Performance Assessment of Industrial Real Estate Contribution to Nigerian Economy

Abstract

This work is set to measure the contribution of real estate to the production output of manufacturing industries in Nigeria and relate it to the gross domestic product of Nigeria with a view to providing guidance for the industrial investors, measuring past achievements and providing the basis for planning and control decisions. 44 of the 108 industries in industrial town of Ota in Nigeria were randomly sampled to elicit data between 2008 and 2012 from heads of administration of each industry and data collected were analyzed using descriptive statistics. The findings indicated that at aggregate level, industrial properties in Ota, Nigeria contributed 19% performance to the manufacturing success of industrial establishments. Furthermore, while both contributions of manufacturing sector to the national economy and the industrial real estate to manufacturing output are not steady or specific in trend, the average of the contribution of manufacturing/industrial sector to Nigerian economy from 2008-2012 as gathered from various sources indicated 3.41%, the implication of this is that the industrial real estate’s actual contribution to Nigerian economy is 0.65%. This work did not measure the value (capital or rental) to determine performance of industrial properties; rather it rated the performance of each standard economic factors of production (land, labour, capital and entrepreneur) base on their contribution to the production activities of the industries by conversion of qualitative perception of the respondents to quantitative measurement. Further endeavor is desired to have pure quantitative measurement as improvement on this qualitative perception. The field of real estate of manufacturing industry lacks empirical measurement to quantify the value that it adds to the firm’s performance and this has made the contribution of real estate to the firm not properly considered or recognized. This work is therefore non-economic parameter used to quantify the contribution. The benchmarks developed in this work were found to be measurable and appropriate for owner occupied industrial buildings and makes collection of data simple. The work advanced the benchmarks required for the performance evaluation of industrial buildings without resorting to determination of actual value. This will be useful for government to fix industrial real estate in the national economic importance as against the usual real estate investment contribution to the national economy.