Abstract
One of the important objectives of holding an investment is to protect investors’ real currency value invested against inflationary trend and enjoy a continuous positive flow of real return. In Nigeria, majority of investors in real estate are uncertain concerning the hedging capability and existing relationship between return in real estate and inflation rates. This research paper identifies the degree of relationship between returns in hostel investment and inflation rates in Akure, Nigeria. Environs of Federal University of Technology Akure (FUTA) were chosen as a study area because of influx of investors in hostel development in the area. Data on rental and capital income were collected from registered and practising Estate Valuation Firms in the study area through self-administered questionnaire, while rates on inflation were obtained from Central Bank and Bureau of Statistics data bank in Nigeria. 25 Estate Valuation Firms in Akure consist of the target population sourced from the NIESV (Nigerian Institution of Estate Surveyors and Valuers) Directory. Twenty-five questionnaires were administered to Estate Valuation Firms, fifteen were retrieved. The descriptive statistics include the mean return while inferential statistics used for the analysis includes Phillip Perron unit root test and Auto regressive distributed lag. The PP unit root result; shows the data sets exhibits a different combination order in terms of the integrations. Existing degree of relationship was seen to vary between hostel and inflation rates. However, instances where some hostels show a positive relationship with inflation component exist; while others show a negative relationship with the inflation components. The findings from this study will give empirical direction to both individual and institutional investors in hostels. It was recommended among others that the Nigerian government should work towards putting in place the relevant policy mix of fiscal and monetary policies to mitigate inflation rate to a single digit so that investors will be able to earn their real return.
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