The Inflation-Hedging Performance and Risk-Return Characteristics of Residential Property Investments in Gombe, Nigeria
Advances in Research · pp. 71–83 · Published 27 Sep 2014
10.9734/AIR/2015/12221Abstract
Purpose: This study aims at investigating the inflation-hedging performance of residential property investments in Gombe metropolis Nigeria. Design/Methodology/Approach: Questionnaire survey was conducted to obtain primary data on rental and capital values of residential properties from branch managers of Estate Surveying and Valuation Firms in the study area, this was subsequently translated to total returns. Similarly, secondary data with respect to the Nigerian Consumer Price Index (CPI) which was used as a proxy for actual inflation and the 90-day Treasury bill rates (used as proxy for unexpected inflation) for the period between 2003 and 2012 were also collected from the National Bureau of Statistics (NBS) and the Central Bank of Nigeria (CBN) respectively. The unexpected inflation was calculated as the difference between the actual and expected inflation. The 3 groups of data obtained for the study were subjected to Phillip-Perron unit root test as well as the Odinary Least Square Regression analysis. Findings: The study revealed that the inflation-hedging performance of residential property investments in Gombe metropolis vis-à-vis the actual inflation provides a partial hedge (with beta 0.061), vis-à-vis the expected inflation provides a complete hedge (with beta 0.678) and vis-à-vis the unexpected inflation provides a perverse hedge (with beta -0.454). Practical Implications: Inflation-hedging performance of investment asset classes is of particular interest to investors. The results of this study can be useful for investment forecasts as well as investment decisions on asset types to include in portfolios as a measure for protecting investors’ earnings from erosion by inflation. Originality/Value: Research work on the subject of inflation-hedging capabilities in Nigeria majorly focused on commercial real estate and stocks in the Southwestern region of Nigeria. This study expanded the scope of the inflation-hedging literature by empirically investigating the inflation hedging performance of residential real estate investments in Northern Nigeria (Gombe metropolis).
References (16)
- 1 Asset returns and inflation [DOI]
- 2 International Evidence on Real Estate Securities as an Inflation Hedge [DOI]
- 3 Measuring Real Estate Returns [DOI]
- 4 The Inflation Hedging Ability of Real Estate in China [DOI]
- 5 Direct Commercial Real Estate as an Inflation Hedge: Korean Evidence [DOI]
- 6 Commercial Property as an Inflation Hedge: An Australian Perspective [DOI]
- 7 An Analysis of Relative Inflation Hedging Capacities of Prime Commercial Properties in Lagos
- 8 The "Real Assets" Alternative: An Investor's Guide
- 9 International Real Estate Review [DOI]
- 10 EVALUATING MANAGERS DIVERSIFICATION OF REAL ESTATE PORTFOLIOS: EVIDENCE FROM NIGERIA [DOI]
- 11 Inflation-hedging Behavior of a Securitized Real Estate Market: Empirical Evidence from Hong Kong
- 12 Can Investors Hedge Residential Price Dynamics of Australia's Capital Cities?
- 13 Global Journal of Human-Social Science [DOI]
- 14 Analysis of Different Dimensions for Property Allocation Process within Real Estate Investment Companies
- 15 The performance and inflation-hedging characteristics of hotel investment in Hong Kong [DOI]
- 16 Short-term inflation-hedging characteristics of real estate in Hong Kong
Cited by 23
Akuakanwa Eziukwu Nwosu, Victoria Amietsenwu Bello, Abiodun Kolawole Oyetunji · Buildings · 2023
Daniel Ibrahim Dabara, Anthony Abbey Tinufa, John Oyekunle Soladoye · SSRN Electronic Journal · 2018
Iwona Dittmann · Real Estate Management and Valuation · 2024
Mbosowo Ebong Ekpo, Kufre Ekereke Akpan, Chicheta Francis Nissi · African Journal of Environmental Sciences and Renewable Energy · 2024
Benjamin Gbolahan Ekemode · Property Management · 2021
Daniel Ibrahim Dabara, Okunola Adewuyi, Anthony Abbey Tinufa · SSRN Electronic Journal · 2018
Showing 6 of 23 known citations — external sources report more than can currently be individually listed.
Related research
- Understanding the Relationship between Unemployment and Inflation in Nigeria — shares topic coverage
- Inflation Correlation with Commercial Real Estate’ Investment Returns in Akure, Nigeria — shares topic coverage
- An Econometric Analysis of the Statistical Relationship between Carbon Dioxide Emissions and Infant Mortality in South Asia — shares topic coverage
- Modified Goal Programming Model for Limited Available Budget Allocation for Equipment Procurement under Inflation Condition — shares topic coverage
- Toy Model of Spinning Quantum Cosmology — shares topic coverage
Article metrics
Real usage data collected on this platform.
46
Page views
0
PDF downloads
6
Outbound clicks
23
Citations
Views over time
Views by country
Approximate, from request IP at view time — not citizenship or institution. Countries with fewer than 5 views are grouped as "Other".
Traffic sources
Referring site, by host.
Views and downloads exclude known bots/crawlers. Citations combines this platform's own DOI-resolved index with each external source's own reported total — see Cited by above for individually listed citing works. Last refreshed 0 seconds ago.