iv) To determine the trend in rental values for residential and commercial properties in the study area.


To aid the completion of the study, the following research hypotheses were formulated by the researcher;

H0: the level and price of rent on commercial property in the study area is high

H1: the level and price of rent on commercial property in the study area is low

H02: the trend of residential and rental property in the study area is high

H2: the trend of residential and rental property in the study area is low


The finding of this study will be of benefit to the following;

Firstly, tenants who are charged rents based on different reasons, especially when the properties are of the same nature (physically). This will again enable the investors not only to understand how occupier thinks, but also why and the things they consider before acquiring properties for certain uses. For example residential and commercial use.

Secondly, the generality of the public can now understand the reason why the rents being commanded by these properties have to differ.

Lastly, this research work will help to determine the factors influencing, commercial and residential properties which is an essential pre-requisite to successful development as well as stimulating interest in the students to carryout out further research on the topic.


The study covers a period of three years (2002 to 2004) and it is restricted to selected properties (Residential and commercial) comprising blocks of flat and tenements in Ogui New Layout, Enugu

  1. a) AVAILABILITY OF RESEARCH MATERIAL: The research material available to the researcher is insufficient, thereby limiting the study
  2. b) TIME: The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.
  3. c) Organizational privacy: Limited Access to the selected auditing firm makes it difficult to get all the necessary and required information concerning the activities.



Renting, also known as hiring or letting, is an agreement where a payment is made for the temporary use of a good, service or property owned by another

Residential property 

A residential area is a land used in which housing predominates, as opposed to industrial and commercial areas. Housing may vary significantly between, and through, residential areas.

Rental property

Also known as hiring or letting, is an agreement where a payment is made for the temporary use of a good, service or property owned by another. A gross lease is when the tenant pays a flat rental amount and the landlord pays for all property charges regularly incurred by the ownership


This research work is organized in five chapters, for easy understanding, as follows Chapter one is concern with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study. Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature. Chapter three deals on the research design and methodology adopted in the study. Chapter four concentrate on the data collection and analysis and presentation of finding.  Chapter five gives summary, conclusion, and recommendations made of the study