ANALYSIS OF THE RELATIONSHIP BETWEEN INFLATION AND INDIRECT REAL ESTATE INVESTMENTS IN NIGERIA

Daniel Ibrahim Dabara, Augustina Chiwuzie, Olusegun Joseph Omotehinshe, Anthony Tinufa and John Oyekunle Soladoye

AfRES from African Real Estate Society (AfRES)

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 (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2019-09-01
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Persistent link: https://EconPapers.repec.org/RePEc:afr:wpaper:2019-012

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