Hedonic values of physical infrastructure in house rentals

Abstract

Purpose – The purpose of this study is to examine the relationship and pricing effects of physical infrastructure on house rents using the hedonic technique. Design/methodology/approach – Primary data are derived through a questionnaire survey and secondary data from existing literature. Sampling data on 211 detached residential buildings with a range of physical infrastructure attributes within Lekki Phase 1 area of Lagos are analysed with the hedonic regression technique. Findings – Results reveal significant impacts and a range of price premium estimates of physical infrastructure on house rents in the study area. Originality/value – The study suggests a nouvelle and contextualized approach for sustainable infrastructure delivery, improvement and maintenance. Appropriate pricing will help to guide and support physical infrastructure development and sustainability. When tailored in line with market support, achievable pricing can be attained in setting land-based user charges and tariffs for cost recovery on projected developments and reform. Results from empirical market evidence also provide demand and viability indicators that offer invaluable blueprints, by which governments, policy/decision makers, investors, town-planning authorities and other stakeholders can take sustainable decisions based on priority, in the face of budgetary constraints – a significant characteristic of the Nigerian economy.