Behavioural factors influencing commercial property investment decisions in Lagos metropolis, Nigeria.
This study identified and examined the profile of real estate investors in the study area, identified the processes involved in commercial property investment decision making, examined and classified the behavioural factors influencing commercial property investment decisions in the study area and determined the impact of investors’ profile and behavioural factors on commercial property investment decisions in the study area. This was with a view to ascertaining the influence of behavioural factors on commercial property investment decisions in Lagos Metropolis. Primary data were used in the study. The data were collected through the administration of questionnaire. The sample consisted of 197 investors who were selected through the portfolio of the 440 registered Estate Surveying and Valuation firms in the study area.The questionnaire sought information on the profile of the investors, processes involved in commercial property investment decision making, behavioural factors influencing investors during commercial property investment decision making and impact of behavioural factors on commercial property investment decisions. Both descriptive and inferential statistics were used to analyze the data collected. These included frequency distribution tables, weighted arithmetic mean, relative involvement indices, Chi-square and binary logistic regression. The study revealed that out of the nine sequential stages involved in real estate investment decision making process, a typical investor follows only three of them. Among others, identification of goals, objectives and constraints (mean 3.45);analysis of the overall investment environment (mean 3.34) and final negotiations and closing (mean 3.10) were often considered necessary by Lagos individual investors. Moreover, the study established that the major behavioural factors that influence commercial property investment decisions in the study area are anchoring and representative heuristics (mean 3.37), market factor (mean 4.37) and herding effect (mean 4.43). The result of the cross tabulation showed thatamong the variable of investors’ profile, there was no significant impact (X2 = 5.03, P > 0.05) of age distribution on commercial property investment decisions. However, there were significant relationship between commercial property investment and each of educational qualification (X2 = 5.99, P < 0.05), years of experience in real estate investment (X2 = 8.07, P < 0.05) and seminar participation on real estate investment (X2 = 17.63, P < 0.05). Each of the three variables significantly influences commercial property investment decisions. Also in the case of the behavioural factors, the study showed that there exists no significant impact of prospect factors (X2 = 13.69, P > 0.05; Odds: 0.16, P > 0.05) on commercial property investment decisions. However, heuristics(X2 = 140.45, P < 0.05; Odds: 0.66, P < 0.05), market factors (X2 = 116.81, P < 0.05; Odds: 0.782, P < 0.05) and herding effect (X2 = 127.69, P < 0.05; Odds: 0.51, P < 0.05) significantly influence commercial property investment decisions in the study area. The study concluded that anchoring and representative heuristics, market factors and herding effect had influence on investors’ decisions on commercial property investment.