Relative Occurrence of Risk Factors in Real Estate Development Phases in Lagos State, Nigeria

Abstract

This paper assesses the relative occurrences of risk factors in real estate development phases in Lagos State, Nigeria with a view to providing information that could enhance effective management of risks in real estate development projects. Adopting random sampling, primary data were obtained from sixty-eight real estate developers in Lagos State through survey questionnaires. Principal component analysis was used to regroup the risk factors through the application of Kaiser- Meyer- Olkin (KMO) and Bartlett’s test values. At KMO of 0.747 and sig. of 0.000, the study established that the most significant risk factors in each phase of real estate development include pre-construction phase risk factors: land title and approval risks (mean = 4.45); resource risks (mean = 3.61); socio-political risks (Mean = 3.69); economic risks (Mean = 3.26); physical risks (Mean = 3.99) and environmental risks (Mean = 2.41). Contract negotiation phase risk factors: contract risks (Mean = 3.44) and financial risks (mean = 3.32). Formal commitment risk factors: legal risks (Mean = 3.175); personnel risks (Mean = 2.94); Insurance risks (Mean = 2.77). Construction phase risk factors: financial risks (Mean = 4.01); technical risks (Mean = 3.36); personnel risks (Mean = 3.16) and time-delay risks (Mean = 3.14). The study also established relatively that pre-construction phase has the highest risk occurrence with RII of 3.52 while the formal commitment phase (RII = 3.13) has the least occurrence of risks. This study will enhance familiarity of real estate developers with the specific risk factors in each phase of project.