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Appraisal Of The Effect Of Property Management On Property Value

(A Case Study Of Commercial Properties In Awka)

5 Chapters
|
66 Pages
|
8,904 Words

Property management plays a pivotal role in shaping the value of real estate assets. This multifaceted discipline involves the administration, operation, and oversight of residential, commercial, or industrial properties, directly influencing their worth. Effective property management encompasses various aspects, including maintenance, tenant relations, financial management, and strategic planning. A well-executed property management strategy enhances the property’s attractiveness, ensuring optimal functionality and aesthetic appeal. By addressing maintenance issues promptly and fostering positive tenant relationships, property managers contribute significantly to the overall desirability of a property. Additionally, sound financial management practices, such as cost-effective budgeting and revenue optimization, directly impact the property’s economic value. Ultimately, the impact of property management on property value is undeniable, as a comprehensive and well-executed approach can lead to increased demand, higher rental income, and enhanced market positioning.

ABSTRACT

The principal objective of property management is to maintain a property in a state to command the greatest possible net return and to protect the owner’s capital investment at all times, one unique feature of commercial properties is that they are of multiple occupation. Considering the huge capital investment in their construction, it is prudent that their efficient management should be of paramount importance. As with all forms of public properties, the management of commercial properties present peculiar problems that demand their own solutions.
The study therefore, seeks to appraise the effect of property management on property value using commercial properties in Awka as a case study.

TABLE OF CONTENT

Title Page
Approval Page
Dedication
Acknowledgment
Synopsis

Chapter One
1.0 Introduction

1.1 Background Of Study
1.2 Statement Of The Problem
1.3 Objectives Of The Study
1.4 Significance Of The Study
1.5 Scope Of The Study
1.6 Limitations Of The Study

Chapter Two
2.0 Literature Review

2.1 Meaning/Concepts Of Property
2.2 Meaning Of Management
2.3 Concepts/Meaning Of Property Management
2.4 Concepts Of Value
2.5 Rental Values Of Commercial Properties
(i) Shops
(ii) Offices
2.6 Landed Properties And Management
2.7 Types Of Landed Properties
2.8 Characteristics Of Landed Property Investment
2.9 Factors Affecting Property Values
2.10 Methods Of Determining Value
2.11 Obsolescence (Concepts)
2.12 Problems Of Public Property Management In Nigeria

Chapter Three
3.0 Research Methodology

3.1 Sources Of Data
3.2 Data Collection Method

Chapter Four
4.0 Data Presentation And Analysis

Chapter Five
5.0 Findings, Recommendation And Conclusion

5.1 Finding Generally
5.2 Recommendations
5.3 Conclusion
Bibliography
Questionnaire

CHAPTER ONE

1.1 BACKGROUND OF STUDY
The issue of property management has persisted in the Nigeria society for quite sometime. Property management is the art and science of real estate with respect to it’s development, maintenance, cash flow from users and occupiers in order to achieve optimum benefits for the owner and all parties interested in the property within the ambit of relevant laws.
It is observed that for many years. most properties have lacked proper management due to absence of qualified property managers who are professionally equipped to handle property management.
Many property owners (Landlords) do not usually engage the services of estate surveyors and valuers. They appoint “caretakers” to look after or take care of their properties. These caretakers in turn have limited powers as they can only collect rent from tenants and engage in minor repairs of the properties. Moreover, they are mostly laymen and not trained in estate management. This has affected the value of some properties in the market.
Therefore, the ability of a property to yield highest returns and posses a long physical and economic life depends on good property management. Good property management has transcended ordinary maintenance of property based on tenant’s complaints and graduated into purposeful planning of building services and efficient accounting system with due regard to the legal, economic and social interests of the tenants and Landlord alike.
If we look around and study some of the multi-storey and public properties in some of our state capitals, most especially Awka, one can easily distinguish between the well managed and the neglected ones.
Proper management of our landed properties is as important as the construction of these properties and it is vital to the economics, historical, social and cultural development of our nation and it should be accorded its due importance both privately and publicly.

1.2 STATEMENT OF THE PROBLEM
Property developers as well as governments all over the world especially in developing countries embark on the development of properties. Although these properties were approved by the town planning authorities, they present physical, economical, environmental, financial and social problems.
Physically, the property becomes a source of discomfort to occupants due to wear and tear of the physical structure of the property. Any person looking for accommodation for residence or business may not like to take up the property that is old or lacked maintenance.
Economically, the property does not generate income as it used to when it was newly constructed.
Environmentally, these properties contribute to the degradation of the environment. They also pose a threat to people’s life as they can collapse and kill the occupants.
The social effect borders mainly on the property driving away high standard people. It was observed that these properties have turned out to become properties of low standard. All these result from poor management and lack of maintenance.

1.3 OBJECTIVES OF THE STUDY
(a) To ensure that the property is kept in a good state of repairs through regular maintenance within the estate.
(b) To ensure that all those management tools such as letting, maintenance schedule, rent collection etc are properly articulated.
(c) To elongate the economic life or useful life of a property through activities which tend to remove physical, economic and functional obsolescence.
(d) To identity the well managed and neglected properties in the study area with a view to comparing their levels of income as well as state of maintenance.
(e) To proffer necessary measures that should be taken in remedying the identified anomalies in poorly managed properties.

1.4 SIGNIFICANCE OF THE STUDY
The findings of this study will no doubt be of immense benefit to several state holders and interest groups in the real estate development industry.
This study will also be particularly significant to the entire society, the Anambra state government and inhabitants, as it will come out with remedial measures towards the eradication of improper management of landed properties which does no one any good.
In addition, it will be of great benefit to professionals in the building industry, real property investors, occupiers, scholarly future researcher in related areas, policy and law makers, students and a host.

1.5 SCOPE OF THE STUDY
The scope of the work is limited only to commercial properties in Awka. The metropolis in question has over the years witnessed poor management of landed properties owned by both private and public bodies due to the ignorance of property owners.
Work has however been limited to the appraisal of the effect of property management on the value of commercial properties.

1.6 LIMITATIONS OF THE STUDY
It is a fact that nothing is foolproof on earth. This position was equally the case with this study, firstly, there was the problem of logistic. Our people are known to have very poor research culture.
This was manifested in the cold attitude which some people approached for information showed and their unwillingness to fill the questionnaire given to them.
Time constraint was experienced, as there was not enough time to carryout more research on this work.
Some people were not convinced about the objective of this study and so they held back certain vital information for obvious reasons known only by them.
Financially difficulty also created hindrance as funds for transportation to source materials and fill the questionnaire posed a great problem.
All the same, the study has been carefully conducted for one to have a good insight into the subject matter.

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Effect Of Property Management On Property Value:

Property management can have a significant effect on property value. Effective property management can enhance property value, while poor management can lead to a decrease in value. Here are some ways property management can impact property value:

  1. Maintenance and Repairs: Regular maintenance and prompt repairs are crucial for preserving a property’s condition. A well-maintained property is more appealing to tenants and potential buyers, which can increase its value over time. Neglecting maintenance can lead to a decrease in value due to deterioration.
  2. Tenant Selection: Property managers play a key role in tenant selection. Screening tenants thoroughly to ensure they have a good rental history and can pay rent on time reduces the risk of damage and unpaid rent, which can negatively affect property value.
  3. Rent Optimization: Property managers can help set appropriate rental rates based on market conditions. Charging too much may deter tenants, while charging too little can leave money on the table. Optimizing rent can maximize cash flow and property value.
  4. Tenant Retention: Reducing tenant turnover is essential for maintaining property value. Frequent turnover leads to increased vacancy periods and leasing expenses. Property managers can work to keep tenants happy, thereby promoting longer-term tenancies.
  5. Compliance with Regulations: Property managers must ensure that the property complies with local regulations and building codes. Failure to do so can result in fines and legal issues, which can reduce property value.
  6. Marketing and Advertising: Effective marketing and advertising can attract quality tenants and maintain high occupancy rates. An empty property generates no income and can lead to a decrease in property value.
  7. Financial Management: Proper financial management, including budgeting and expense control, is essential. Property managers can help optimize income and reduce unnecessary costs, positively impacting property value.
  8. Security and Safety: Property managers must implement security measures to protect the property and its occupants. A secure property is more attractive to tenants and can command higher rents, which can increase property value.
  9. Community and Neighborhood Relations: Property managers can foster positive relationships with the local community and neighbors. This can help prevent disputes and maintain the property’s reputation, which can affect its value.
  10. Upgrades and Renovations: Property managers can recommend and oversee renovations or upgrades that can increase property value. This may include cosmetic improvements, energy-efficient upgrades, or adding amenities.
  11. Market Knowledge: Property managers who are knowledgeable about local real estate trends and market conditions can make informed decisions to optimize property value.

In summary, effective property management is essential for maximizing property value. It involves various aspects, including maintenance, tenant selection, financial management, and compliance with regulations. Property owners and investors should carefully choose and work with property managers who have the skills and expertise to enhance and protect the value of their real estate assets.