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OKEAHIALAM, CHUKWUNYERE OBINNA.
PG/M.Sc./06/45725.
RISK MANAGEMENT IN COMMERCIAL SHOPPING MALLS
IN ABUJA, A STUDY OF INVESTMENT IMPLICATIONS.
Estate Management
A THESIS SUBMITTED TO THE DEPARTMENT OF ESTATE MANAGEMENT,
FACULTY OF ENVIRONMENTAL STUDIES, UNIVERSITY OF NIGERIA ENUGU
CAMPUS
Webmaster Digitally Signed by Webmaster’s Name
DN : CN = Webmaster’s name O= University of Nigeria, Nsukka
OU = Innovation Centre
2010
UNIVERSITY OF NIGERIA
2
TITLE PAGE
RISK MANAGEMENT IN COMMERCIAL SHOPPING
MALLS IN ABUJA, A STUDY OF INVESTMENT
IMPLICATIONS.
BY
OKEAHIALAM, CHUKWUNYERE OBINNA.
PG/M.Sc./06/45725.
A DISSERTATION SUBMITTED TO THE SCHOOL OF
POSTGRADUATE STUDIES AND THE DEPARTMENT
OF ESTATE MANAGEMENT, IN PARTIAL
FULFILMENT OF THE REQUIREMENTS FOR THE
AWARD OF THE DEGREE OF MASTER OF SCIENCE
(M.Sc.) IN ESTATE MANAGEMENT.
SUPERVISOR: PROF. J. U. OGBUEFI
SEPTEMBER, 2010.
3
APPROVAL
This dissertation has been approved by the School of Postgraduate Studies, University
of Nigeria, in partial fulfillment of the requirements for the award of the Degree of
Master of Science in Estate Management.
______________________ ___________________________
SUPERVISOR HEAD OF DEPARTMRNT
______________________ ___________________________
EXTERNAL EXAMINER DEAN OF FACULTY
___________________________________________
DEAN, SCHOOL OF POSTGRADUATE STUDIES
4
CERTIFICATION
The work embodied in this dissertation is original and has not been submitted in part
or in full for any other diploma or degree of this or any other university. All observed
errors of omission or commission are entirely mine.
_______________________________
Okeahialam, Chukwunyere Obinna.
Student.
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DEDICATION
This dissertation is dedicated to my late mother – Lolo Bernadine N. Okeahialam.
May her soul rest perfectly in the bosom of God.
6
ACKNOWLEDGEMENT
My gratitude goes to several persons that contributed to the successful completion of
this research work. First among them is my supervisor – Professor J. U. Ogbuefi who
inspite of his busy schedule guided this work.
I appreciate other members of staff namely, Prof. J. A. Umeh, Rev. I. W. Ozigbo and
Mrs. Ilechukwu for their support.
I must also thank my classmates, friends and other colleagues in academics for their
constructive criticisms to this work before completion.
My friends in Abuja are acknowledged. I am overwhelmed by their moral and
financial support to the successful completion of this dissertation.
My heartfelt gratitude goes to my dear wife and other family members. They were of
colossal help.
May God bless all of you as I end by saying – thank you Jesus.
OKEAHIALAM, CHUKWUNYERE OBINNA.
DEPARTMENT OF ESTATE MANAGEMENT
UNIVERSITY OF NIGERIA
ENUGU CAMPUS.
7
TABLE OF CONTENTS
Title Page ….. ….. ….. ….. ….. ….. ….. ….. i
Approval ….. ….. ….. ….. ….. ….. ….. ….. ii
Certification ….. ….. ….. ….. ….. ….. ….. ….. iii
Dedication ….. ….. ….. ….. ….. ….. ….. ….. iv
Acknowledgement ….. ….. ….. ….. ….. ….. ….. v
Table of Contents ….. ….. ….. ….. ….. ….. ….. vi
List of Tables ….. ….. ….. ….. ….. ….. ….. ….. x
Abstract ….. ….. ….. ….. ….. ….. ….. ….. xiii
CHAPTER ONE: Introduction
1.1 Background of the Research ….. ….. ….. ….. ….. 1
1.2 Statement of the Problem ….. ….. ….. ….. ….. 2
1.3 Aim and Objectives ….. ….. ….. ….. ….. ….. 2
1.4 Research Hypothesis ….. ….. ….. ….. ….. ….. 3
1.5 Significance of the Research ….. ….. ….. ….. ….. 3
1.6 Scope of the Research ….. ….. ….. ….. ….. 4
1.7 Constraints to the Research ….. ….. ….. ….. ….. 4
CHAPTER TWO: Literature Review
2.1 The Concept of Investment ….. ….. ….. ….. ….. 5
2.2 The Concept of Risk ….. ….. ….. ….. ….. ….. 6
2.2.1 Categories of Risk ….. ….. ….. ….. ….. ….. 8
2.3 Types of Investment Risk ….. ….. ….. ….. ….. 9
2.4 Risk Management ….. ….. ….. ….. ….. ….. 10
2.4.1 Risk Management Process ….. ….. ….. ….. ….. 11
(a) Establishing the Context ….. ….. ….. ….. 12
(b) Risk Identification ….. ….. ….. ….. ….. 12
(c) Risk Assessment ….. ….. ….. ….. ….. 12
(d) Risk Treatment ….. ….. ….. ….. ….. 13
(e) Creating Risk Management Plan ….. ….. ….. 14
(f) Implementation ….. ….. ….. ….. ….. 14
(g) Review and Evaluation of the Plan ….. ….. ….. 14
2.5 Investment Risk Measurement ….. ….. ….. ….. 15
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2.6 Meaning of Real Estate ….. ….. ….. ….. ….. 17
2.7 Real Estate Investment ….. ….. ….. ….. ….. 18
2.8 Real Estate Investment Risk ….. ….. ….. ….. ….. 19
2.9 Real Estate Investment Risk Measurement ….. ….. ….. 21
2.10 The Meaning of Shopping Mall ….. ….. ….. ….. 22
2.10.1 Early Shopping Malls ….. ….. ….. ….. ….. ….. 23
2.10.2 Largest Shopping Malls ….. ….. ….. ….. ….. 24
2.11 Problems of Property Management ….. ….. ….. ….. 25
2.12 The Federal Capital Territory (FCT) Abuja ….. ….. ….. 25
Historical Development ….. ….. ….. ….. ….. 25
Administrative Areas ….. ….. ….. ….. ….. ….. 27
Federal Capital City (FCC) Abuja ….. ….. ….. ….. 27
CHAPTER THREE: Research Methodology
3.1 Study Area ….. ….. ….. ….. ….. ….. ….. 28
3.2 Sources of Data for the Research ….. ….. ….. ….. 28
(a) Primary Source ….. ….. ….. ….. ….. 28
(b) Secondary Source ….. ….. ….. ….. ….. 28
3.3 Types of Questionnaire ….. ….. ….. ….. ….. 28
3.3.1 Preliminary Questionnaire ….. ….. ….. ….. ….. 29
3.3.2 Type A Questionnaire ….. ….. ….. ….. ….. ….. 29
3.3.3 Type B Questionnaire ….. ….. ….. ….. ….. ….. 29
3.4 Sample Population ….. ….. ….. ….. ….. ….. 29
3.5 Sampling Method or Procedure ….. ….. ….. ….. 30
3.6 Data Presentation and Analysis Techniques ….. ….. ….. 31
3.7 Analysis of Returned Questionnaires ….. ….. ….. ….. 31
3.8 Reliability Test ….. ….. ….. ….. ….. ….. 32
CHAPTER FOUR: Analysis, Presentation and Discussion of Findings
4.1 Introduction ….. ….. ….. ….. ….. ….. ….. 33
4.2 Analysis of Preliminary Questionnaire ….. ….. ….. 33
4.3 Analysis of Type A and Type B Questionnaires ….. ….. 36
4.3.1 Litigation between Tenants and Management ….. ….. 36
4.3.2 Incessant Increases of Rent ….. ….. ….. ….. ….. 39
4.3.3 Eviction Conflicts Arising from Recovery of Possession ….. 42
4.3.4 Shrewd Attitude of some Tenants ….. ….. ….. ….. 44
9
4.3.5 Inability to Honour Repairs and Maintenance Obligation
by Both the Management and Tenants ….. ….. ….. 46
4.3.6 Insecurity of Goods and Properties in the Plazas ….. ….. 49
4.3.7 Problem of Subletting of Accommodation ….. ….. ….. 53
4.3.8 Tenancy Commencement Date Problem ….. ….. ….. 56
4.3.9 Inadequate Parking Space in the Plazas ….. ….. ….. 58
4.3.10 Lack of Transparency and Inefficiency in the Use
and Administration of the Service Charge Fund ….. ….. 60
4.3.11 Sabotage, Impropriety and Shrewd Attitude of Some
Management Staff ….. ….. ….. ….. ….. ….. 64
4.4 Test of Hypothesis ….. ….. ….. ….. ….. ….. 65
Hypothesis ….. ….. ….. ….. ….. ….. ….. 65
Decision Rule ….. ….. ….. ….. ….. ….. 66
Decision ….. ….. ….. ….. ….. ….. ….. 66
CHAPTER FIVE: Summary, Recommendations and Conclusion
5.1 Summary of findings ….. ….. ….. ….. ….. ….. 67
5.2 Recommendations ….. ….. ….. ….. ….. ….. 67
5.2.1 Litigation between Tenants and Management ….. ….. 68
5.2.2 Incessant Increases of Rent ….. ….. ….. ….. ….. 68
5.2.3 Eviction Conflicts Arising from Recovery of Possession ….. 69
5.2.4 Shrewd Attitude of some Tenants ….. ….. ….. ….. 70
5.2.5 Inability to Honour Repairs and Maintenance Obligation
by Both the Management and Tenants ….. ….. ….. 70
5.2.6 Insecurity of Goods and Properties in the Plazas ….. ….. 71
5.2.7 Problem of Subletting of Accommodation ….. ….. ….. 72
5.2.8 Tenancy Commencement Date Problem ….. ….. ….. 73
5.2.9 Inadequate Parking Space in the Plazas ….. ….. ….. 73
5.2.10 Lack of Transparency and Inefficiency in the Use
and Administration of Service Charge Fund ….. ….. ….. 74
5.2.11 Sabotage, Impropriety and Shrewd Attitude of Some
Management Staff ….. ….. ….. ….. ….. ….. 75
5.3 Conclusion ….. ….. ….. ….. ….. ….. ….. 75
5.4 Suggestion for Further Research ….. ….. ….. ….. 76
Bibliography ….. ….. ….. ….. ….. ….. ….. 77
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Appendix (i) ….. ….. ….. ….. ….. ….. ….. 83
Appendix (ii) ….. ….. ….. ….. ….. ….. ….. 85
Appendix (iii) ….. ….. ….. ….. ….. ….. ….. 87
Appendix (iv) ….. ….. ….. ….. ….. ….. ….. 92
Appendix (v) ….. ….. ….. ….. ….. ….. ….. 96
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LIST OF TABLES
Table 3.1 Analysis of Returned Preliminary Questionnaire ….. ….. 31
Table 3.2 Analysis of Returned Type A Questionnaire ….. ….. 32
Table 3.3 Analysis of Returned Type B Questionnaire ….. ….. 32
Table 4.1 Analysis of Locational distribution of Shopping Malls Sampled … 33
Table 4.2 Analysis of the Effect of Management
Problems on Generation of Rent ….. ….. ….. ….. 35
Table 4.3 Analysis of the Effect of Shortfall
of Rent on Returns to Investment ….. ….. ….. ….. 35
Table 4.4 Analysis of the Views of the Management on the
Existence of Litigation in the Course of Management ….. 36
Table 4.5 Analysis of the Views of the Management on the
Extent of Litigation in the Course of Management ….. ….. 37
Table 4.6 Analysis of the Views of Occupants on the Existence
of Litigation and Court Cases in the Plazas ….. ….. ….. 38
Table 4.7 Analysis of the Views of Occupants on Litigation
and Court Cases as a Reason for Rent Default ….. ….. 38
Table 4.8 Analysis of the Views of the Management on Litigation
and Court Cases as a Reason for Rent Default ….. ….. 39
Table 4.9 Analysis of the views of the Management
on Periodic Rent Review ….. ….. ….. ….. ….. 40
Table 4.10 Analysis of the Views of the Management
on the Interval of Rent Review ….. ….. ….. ….. 40
Table 4.11 Analysis of the Views of Occupants on
the Interval of Rent Review ….. ….. … ….. ….. 41
Table 4.12 Analysis of the Views of the Management on the
Existence of Eviction Conflicts ….. ….. ….. ….. 42
Table 4.13 Analysis of the Views of Occupants on the
Existence of Eviction Conflicts ….. ….. ….. ….. 43
Table 4.14 Analysis of the Views of the Management on the
Effect of Eviction Conflicts on Rent Payment ….. ….. 43
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Table 4.15 Analysis of the Views of the Management on the
Category of Occupants with High Rent Default ….. ….. 45
Table 4.16 Analysis of the Views of the Management on Interior
Repairs and Maintenance Obligation by the Occupants ….. 46
Table 4.17 Analysis of the Views of Occupants on Repairs and
Maintenance Obligation of the Management …. ….. ….. 47
Table 4.18 Analysis of the Views of Occupants on the Promptness of the
Management in Responding to Repairs and Maintenance Request ... 47
Table 4.19 Analysis of the Views of Occupants on Comprehensive
Renovation and Refurbishment of the Plazas ….. ….. 48
Table 4.20 Analysis of the Views of Occupants on the
Issue of Theft in the Plazas ….. ….. ….. ….. ….. 49
Table 4.21 Analysis of the Views of Occupants on the
Frequency of Theft of Valued Items in the Plazas ….. ….. 50
Table 4.22 Analysis of the Views of the Management on the
Existence of Security Arrangement in the Plazas ….. ….. 51
Table 4.23 Analysis of the Views of Occupants on the
Existence of Security Arrangement in the Plazas ….. ….. 51
Table 4.24 Analysis of the Views of the Management Showing the Score
Card on Performance of the Security Arrangement in the Plazas ... 52
Table 4.25 Analysis of the Views of Occupants Showing the Score
Card on Performance of the Security Arrangement in the Plazas ... 52
Table 4.26 Analysis of the Views of the Management on the Existence
of Subletting of Accommodation in the Plazas ….. ….. 53
Table 4.27 Analysis of the Views of Occupants on
Methods of Taking Occupation ….. ….. ….. ….. 54
Table 4.28 Analysis of the Views of the Management on the
Frequency of Subletting of Accommodation ….. ….. 54
Table 4.29 Analysis of the Views of the Management on the Effect
of Subletting of Accommodation on Rent Generation ….. 55
Table 4.30 Analysis of the Views of the Management on the Existence
of Tenancy Commencement Date Disputes ….. ….. ….. 56
Table 4.31 Analysis of the Views of Occupants on the Existence
of Tenancy Commencement Date Disputes ….. ….. ….. 57
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Table 4.32 Analysis of the Views of Occupants on the Effect of
Tenancy Commencement Date Disputes on Rent Renewal ….. 57
Table 4.33 Analysis of the Views of the Management on the
Adequacy of Parking Space in the Plazas ….. ….. ….. 59
Table 4.34 Analysis of the Views of Occupants on the
Adequacy of Parking Space in the Plazas ….. ….. ….. 59
Table 4.35 Analysis of the Views of the Management on the
Existence of Service Charge Payment ….. ….. ….. 60
Table 4.36 Analysis of the Views of Occupants on the
Existence of Service Charge Payment ….. ….. ….. 61
Table 4.37 Analysis of the Views of the Management on Proper
and Efficient Use of Service Charge Fund ….. ….. 61
Table 4.38 Analysis of the Views of Occupants on Proper and
Efficient Use of Service Charge Fund ….. ….. ….. 62
Table 4.39 Analysis of the Views of the Management on
Compliance to Service Charge Payment ….. ….. ….. 63
Table 4.40 Analysis of the Views of Occupants on Prompt
Compliance to Service Charge Payment ….. ….. ….. 63
Table 4.41 Analysis of Responses on the Major Cause of
Rent Default by Occupants ….. ….. ….. ….. ….. 65
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ABSTRACT
This research is on risk to commercial shopping malls in Abuja from investment
perspective. It is confined to post construction risks which begin from the start of
letting of a newly completed shopping mall through its life-span. The post
construction risks to the investment are the problems encountered in the course of
management which hinder flow of rental income. This research aimed at
recommending the best management approach to commercial shopping malls in
Abuja, in order to minimize risk on returns to investment by enhancing prompt and
regular rental income. This was achieved through the following objectives:
investigating the problems encountered in the course of management, investigating
the causes of the problems and analyzing the problems and causes with the view of
showing their negative effects on the flow of rent. The methodology to the research
was by sampling the management and tenants/occupants of the 46 commercial
shopping malls in FCC phase 1 Abuja, through the use of 3 different sets of
questionnaire. Some of the managerial problems unraveled include; protracted
litigation between tenants and management, incessant increases of rent, eviction
conflicts arising from attempts towards recovering vacant possession, problem of
subletting of accommodation etc. The three major causes of these problems as
discovered were, inefficiency in management, poor managerial approach, and, shrewd
and un-coperative attitude of some tenants. Based on the findings several
recommendations were proffered (which are risk management strategies). They
include; avoidance of un-necessary litigation, adoption of out of court settlement as
option of first resort in dispute resolution, reasonable increases of rent based on
prevailing property values, effective tenant’s selection process aimed at guarding
subsequent rent default etc. It is hoped that when these recommendations are put into
effect in the management of commercial shopping malls in Abuja and beyond there
will be a guaranteed flow of rental income thus profit maximization.
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CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE RESEARCH
Risk in general terms could be defined as the probability of the occurrence of an event
which may counter the objective (purpose) of a decision (Baird and Thomas, 1985,
cited in Huffman, 2004). Risk in investment is the probability of occurrence of that
event which may negate the objective of an investment which is returns and profit
making.
In view of the consequences of risk in investment, risk management strategies must be
applied. Therefore, risk management is a structured approach to managing uncertainty
related to a threat, through a sequence of human activities including: risk assessment,
strategies development to manage it, and mitigation of risk using managerial
resources.
This research focused on risks in commercial shopping malls in Abuja from
investment perspective. The risk envisaged and investigated in this study are post
construction risks which starts from the beginning of letting of a newly completed
shopping mall through its life span. The risk under scrutiny neither includes pre-
construction risks (such as, cost of capital/interest rate risk) nor construction risks
(such as, possible collapse of building under construction, use of substandard building
materials and poor workmanship which affects among other things, structure, strength
and value).
The research is geared towards discovering extensively those day to day problems and
other issues confronting the management of the plazas which threaten return on
investment as a result of shortfall in rental income. These day to day management
problems are the post-construction risks to commercial shopping malls. They hinder
rent collection and returns on investment. This research investigated and analyzed
these problems, their causes and effects and then, recommended on strategies to their
solution or at least mitigation.
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1.2 STATEMENT OF THE PROBLEM
The demolition of corner shops in Abuja in 2005 created shortage of accommodation
for commercial purposes. In the quest to partake in this expected boom, most
investors hastily began massive construction of plazas (shopping malls) without a
thorough study of the managerial problems that will emanate as from the
commencement of letting through the lifespan of the entire complex. These
managerial problems are the risk to the investment which affects returns as a result of
shortfall in rental income.
What exactly are these managerial problems? What are their causes and effects on the
flow of rent? It is based on this premise that this research extensively investigated
these managerial problems, their causes and effects on returns to investment as a
result of shortfall in rental income with the view of recommending on strategies to
their mitigation and solution.
1.3 AIM AND OBJECTIVES
The aim of this research is to recommend the best management approach to
commercial shopping malls (plazas) in Abuja, in order to minimize risk on returns to
investment by enhancing prompt and regular flow of rental income.
This is expected to be achieved through the following objectives:
1. Investigating the problems encountered in the course of managing
shopping malls in Abuja.
2. Investigating the causes of the managerial problems.
3. Analyzing the managerial problems and their causes with the view of
showing their negative effects on the flow of rental income.
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1.4 RESEARCH HYPOTHESIS
The null hypothesis (H0) is, “Managerial problems do not cause default in rent
payment”.
The alternative hypothesis (Hi) is, “Managerial problems do cause default in rent
payment”.
1.5 SIGNIFICANCE OF THE RESEARCH
Due to the demolition of corner shops in Abuja in 2005, commercial shopping
malls/plazas gained prominence. Investors began massive construction of shopping
malls (plazas) without concise and thorough studies of risk as it affects viability. They
only looked at pre-construction feasibility and construction risks (such as, land use
restrictions, development control measures and strength of building) and ignored post-
construction risks.
They always assume by intuition that post-construction risks which start from the
beginning of letting to management of the entire complex is nonexistent or at least
minimal, and, that rent will surely flow without actually considering the extent,
promptness and regularity of the flow.
This research dealt critically on post-construction risks which start from the beginning
of letting to management of the entire complex. It related and established that, the
problems that arise during management of the shopping malls as it affects rent
collection are the post-construction risks to the investment.
The research is significant and justified by the veritable recommendations it proffered
on strategies towards solving the management problems and enhancing efficient
management of shopping malls in Abuja. The recommendations proffered are post-
construction risk management strategies aimed at ensuring and enhancing returns on
investment through prompt and regular rent collection.
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1.6 SCOPE OF THE RESEARCH
This research is limited to the problems encountered in the management of
commercial shopping malls in Abuja as it affects returns on investment through
shortfall in rent collection. It is confined to post-construction risks which start from
the beginning of letting to management of tenants and to the management of the
physical fabric of the entire complex. The causes of the problems were sought and
recommendations made from findings on the most efficient ways of managing
commercial shopping malls in Abuja which is in essence a risk management strategy.
1.7 CONSTRAINTS TO THE RESEARCH
This research met with some difficulties. Whereas, some were expected others were
least expected. The major difficulty was during collection and assembling of data.
Some respondents were reluctant to accept the questionnaires while others were
reluctant to grant interviews. Also, some questionnaires were not completed and
returned by the respondents. Furthermore, some errors were made by some
respondents while supplying answers to the questionnaires.
Another major difficulty was the scarcity of literature and other research materials
particularly, text books and journals. However, the internet (World Wide Web)
cushioned this difficulty by providing access to vast literature on the topic.
Despite these impediments, efforts were made to make this research qualitative.
However, there may be certain lapses which I wish to own up whether they occurred
out of constraints or that they were inevitable.
19
CHAPTER TWO
LITERATURE REVIEW
2.1 THE CONCEPT OF INVESTMENT
The word – investment originates from the Latin ‘vestis’, meaning “garment, and
refers to the act of putting things (money or other claims to resources) into others'
pockets” (www.wikipedia.org/wiki/Investment).
Oxford Advanced Learners Dictionary of Current English (2001) defined investment
or investing as the buying of, “… property, shares in a company, etc, in the hope of
making a profit”.
Mortenson (2010) argues that investment or investing is related to saving or deferring
consumption. He further posited that investing is the active redirection of resources
from being consumed today, to creating benefits in the future.
An investment must have the quality of increase or decrease in value giving the
investor capital gains or losses. Any asset that does not have an element of capital risk
can not be termed an investment. In view of this, relating investment to mean saving
or differed consumption as argued by Mortenson (2010) is faulted. Saving or differed
consumption put in a bank do not have any risk and therefore can not cause a capital
loss. The only risk to saving is inflation and it does not cause capital loss but loss of
real value of money (capital).
The above view is supported by Legum (2005) when he gave a distinction between
savings and investment by using risk. Savings refers to money put aside normally on
regular basis. Risk to savings is limited to devaluing of cash due to inflation. While
the risk associated to investment can cause an entire capital loss.
An investment decision should be taken after at least some careful analysis or thought
in order to minimize capital risk. Valuation is the method for assessing whether a
potential investment is worth its price. The investor must determine whether the net
20
present value of the investment to the enterprise is positive using the marginal cost of
capital that is associated with the particular area of business.
Investment is also described as the placing of money to purchase property, stock,
bonds and other securities etc, which has sufficiently low risk and provides the
possibility of generating returns over a period of time. Placing or lending money in a
vehicle that risks the loss of the principal sum which has not been thoroughly
analyzed is speculation and not investment (www.wikipedia.org/wiki/Investment).
Investment can be categorized into three; physical assets (such as buildings or
machinery), intangible assets (such as patents, software, goodwill), and financial
assets (such as bank fixed deposits and securities). In real estate, investment is money
used to purchase property for the sole purpose of holding or leasing for income and
where there is an element of capital risk.
2.2 THE CONCEPT OF RISK
Risk is a concept that denotes a potential negative impact to some characteristic of
value that may arise from a future event, or we can say that risks are events or
conditions that may occur, and whose occurrence, if it does take place, has a harmful
or negative effect (http://en.wikipedia.org/wiki/Risk).
The above definition of risk denoting a potential negative impact to some
characteristic of value is shared by Lopes (1987) cited in Olsen (1997), where it was
asserted that, “risk must be related to the loss of what one values”. March and
Sharpira (1987) cited in Miller (1992) also shared this view when they stated that,
“managers generally associate risk with negative outcomes”.
The Institute of Risk Management (IRM) as identified by Hillson (2002) seems to
take the unequivocal position that risk is wholly negative. Hillson (2002) went further
to posit that, “Some other national standard-setting bodies also use a negative
definition of risk, including the Norwegian Standard NS5814:1981, British Standard
BS8444-3:1996, and National Standard of Canada CAN/CSA-Q850-97:1997”.
21
Some professional bodies have taken a neutral view in the definition of risk by
refusing to buttress neither the negative nor positive impacts. Such professional body
is the UK Association for Project Management (APM), whose Project Risk Analysis
& Management Guide (PRAM Guide, 1997) cited in Hillson (2002) defines risk as
“an uncertain event or set of circumstances which, should it occur, will have an effect
on achievement of objectives”. The nature of the effect is undefined, so implicitly this
could include both negative and positive effects.
The British Standards Institute (BSI) echoes this silent view in BS6079-3:2000, which
says that risk is “uncertainty … that can affect the prospects of achieving … goals”.
The joint Australian/New Zealand risk management standard AS/NZS 4360:1999 also
has an open definition that could implicitly encompass both opportunities and threats.
And project risk management guidelines in IEC62198:2001 also defined risk without
specifying whether its consequences are positive or negative (Hillson, 2002).
More recent guidelines insist in the explicit inclusion of both positive and negative
impacts in the definition of risk. For example the Risk Analysis & Management for
Projects Guide (RAMP Guide, 1998), produced by the Institute of Civil Engineers
(ICE) cited in Hillson (2002), states that risk is “a threat (or opportunity) which could
affect adversely (or favourably) achievement of the objectives”. Similarly, the Guide
to the Project Management Body of Knowledge (PMBoK® 2000) produced by the
Project Management Institute (PMI®) defines risk as “an uncertain event or condition
that, if it occurs, has a positive or negative effect on a project objective”.
Most recently, the Draft ISO Guide ‘Risk Management Vocabulary – Guidelines for
use in standards’ ISO DGUIDE73:2001 cited in Hillson (2002), defines risk as
“combination of the probability of an event and its consequence”, noting that
consequences can range from positive to negative.
Holton (2004), Hillson and Webster (2002) are of the similar view that risk is an
uncertainty that could have a positive or negative effect on one or more objectives.
Hillson (2002) asserted that the risk management community is moving towards
accepting “a broadened definition of risk which includes both upside opportunities as
22
well as downside threats” and he finally capped by saying that, risk is an umbrella
term, with two varieties:
1. “opportunity” which is a risk with positive effects, and,
2. “threat” which is a risk with negative effects.
From investment perspective, risk is often defined as the unexpected variability or
volatility of returns and thus includes both potential worse-than-expected as well as
better-than-expected returns. A fundamental idea in investment is the relationship
between risk and return. The greater the amount of risk that an investor is willing to
take on, the greater the potential return. The reason for this is that investors need to be
compensated for taking on additional risk. The root causes of risk have been
established to be optimism, bias and strategic misrepresentation.
2.2.1 CATEGORIES OF RISK
Wikipedia, the free encyclopedia (http://en.wikipedia.org/wiki/Risk) categorizes risk
into the following:
1. Political Risk – This is the risk as a result of change of government and its
resultant cross cutting policy decisions.
2. Regulatory Risk – This is the risk as a result of change of policy by state,
national or multinational regulatory bodies.
3. Market Risk – This is the risk as a result of fundamental change in supply
and demand functions or global prices for commodities.
4. Professional Risk – This is the risk associated with the nature of each
profession.
5. Economic Risk – This is the risk associated with the general aggregate
economic trend e.g. exchange rates, interest rates etc.
6. Socio-cultural Risk – This is the risk associated with demographic changes
and its effects on demand for services.
7. Health and Safety Risk – This is the risk associated with buildings, vehicles,
equipment, fire, noise, vibration, asbestos, chemical and biological hazards,
food safety, traffic management, stress, lone working, etc.
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8. Technological Risk – This is the risk associated with obsolescence of current
systems; cost of procuring best technology available, opportunity cost arising
from technological development.
9. Contractual Risk – This is the risk associated with the failure of contractors
to deliver devices or products to the agreed cost and specification.
10. Environmental Risk – This is the risk associated with changes in
environmental standards.
11. Physical Risk – This is the risk associated with the following: theft,
vandalism, arson, building related risks, storm, flood, damage to vehicles,
mobile plant and equipment.
12. Operational Risk – This is the risk relating to existing operations – both
current delivery and building and maintaining.
2.3 TYPES OF INVESTMENT RISK
On a macro (large scale) level there are two main types of risks, these are systematic
risk and unsystematic risk (http://www.qwoter.com/college/understanding-the-
Risks/24.html).
Systematic risk is the risk that can not be reduced or predicted in any manner and it is
almost impossible to predict or protect an investment against it. Examples of this type
of risk include interest rate risk and government legislation (regulation) risk.
Unsystematic risk is the risk that is specific to assets features and can usually be
eliminated through a process called diversification. Examples of this type of risk
include employee strikes and management decision changes.
On a micro (small scale) level the types of risk include
(http://www.enoughwealth.com/2006/10/types-of-investment-risk.html):
1. Inflation Risk – This is the probability that money invested will decline in
real value due to inflation.
2. Principal Risk – This is the chance that the original investment will decline in
value or be lost entirely.
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3. Credit Risk – This is the probability that a borrower might default on
repayment obligation.
4. Market Risk – This is the likelihood that a broad investment market, such as
the bond or stock market, might decline in value.
5. Liquidity Risk – This is the possibility that a security or investment may not
be quickly sold or converted into cash when the need arises.
6. Business Risk – This is the risk of doing business in a particular industry or
environment.
7. Reinvestment Risk – This is the uncertainty that dividends and proceeds from
investment will not be reinvested, or cannot be reinvested at the same rate.
8. Exchange Rate Risk or Currency Risk – This is the variability in returns on
securities and investments caused by currency fluctuations.
9. Country Risk – This is the chance of loss of investment due to instability and
variability of a country's economy. It is also known as, political risk.
10. Valuation Risk – This is the chance that an investment is wrongly valued.
11. Timing Risk – This is the risk involved in the buying or selling of an
investment at an inappropriate time.
12. Forced Sale Risk – This is the chance that an investment is liquidated
involuntarily, e.g. takeover and for-closure.
2.4 RISK MANAGEMENT
Risk management is a structured approach to managing uncertainty related to a threat,
through a sequence of human activities including: risk assessment, strategies
development to manage it, and mitigation of risk using managerial resources
(www.wikipedia.org/wiki/Risk_management). Miller (1992) concurred with the
above definition but with semantic differences. In his words, risk management is a
logical process or approach that seeks to eliminate or at least minimize the level of
risk associated with a business operation. From the perspective of Hillson and
Webster (2005), risk management focuses on addressing uncertainties in a proactive
manner in order to minimize threats, maximize opportunities, and optimize
achievement of objectives.
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The above definitions are acceptable within risk management community. Peyton and
Bardzik (2008) shared the same definitions but with scope to real estate. Risk
management involves all means available to a risk management entity (person, staff
or organization) in the control and mitigation of risk. For instance, traded financial
instruments are used in financial risk management. The objective of risk management
is to reduce different risks related to a pre-selected domain to an acceptable level. The
strategies in risk management; include transferring the risk to another party, avoiding
the risk, reducing the negative effect of the risk, and accepting some or all of the
consequences of a particular risk.
2.4.1 RISK MANAGEMENT PROCESS
A review of steps in risk management process shows similarity though several writers
commented from different perspectives. Hillson and Webster (2005), categorized risk
management process into the following steps; identification of risks, assessment of
probability of the risk occurring, assessment of potential impact should the risk occur,
and, deciding how to respond to assessed risks.
In view of the noticeable similarities arising from different perspectives, risk
management process is comprehensively deduced into the following steps
(www.wikipedia.org/wiki/Risk_management):
A. Establishing the Context
B. Risk Identification
C. Risk Assessment
D. Risk Treatment
E. Creating Risk Management Plan
F. Implementation of the Plan
G. Review and Evaluation of the Plan
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A. ESTABLISHING THE CONTEXT
This involves:
1. Identification of risk in a selected domain of interest.
2. Planning the remainder of the process.
3. Mapping out the following:
a. the social scope of risk management
b. the identity and objectives of stakeholders
c. the basis upon which risks will be evaluated.
4. Defining a framework for the activity and an agenda for identification.
5. Developing an analysis of risks involved in the process.
6. Mitigation of risks using available technological, human and organizational
resources.
B. RISK IDENTIFICATION
After establishing the context, the next step in the process of managing risk is to
identify potential risks. Hence, risk identification can start with the source of
problems, or with the problem itself. When either source or problem is known, the
events that a source may trigger or the events that can lead to a problem can be
investigated.
C. RISK ASSESSMENT
Once risks have been identified, they must then be assessed as to their potential
severity of loss and to the probability of occurrence. These quantities can be either
simple to measure, in the case of the value of a lost building, or impossible to know in
the case of the probability of an unlikely event occurring. Therefore, in the assessment
process it is critical to make the best educated guesses possible in order to properly
prioritize the implementation of the risk management plan.
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D. RISK TREATMENT
Once risks have been identified and assessed, all techniques to manage the risk fall
into one or more of these four major categories (Dorfman, 2007, cited 28th
May, 2008,
from http://en.wikipedia.org/wiki/Risk_management):
1. Avoidance (elimination)
2. Reduction (mitigation)
3. Retention (acceptance)
4. Transfer (buying insurance)
The above four categories is also referred to as, ACAT, for Avoid, Control, Accept,
and Transfer.
Risk avoidance entails non performance of an activity that could carry risk. An
example is the decision not to buy a property or business in order not to incur the
liability that comes with it.
Risk reduction involves methods that reduce the severity of the loss or the likelihood
of the loss from occurring. Examples include sprinklers designed to put out a fire to
reduce the risk of loss by fire. When sprinklers are used to put off fire minimal loss is
incurred by the soaking of the goods.
Risk retention involves accepting the loss when it occurs. It is a viable strategy for
small risks where the cost of insuring against the risk would be greater over time than
the total losses sustained. All risks that are not avoided or transferred are retained by
default.
Risk transfer involves causing another party to accept the risk, typically by contract or
by hedging. Insurance is one type of risk transfer that uses contracts. Other times it
may involve contract language that transfers a risk to another party without the
payment of an insurance premium.
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E. CREATING RISK MANAGEMENT PLAN
After risk treatment, risk management plan is created. This is achieved by selecting
appropriate controls or countermeasures to measure each risk. It is a plan that
documents the decisions about how each of the identified risks should be handled.
Risk management plan should propose applicable and effective security controls for
managing risks. A good risk management plan should contain a schedule for control,
implementation, and, responsible persons for those actions. In essence, it entails the
selection of security controls, which should be documented in a statement of
applicability, that identifies which particular control objectives and controls from the
standard have been selected, and why.
F. IMPLEMENTATION
Implementation of risk management plan entails adhering strictly to the planned
methods for mitigating the effects of risk. They include purchase of insurance policies
for the risks that have been decided to be transferred to an insurer, avoid all risks that
can be avoided without sacrificing the entity's goals, reduce others, and retain the rest.
G. REVIEW AND EVALUATION OF THE PLAN
Initial risk management plans will never be perfect. Practice, experience, and actual
loss results will necessitate changes in the plan and contribute information to allow
possible different decisions to be made in dealing with the risks being faced.
Risk analysis results and management plans should be updated periodically. There are
two primary reasons for this. Firstly, to evaluate whether the previously selected
security controls are still applicable and effective. Secondly, to evaluate the possible
risk level changes in the business environment.
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2.5 INVESTMENT RISK MEASUREMENT
Katrina Lamb in 2010 defined investment risk as a deviation from an expected
outcome of an asset. The deviation could be positive or negative. When the deviation
is positive there is capital gain and when negative there is capital loss. There are
various methods of measuring investment risks. Johnson (2010) enumerated them to
include:
1. Value at Risk (VAR)
2. Sharpe Ratio
3. Modified Sharpe Ratio
4. Standard Deviation
5. Shortfall
6. Ulcer Index
7. Information Ratio
8. Intra-Portfolio Correlation
9. Drawdown
Lamb (2010) enumerated more to include:
10. Volatility
11. Beta
12. Alpha
13. R-squared.
These methods of investment risk measurement are all essential but the predominantly
used ones were briefly discussed below.
Value at Risk (VAR) calculates the maximum loss expected (or worst case scenario)
on an investment, over a given time period and given a specified degree of confidence
(Harper, 2010). Haiying and Xiangpeng (2009) supported this definition but restricted
it to urban real estate.
30
Standard deviation could be defined as a measure of the spread or dispersion of a set
of data around its mean. Balzer (1994) asserted that “standard deviation is a statistical
measure of variability. When applied to investment returns, it is a measure of the
volatility of those returns”. Lamb (2010) identified standard deviation as one of the
most commonly used absolute risk metrics. However, Johnson (2010) said that it is
deficient because it does not differentiate pro-position and counter-position volatility.
The deficiency of standard deviation as a risk measure was confirmed by Balzer
(1994) where he stated that standard deviation is applied only in situations where all
things being equal. He however, posited that all things are not usually equal in
investment. The larger the standard deviation, the more uncertain the outcome.
Volatility may be described as the range of movement (or price fluctuation) from the
expected level of return. For example, the more a stock goes up and down in price, the
more volatile that stock is. It could also be described as a statistical measure of the
dispersion of return for a given security or market index
(http://www.investopedia.com/terms/v/volatility.asp). Harper (2010) and Hannon
(2009) shared the view that volatility is the most popular and traditional measure of
risk. They further posited that the main problem with volatility is that it does not care
about the direction of an investment’s movement unlike the Value at Risk method.
Beta is a measure of the volatility of systematic risk, of a security or a portfolio in
comparison to the market as a whole (McClure, 2010). Alles (1993) agreed to this
definition but with a modification. His modification is that beta is used to measure
non diversifiable systematic risk. One of the differences between standard deviation
and beta is that the former measures both systematic and unsystematic risk while the
later only measures systematic risk. It is important to note that beta measures a
security's volatility, or fluctuations in price, relative to a benchmark, the market
portfolio of all stocks. Stocks with high Betas are high risk securities.
Alpha is a measure of performance on a risk-adjusted basis. Alpha takes the volatility
(price risk) of a mutual fund and compares its risk-adjusted performance to a
benchmark index. The excess return of the fund relative to the return of the
benchmark index is a fund's alpha (http://www.investopedia.com/terms/a/alpha.asp).
Lamb (2010) distinguished between alpha and beta by referring alpha to mean active
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risk and beta passive risk. An investment with positive alpha is selected while the one
with negative alpha is rejected.
Drawdown according to Lamb (2010) is a risk measure oriented to behavioral
tendencies. It refers to any period during which an asset's return is negative relative to
a previous high mark. In measuring drawdown, we attempt to address three things: the
magnitude of each negative period (how bad), the duration of each (how long) and the
frequency (how many times).
Other remaining methods have strengths and drawbacks, though, all successfully
measure risk. It is suggested that a combination of methods in investment decision-
making process will permit a more comprehensive analysis of risk. Below is an
overview of the strengths and drawbacks of other methods as put forward by Johnson
(2010). For investment capital attached to future outlays such as pension obligations
and retirement account distributions, Shortfall should be included in the risk
assessment tools mix. For those asset managers who are not tethered to an Index,
Information Ratio is of little use and is clearly inferior at measuring absolute risk.
Furthermore, for all but the most stoic of investment managers, Standard Deviation
and Sharpe Ratio are deficient because they do not differentiate pro-position and
counter-position volatility.
2.6 MEANING OF REAL ESTATE
Oxford Advanced Learners Dictionary of Current English (2001) defined Real Estate
as, “property in the form of land or buildings”. Wikipedia, the free encyclopedia
(www.en.wikipedia.org/wiki/Realestate) posits that, “Real estate is a legal term (in
some jurisdictions, notably in the USA, United Kingdom, Canada, and Australia) that
encompasses land along with anything permanently affixed to the land, such as
buildings, specifically property that is stationary, or fixed in location”.
Wikipedia brought to the fore the issue of permanency to fixtures attached to land in
the definition of real estate. Going by this definition, economic trees which are
permanent fixtures to land are considered as part of real estate, while easily removable
fixtures such as furniture, fittings, plants and machinery are excluded.
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Nwanekezie (1996) described Estate as, “… any interest in landed property whether
leasehold, freehold, right of occupancy etc…” This definition raised the issue of
interest which is usually attached to real estate. Interest in real estate confers rights
and privileges of various kinds e.g. right of use.
The above definitions of real estate lacked the traditional definition of land which is,
Cuius est solum eius est usque ad coelum et ad inferos (the owner of the land owns
everything up to the sky and down to the centre of the earth). Harvey (2004) argued in
favour of the inclusion of the traditional definition of land when he asserted that, real
estate should include the air above and the ground below the soil. This view is shared
by, The Complete Real Estate Encyclopedia (2007), where real estate is stated to
mean, “land and everything above and below the soil”.
Real estate is considered synonymous with real property (also sometimes called –
realty). Real property or estate must be a substantial tangible object of value
conferring to the holder intangible attributes such as ownership rights. This view is
shared by Ifediora (1993) when he defined real property as, the physical land and
appurtenances including structures affixed thereto and its chief characteristics are
immobility and tangibility. Real property comprises of land and all things of a
permanent and substantial nature affixed thereto, whether by nature or by the hand of
man. It is a composite term embracing the tangible or physical element of land and the
intangible attributes, which are rights of ownership.
Real estate encompasses of land and anything permanently affixed to land. It could be
buildings, economic trees, mineral resources etc. The “real” in real property is derived
from the Latin word, “res/rei” meaning “thing” as distinguished from a person.
2.7 REAL ESTATE INVESTMENT
Real estate investment could be described as the parting of money to buy land,
buildings or fixtures permanently affixed to land with the hope of making future
income and profits through rental income or capital gain. Wilson, Fabozzi and Gordon
(2003) agreed to this view when they asserted that, real estate investment involves the
33
commitment of funds to property with an aim to generate income through rental or
lease and to achieve capital appreciation. Real estate investment is of different
categories. Ogbuefi in 2002 categorized them into five namely:
1. Commercial real estate investment
2. Residential real estate investment
3. Recreational real estate investment
4. Agricultural real estate investment
5. Industrial real estate investment
2.8 REAL ESTATE INVESTMENT RISK
Huffman (2002, cited in Huffman, 2004) identified several types of risks in real estate
investment to be the following:
1. Financing risk
2. Interest rate risk
3. Physical risk
4. Regulatory risk
5. Valuation risk
6. Mortgage default risk
7. Property management risk
8. Lease term risk
9. Timing risk
10. Liquidity risk
11. Reversion risk
Financing risk entails the uncertainty in securing the finance necessary to develop or
acquire a real estate investment. It also entails the uncertainty which might lead to the
withdrawal by the financing authority from further funding of the real estate
development project. When this scenario suffices, the aim of investing may be
dashed. For instance, a developer who targeted 8 months of building period in order to
capture the period of property boom will be disappointed if as a result of financing
problem the project is delayed.
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The risk in high interest rate could discourage an investor from going into investing
in real estate. When this situation suffices, the anticipated gain from investing is
dashed. Also changes in interest rate during the course of investing and repayment of
acquired loan for investment could lead to losses.
Physical risks are encountered during construction of the real estate project. It relates
to risks such as design weakness, structural defects, poor site and locational
conditions which might lead to the possible collapse of the building and loss.
Regulation risk is exerted on real estate investment by statutory bodies such as the
government. The government achieves this through the use of planning
regulation/restriction and power of eminent domain. For instance, the government can
use the power of eminent domain to compulsorily acquire a real estate. Furthermore, a
real estate can be affected by changes in planning policy such as new road proposal.
Valuation risk entails the loss incurred when a real estate investment is overvalued or
undervalued. Risk of overvaluation causes losses to the buyer while risk of
undervaluation causes losses to the seller.
Mortgage default risk entails the loss of a real estate investment involuntarily as a
result of default in mortgage repayment. This leads to for-closure of the mortgaged
property and its forced sale.
Property management risk is the loss incurred on real estate investment as a result
of inefficiency in its management. Inefficient management could lead to shortfall in
rent collection. It could lead to the deterioration in the physical fabric of the real estate
and its resultant loss of value.
Lease term risk is the loss incurred as a result of the length of a lease term. This loss
is particularly encountered in long leases where the tenant enjoys profit rent. When a
tenant enjoys profit rent the landlord makes losses because he is not receiving rent
based on full value.
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Timing risk affects real estate investment. This suffices when a real estate is bought
or sold at an inappropriate time.
Liquidity risk entails the probability that an investment may not easily be converted
into cash when there is need. This affects real estate investment. As a result of its
magnitude, cost and value, getting a buyer when it is to be disposed off is not easily
achieved.
Reversion risk in real estate is the uncertainty on the state of repair condition of a
leased property after reversion to the freeholder. If the lease holder caused serious
deterioration on the fabric of the estate and hand it over to the landlord without
repairs, the value of the property will decline.
2.9 REAL ESTATE INVESTMENT RISK MEASUREMENT
Real estate investment risk measurement entails the use of viability appraisal
techniques to ascertain the profitability and the extent of risk surrounding a proposed
real estate investment decision. Greer and Kolbe (2003) categorized real estate
investment analysis techniques into – traditional and modern methods.
Modern method is the discounted cash flow techniques of Net Present Value (NPV)
and Internal Rate of Return (IRR) while traditional method includes others which are
enumerated below:
1. Ratio Analysis
a. Income multipliers
i. Gross income multiplier
ii. Net income multiplier
b. Financial ratios
i. Operating ratio
ii. Breakeven ratio
iii. Debt coverage ratio
2. Overall Capitalization Rate
3. Equity Dividend Rate
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4. Brokers Rate of Return
5. Pay Back Period.
6. Profitability Index
7. Weighted Annual Average
8. Net Terminal Value.
Ogbuefi (2002) enumerated more to include:
9. Cut-off Period
10. Average Rate of Return
11. Simple Rate of Return
12. Time Weighted Rate of Return
13. Money Weighted Rate of Return.
It is worthy to note other methods of real estate investment appraisal and analysis
techniques such as; cost benefit analysis, residual valuation and break even valuation
(alternatively called – cost volume profit appraisal).
2.10 THE MEANING OF SHOPPING MALL
A shopping mall or shopping center is a building or set of buildings that contain a
variety of retail units, with interconnecting walkways enabling visitors to easily walk
from unit to unit (www.en.wikipedia.org/wiki/Shopping_mall).
Cohen (1996) gave a similar definition of shopping mall to the one above with a slight
difference which is that, the interconnecting walkways may or may not be enclosed.
Voyce (2006) said that the term ‘shopping mall’ is predominantly used in North
America. In the United Kingdom and Australia they are called shopping centres or
shopping arcades
Goss (1993) brought a slight but arguably difference between shopping mall and
shopping centre. He said that, shopping mall refers to enclosed retail structures while
shopping centre refers to open air retail complexes.
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The research submits that, differences in terms depend on geographical jurisdiction.
In Nigeria for instance, shopping mall is generally referred to as, ‘Plaza’. They are
usually large commercial buildings housing retail shops and corporate offices in the
top-most floor (depending on the height of the building). They are predominantly
found in big Nigerian cities like; Abuja, Lagos, Port Harcourt and Kano.
Downs (1970) brought to the fore the recreational and entertainment aspect of a
shopping mall. He argued that, a good plaza should have a movie house, restaurants
and must offer a range of entertainments besides a large number of shops in an air-
conditioned enclosed area.
A shopping mall is a modern version of the traditional market place where a
collection of shops all adjoin a pedestrian area, or an exclusively pedestrian street,
that allows shoppers to walk without interference from vehicle traffic. A shopping
mall should have a convenient parking area.
2.10.1 EARLY SHOPPING MALLS
Isfahan's Grand Bazaar, which is largely covered, dates from the 10th century A.D.
The 10 kilometer long covered Tehran's Grand Bazaar also has a long history. The
Grand Bazaar of Istanbul was built in 15th century and is still one of the largest
covered markets in the world with more than 58 streets and 4000 shops.
Gostiny Dvor in Saint Petersburg, which opened in 1785 and should probably be
regarded as one of the first purposely-built shopping malls in the world, as it consisted
of more than 100 shops covering an area of over 53,000 m².
The Oxford Covered Market in Oxford, England was opened in 1774 and still runs
today.
The Burlington Arcade in London was opened in 1819. The Arcade in Providence,
Rhode Island introduced the concept to the United States in 1828. The Galleria
Vittorio Emanuele II in Milan, Italy followed in the 1860s and is closer to large
modern malls in spaciousness. Other large cities created arcades and shopping centres
38
in the late 19th century and early 20th century, including the Cleveland Arcade and
Moscow's GUM in 1890. Early shopping centers designed for the automobile include
Market Square, Lake Forest, Illinois (1916) and Country Club Plaza, Kansas City,
Missouri (1924).
An early indoor mall in the United States was the Lake View Store at Morgan Park,
Duluth, Minnesota, which was built in 1915 and held its grand opening on July 20,
1916. The architect was Dean & Dean from Chicago and the building contractor was
George H. Lounsberry from Duluth. The building is two-stories with a full basement
and shops were originally located on all three levels. All of the stores were located
within the interior of the mall with some shops being accessible from both inside and
out.
However, the concept of the fully-enclosed shopping mall did not appear until the
1950s. The idea was pioneered by the Austrian-born architect and American
immigrant Victor Gruen. This new generation, that were eventually called malls,
included Northgate Mall, built in north Seattle, Washington, USA in 1950, Victor
Gruen's Northland Shopping Center built near Detroit, Michigan, USA in 1954, and
Gulfgate Mall in Houston were all originally open-air pedestrian shopping centers that
later were enclosed as malls (www.en.wikipedia.org/wiki/Shopping_mall).
2.10.2 LARGEST SHOPPING MALLS
Berjaya Times Square in Kuala Lumpur, Malaysia, is advertised at 700,000 m2.
Beijing's (Peking) Golden Resources Mall, which opened in October 2004, is the
world's second largest mall, at 600,000 m2. SM City North EDSA in the Philippines,
which opened in November 1985, is the world's third largest at 460,000 m2 of gross
floor area, and SM Mall of Asia in the Philippines, opened in May 2006, is the world's
fourth largest at 386,000 m2 of gross floor area
(www.en.wikipedia.org/wiki/Shopping_mall).
Previously, the title of the largest enclosed shopping mall was with the West
Edmonton Mall in Edmonton, Alberta, Canada from 1986–2004. It is now the fifth
largest mall. Two of the largest malls are in China, South China Mall and Jin Yuan.
39
Dubai Mall is the largest mall in Middle East and Europe, currently ranked seventh in
the world.
However, Centre Commercial Al Qods" in Algiers, is the largest shopping mall in
Africa (www.en.wikipedia.org/wiki/Shopping_mall).
2.11 PROBLEMS OF PROPERTY MANAGEMENT
1. Difficulty in rent collection or default in rent payment.
2. Default in the payment of other fees like the service charge in multi-tenanted
accommodation.
3. Litigation between tenants and management on property management issues.
4. Eviction conflicts arising from recovery of possession of premises.
5. Uncoperative attitudes of tenants in the enforcement of lease convenants.
6. Inflation as it affects repairs and maintenance cost.
7. Refusal to honour repair obligation by tenants and landlords.
8. Short fall in rental income as a result of several factors such as rent control
edict leads to the unavailability of funds to carryout out routine maintenance
and refurbishment.
2.12 THE FEDERAL CAPITAL TERRITORY (F.C.T) ABUJA.
Historical Development
Changing a nation's capital to a new place is an issue that is considered as part of an
evolutionary life of a nation. Countries like Brazil, Australia and Cote D'lvoire have,
for instance, thought it necessary to have their capitals shifted to Brasilia. Canberra
and Yamoussoukuro respectively, in order to address the apparent inadequacies of the
traditional capital cities of the respective countries.
In Nigeria, many had for long observed that Lagos as a federal capital suffered several
drawbacks which made its continued existence as Nigeria's capital untenable. Reasons
for this include: inadequate land for expansion, urban crises, lack of proper
cosmopolitan orientation, lack of locational centrality and urban congestion. It was
40
however; only in 1975 that the Federal Government thought it timely enough to
initiate a process towards finding a lasting solution to these problems.
Precisely on 9th August, 1975, the then Head of State, General Murtala Mohammed,
set up a panel to examine the issue of a new federal capital for Nigeria. The seven
man panel chaired by Dr. Akinola Aguda was set up and after collecting memoranda
and extensive deliberations, submitted a unanimous recommendation to the
Government for siting the new federal capital at Abuja. Less than two months after its
submission, the Panel's recommendation was accepted by the Federal Government,
formally accepting Abuja as the new Federal Capital.
On 3rd February 1976, General Mohammed made a historic national broadcast on the
issue and on 5th February, 1976, Decree No. 6 of 1976 was promulgated by the
Federal Government establishing the Federal Capital Development Authority
(FCDA). The Decree charged the FCDA with the responsibility for planning,
designing and developing the Federal Capital Territory (FCT).
The decree went ahead to vest the ownership, control and governance of the territory
in the hands of the Federal Government. From that period, construction of the new
federal capital began in earnest and since then successive administrations have placed
very high priority on making Abuja a reality. In fact, Alhaji Shehu Shagari who ruled
the country from 1979 to 1983 made this a fundamental component of his campaign
promises, which he however did not fulfill.
It was General lbrahim Babangida, Nigeria's President from 1985 to 1993, that
formally and finally moved the seat of Government from Lagos to Abuja on 12th
December 1991. Abuja (FCT) covers an area of 8,000 sq. km. This makes it more
than twice the area of Lagos State. According to the Aguda panel, this vast area was
considered necessary in order to allow room not just for the capital city but also for a
city region that will provide most of the needs of the city, including water, forestry,
industrial, agricultural, open spaces, defence, air transport and other needs.
As at now, the Federal Capital City (FCC) is planned to cover an area of about 250 sq.
kms, while the rest of the Territory of the city region covers about 7,750 sq. kms. The
41
entire Territory itself was carved out from three states, namely, Niger State which
contributed seventynine percent of the land area and seventyone percent of the
indigenous population, Nassarawa State which contributed sixteen percent and
twentyone percent respectively, and Kogi State which made a contribution of five
percent and eight percent respectively. Until the creation of the FCT, the area was
among the least developed in the country, lacking any form of developmental amenity
and infra structure. Things are now changing at a pace hardly matched by any other
part of the country (www.onlinenigeria.com/links/abujaadv.asp).
Administrative Areas
Prior to 1996, the FCT had four area councils, namely Abaji, Gwagwalada, Kuje and
Municipal. In 1996, two more area councils were created, namely Kwali (from
Gwagwalada) and Bwari (from Municipal area Council). Each area council is now
headed by an elected Executive Chairman
(www.onlinenigeria.com/links/abujaadv.asp). According to the population figures of
2006 census, FCT Abuja has a population of 778,567
(www.en.wikipedia.org/wiki/Abuja).
Federal Capital City (F.C.C) Abuja
Federal Capital City, Abuja, is an integral part of the Federal Capital Territory, Abuja.
It is the section designated by the master plan to be the urban centre while the rest of
the territory will remain rural, region or countryside. The Federal Capital City (FCC)
is designated to cover an area of about 250 square kilometers out of the 8,000 square
kilometers of the FCT. The FCC is divided into phases of development. There are five
districts in Phase 1; they include Garki, Wuse, Maitama, Asokoro and Central Area
districts. There are also five districts in phase 2; they are Kado, Durumi, Gudu, Utako
and Jabi. Phase 3 Districts are: Mabuchi, Katampe, Wuye and Gwarimpa. There are
also five suburban districts, which are Nyanya, Karu, Gwagwalada, Kubwa, and
Jukwoyi. Along the airport road are clusters of satellite settlements these are: Lugbe,
Chika, Kuchigworo and Pyakassa. Other satellite settlements are Idu (the main
industrial zone), Mpape, Karimu, Gwagwa and Dei-Dei (housing the international
livestock market and also international building materials market).
42
CHAPTER THREE
RESEARCH METHODLOGY
3.1 STUDY AREA
The study area for this research is the Federal Capital Territory (FCT) Abuja. The
focus is on commercial shopping malls popularly known as “Plazas”. The Plazas are
located in the Federal Capital City (FCC). The section of the FCC in focus is the
phase 1 (i.e. the already developed districts) comprising of; Garki, Wuse, Maitama,
Asokoro, and Central Area districts (see map of FCC phase 1 in appendix v, page 92).
3.2 SOURCES OF DATA FOR THE RESEARCH
Data for this research was collected from two major sources namely, primary source
and secondary source.
(A) PRIMARY SOURCE
Data obtained from primary source include; information from administered
questionnaires, formal interviews and personal observation of the researcher.
(B) SECONDARY SOURCE
Data obtained from secondary source include; information from text books, journals,
seminar papers, internet and other unpublished materials.
3.3 TYPES OF QUESTIONNAIRE
Three types of questionnaires were prepared and used for this research. They are
categorized into; preliminary questionnaire, type A questionnaire and type B
questionnaire.
43
3.3.1 PRELIMINARY QUESTIONNAIRE
Preliminary questionnaires were administered on the senior management of all the
shopping malls in FCC phase 1. Each preliminary questionnaire was administered on
each shopping mall. They are 46 in number of which they were all completed and
returned.
3.3.2 TYPE A QUESTIONNAIRE
Based on issues raised in the preliminary questionnaire, type A and type B
questionnaires were designed for further investigation. Type A questionnaires were
administered on the management of the plazas. Each type A questionnaire was
administered on the estate officer of every shopping mall in FCC phase 1. They are 46
in number of which 40 were completed and returned representing 86.96%.
3.3.3 TYPE B QUESTIONNAIRE
Type B questionnaires were administered on the tenants/occupants of the 46 shopping
malls in FCC phase 1. In every shopping mall, two tenants randomly selected were
sampled bringing the total number to 92 administered questionnaires. Out of this
number, a total of 86 questionnaires were completed and returned representing
93.48%.
3.4 SAMPLE POPULATION
The total number of shopping malls, plazas, complexes and centres, etc, in FCC phase
1 is approximately 46 with more rapidly springing up. This number is manageable by
the research and thus, formed the sample population. 12 shopping malls were sampled
in Garki district, 12 sampled in Wuse district and 12 sampled in Central area district.
5 shopping malls were sampled in Maitama district and 5 sampled in Asokoro district.
There are few shopping malls in Maitama and Asokoro districts due to their high-
brow status.
44
3.5 SAMPLING METHOD OR PROCEDURE
A reasonable percentage of the data were collected through the questionnaire.
Preliminary questionnaires were administered on the senior management of the 46
shopping malls/plazas. Preliminary questionnaire comprises of 9 subjective and
objective questions. Answers to the objective questions were given by ticking the
selected option, while, answers to the subjective questions were filled-in by the
respondents.
Based on issues raised in the preliminary questionnaire, type A and type B
questionnaires were designed for further investigation. Type A questionnaires were
administered on the management of the 46 shopping malls/plazas. The estate officer
or manager in charge supplied the answers. Type A questionnaire comprises of 50
subjective and objective questions. Answers to the objective questions were given by
ticking the selected option, while, answers to the subjective questions were filled-in
by the respondents.
Type B questionnaires were administered on the tenants/occupants of the 46 shopping
malls/plazas. Type B questionnaire comprises of 39 subjective and objective
questions. Answers to the objective questions were given by ticking the selected
option, while, answers to the subjective questions were filled-in by the respondents.
The 18th
question in the type A questionnaire and the 13th
question in the type B
questionnaire provided answers which were used to test the research hypothesis.
45
3.6 DATA PRESENTATION AND ANALYSIS TECHNIQUES
Data collected for this research were presented and analyzed in tabulated form (where
necessary) using simple statistical techniques namely, frequency distribution and
percentage count. The report on findings was presented in both analytical and
descriptive forms. Also, Chi–square (X2) with the formulae below stated was used to
test the hypothesis of the research.
X2 =
Where: X2 = Chi-square
OF = Observed frequency
EF = Expected frequency
∑ = Summation.
3.7 ANALYSIS OF RETURNED QUESTIONNAIRES
The analyses of returned preliminary questionnaires, returned type A questionnaires
and returned type B questionnaires sampled on the respondents are presented in the
tables below.
Table 3.1: Analysis of Returned Preliminary Questionnaire.
No. of Questionnaires No. Returned Percentage (%)
46 46 100
Source: Field survey 2008.
Table 3.1 above shows that a total of 46 preliminary questionnaires were distributed
for sampling which were all completed and returned. Preliminary questionnaires were
administered on the senior management of the shopping malls/plazas.
∑
(OF – EF)2
EF
46
Table 3.2: Analysis of Returned Type A Questionnaire.
No. of Questionnaires No. Returned Percentage (%)
46 40 86.96
Source: Field survey 2008.
Table 3.2 above shows that out of a total 46 type A questionnaires distributed for
sampling, 40 were completed and returned. This number represents 86.96% of the
total questionnaires distributed. Type A questionnaires were administered on the
management of the plazas where the estate officer or manager in-charge responded.
Table 3.3: Analysis of Returned Type B Questionnaire.
No. of Questionnaires No. Returned Percentage (%)
92 86 93.48
Source: Field survey 2008.
Table 3.3 above shows that out of a total 92 type B questionnaires distributed for
sampling, 86 were completed and returned. This number represents 93.48% of the
total questionnaires distributed. Type B questionnaires were administered on the
tenants/occupants of the plazas.
3.8 RELIABILITY TEST
The three sets of questionnaire used for this research were subjected to a reliability
test to ensure consistency in responses. In doing so, each of the three sets was
sampled on respective respondents on two different occasions. When the two
completed copies by each respondent were compared, it showed a noticeable high
level of consistency in responses, thus making the data reliable for the research.
47
CHAPTER FOUR
ANALYSIS, PRESENTATION AND DISCUSSION OF FINDINGS
4.1 INTRODUCTION
Analysis and discussion of research findings took place in this chapter and focused on
the key areas of the research guided by the aim, objectives and hypothesis. The key
areas include the encountered problems of management, the causes of the problems
and their effects on the flow of rent. Analyses of findings were presented in tabulated
form using frequency distribution and percentage count, and, where necessary they
were enumerated and extensively discussed. Analysis of preliminary questionnaire
took place first followed by a simultaneous analysis of type A and type B
questionnaires.
4.2 ANALYSIS OF PRELIMINARY QUESTIONNAIRE
Preliminary questionnaire provided the platform to the discovery of those problems of
management hindering returns on investment as a result of shortfall in rental income.
It was sampled on the senior management of the 46 shopping malls in FCC phase 1. It
contained only 9 questions of which the very essential ones were analyzed below.
Question 3: Location of shopping mall managed by the respondent:
Table 4.1: Analysis of Locational distribution of Shopping Malls Sampled.
Option Frequency Percentage
Garki district 12 26.09
Wuse district 12 26.09
Central Area district 12 26.09
Asokoro district 5 10.87
Maitama district 5 10.87
Total 46 100
Source: Field survey 2008.
48
The analysis in table 4.1 is the response to question 3 above. It shows the pattern of
distributing the preliminary questionnaire. 12 questionnaires were distributed to Garki
district, 12 to Wuse district and 12 to Central Area district. While 5 questionnaires
were distributed to Asokoro district and 5 to Maitama district. The reason for having
less number of questionnaires to Asokoro and Maitama districts is because few
shopping malls are situated there due to their high-brow status.
Question 7: Do you accept the view that the problems of management
causes shortfall of rental income as a result of default in rent
payment by tenants?
Table 4.2: Analysis of the Effect of Management Problems on Generation of
Rent.
Option Frequency Percentage
Yes 44 95.65
No 2 4.35
Total 46 100
Source: Field survey 2008.
The analysis in table 4.2 is the response to question 7 above. It shows that out of the
46 selected senior management personnel sampled 44 believe that the problems of
management causes shortfall of rental income as a result of default in rent payment.
This figure represents 95.65% of affirmation to the question.
49
Question 8: If yes to question 7 above, do you believe that, shortfall of rent
as a result of default in payment hinders returns on investment
and could be considered as the risk in the investment portfolio?
Table 4.3: Analysis of the Effect of Shortfall of Rent on Returns to
Investment.
Option Frequency Percentage
Yes 44 100
No 0 0
Total 44 100
Source: Field survey 2008.
Table 4.3 shows 44 respondents giving affirmative answer to question 8 above.
Question 9: If yes to question 7 and 8 above, kindly enumerate those
problems of management that you think causes default in rent
payment?
In response to question 9 several problems of management were enumerated by the
respondents. They were summarized to 11 points which are enlisted below:
1. Litigation between tenants and management,
2. Incessant increases of rent,
3. Eviction conflicts arising from recovery of possession,
4. Shrewd attitude of some tenants,
5. Inability to honour repairs and maintenance obligation by both the
landlords and tenants,
6. Insecurity of goods and properties in the plazas,
7. Problem of subletting of accommodation,
8. Tenancy commencement date problem,
9. Inadequate parking space in the plazas,
50
10. Lack of transparency and inefficiency in the use and administration of
service charge fund,
11. Sabotage, impropriety and shrewd attitude of some management staff.
These problems of management as discovered from the preliminary questionnaire
formed the basis in formulating the type A and type B questionnaires which were
designed for further investigation.
4.3 ANALYSIS OF TYPE A AND TYPE B QUESTIONNAIRES
Analysis of data from type A and type B questionnaires were done simultaneously
with the intent of showing corroborative or divergent views to each other. Where the
views corroborates the responses will be accepted as correct. However, if the views
are divergent a further analysis by the research based on extensive oral interviews will
assert the correct one.
4.3.1 LITIGATION BETWEEN TENANTS AND MANAGEMENT
Litigation between tenants and management was discovered to be one of the
managerial problems that lead to default in rent payment by tenants. This problem
was discovered to exist in over half of the plazas sampled. In each of them there were
abundant cases of litigations as shown in the following analyses below:
Question 26 type A: Are there incidences of litigation in the course of management?
Table 4.4: Analysis of the Views of the Management on the Existence of
Litigation in the Course of Management.
Option Frequency Percentage
Yes 28 70
No 12 30
Total 40 100
Source: Field survey 2008.
51
Table 4.4 shows that 70% of the plazas in FCC 1 have incidences of litigation
between the tenants and management while 30% do not have.
Question 27 type A: If yes to question 26 above, to what extent are the litigations?
Table 4.5: Analysis of the Views of the Management on the Extent of
Litigation in the Course of Management.
Option Frequency Percentage
Negligible 5 17.86
Moderate 8 28.57
High 12 42.86
Excessively high 3 10.71
Total 28 100
Source: Field survey 2008.
Table 4.5 above shows abundant cases of litigations between tenants and
management. 17.86% of the respondents said that it is negligible, 28.57% said that it
is moderate, 42.86% said that it is high while 10.71% said that it is excessively high.
The views of the tenants/occupants while responding to question 35 in type B
questionnaire confirmed the existence of litigations between tenants and management.
This is thus analyzed below.
52
Question 35 type B: Have you encountered any litigation or court case with
the management since taking occupation in the plaza?
Table 4.6: Analysis of the Views of Occupants on the Existence of Litigation
and Court Cases in the Plazas.
Option Frequency Percentage
Yes 49 56.98
No 37 43.02
Total 86 100
Source: Field survey 2008.
Table 4.6 above shows that 56.98% of the occupants sampled responded affirmatively
that they have encountered litigation with the management of the plazas while 43.02%
responded negatively.
The issue on whether litigation and court cases hinder payment of rent or not are
analyzed below:
Question 36 type B: If yes to question 35 above, do you consider litigation
and court cases as a reason for not paying rent?
Table 4.7: Analysis of the Views of Occupants on Litigation and Court Cases
as a Reason for Rent Default.
Option Frequency Percentage
Yes 37 75.51
No 12 24.49
Total 49 100
Source: Field survey 2008.
From table 4.7 above 75.51% of the occupants said that litigation and court cases
prevents them from paying rent while 24.49% said that it does not.
53
From the views of the management, litigation and court cases prevents the payment of
rent. This was made evident while responding to question 29 in type A questionnaire
which is thus analyzed below:
Question 29 type A: Do you think that litigation and court cases cause rent
default by tenants?
Table 4.8: Analysis of the Views of the Management on Litigation and Court
Cases as a Reason for Rent Default.
Option Frequency Percentage
Yes 32 80
No 8 20
Total 40 100
Source: Field survey 2008.
Table 4.8 above shows 80% of the respondents accepting that litigation and court
cases causes rent default by tenants while 20% do not accept the view.
Litigation and court cases arise due to the inability to fulfill and respect several
provisions contained in the tenancy agreement by either or both parties. When a party
defaults any provision in the tenancy agreement the infringed party can resort to court
for remedy. In doing so there could be an injunction restraining payment of
subsequent rent until judgment is given in the substantive case. However, if the suit is
protracted the longer there will be shortfall of rent.
4.3.2 INCESSANT INCREASES OF RENT
Incessant increases of rent by the management were discovered to be one of the
problems hindering rent recovery from the tenants. This discovery was made evident
based on answers to the questionnaires by the respondents as shown in the analyses
below:
54
Question 13 type A Is rent subject to review periodically?
Table 4.9: Analysis of the views of the Management on Periodic Rent Review.
Option Frequency Percentage
Yes 40 100
No 0 0
Total 40 100
Source: Field survey 2008.
From table 4.9 above, the views of the management shows that rent is reviewed
periodically, where all the 40 respondents answered in the affirmative to the existence
of periodic rent review.
The issue of incessant rent increases is evident based on the analysis below:
Question 15 type A: If rent is subject to review, at what interval is the review
undertaken?
Table 4.10: Analysis of the Views of the Management on the Interval of Rent
Review.
Option Frequency Percentage
Annually 15 37.5
Biannually 21 52.5
Interval of 3 years 4 10
Others 0 0
Total 40 100
Source: Field survey 2008.
55
Table 4.10 shows 37.5% of the respondents accepting annual rent review; 52.5%,
biannual rent review; 10%, rent review after an interval of 3 years; and, non to other
specification.
Question 15 type B: How periodic has your rent been reviewed?
Table 4.11: Analysis of the Views of Occupants on the Interval of Rent Review.
Option Frequency Percentage
Annually 34 39.53
Biannually 41 47.67
Interval of 3 years 11 12.79
Others 0 0
Total 86 100
Source: Field survey 2008.
From table 4.11 above, 39.53% of the tenants said that rent is reviewed annually,
47.67% said that it is reviewed biannually, 12.79% said that it is reviewed after an
interval of 3 years, and, non to other specification.
Based on the analyses above, the research concludes that rent is reviewed biannually
in most of the plazas sampled. The tenants consider biannual increases as incessant
while the management considers it as rational and justifiable. It was further
discovered that in most of the plazas, biannual increase of rent is not a formal
policy/procedural framework. Rather, it is been applied informally to avoid the
embarrassment of been accused of applying regular annual rent increases. This
justifies the accusation by a reasonable number of tenants that the management
practices silent and unnoticeable regular annual rent increases. They posit that such
application stands when it is unnoticed by the tenants.
When rent increases are incessant the tenants are angered. They feel exploited and
extorted. Some of them become stubborn and refuse to pay rent due to this, while
56
some seek solace at the court. When this situation suffices and further protracted rent
payment is made difficult.
4.3.3 EVICTION CONFLICTS ARISING FROM RECOVERY OF
POSSESSION
Eviction conflicts arising from attempts towards recovering vacant possession were
discovered as one of the problems of management. Eviction conflicts were also
discovered to be one of the factors causing shortfall in rent collection. These
discoveries were made evident based on answers to the questionnaire by the
respondents. In supplying answer to question 32 in type A questionnaire, the
management of the plazas responded affirmatively to the existence of eviction
conflicts. This is thus analyzed below:
Question 32 type A: Have you encountered conflicts arising from eviction
and recovery of possession attempts in the course of
management?
Table 4.12: Analysis of the Views of the Management on the Existence of
Eviction Conflicts.
Option Frequency Percentage
Yes 28 70
No 12 30
Total 40 100
Source: Field survey 2008.
From table 4.12 above, 70% of the respondents have encountered conflicts arising
from eviction and recovery of vacant possession attempts while 30% have not.
The views of the occupants consolidate the existence of eviction conflicts arising from
attempts towards recovery of vacant possession. This is thus shown in the answer to
question 37 in type B questionnaire.
57
Question 37 type B: Since taking occupation, do you have any knowledge of
the existence of conflicts arising from attempt to
recover vacant possession in the plaza?
Table 4.13: Analysis of the Views of Occupants on the Existence of Eviction
Conflicts.
Option Frequency Percentage
Yes 49 56.98
No 37 43.02
Total 86 100
Source: Field survey 2008.
From table 4.13 above, 56.98% of the occupants acknowledged the existence of
conflicts arising from attempts towards recovering vacant possession while 43.02%
responded negatively.
Conflicts arising from attempts towards recovery of vacant possession do hinder rent
payment by tenants. This was established based on the views of the management of
the plazas while responding to question 33 in the type A questionnaire. It is thus
analyzed below:
Question 33 type A: If yes to question 32 above, do you think that conflicts
arising from attempts to recover vacant possession
cause non payment of rent?
Table 4.14: Analysis of the Views of the Management on the Effect of Eviction
Conflicts on Rent Payment.
Option Frequency Percentage
Yes 35 89.29
No 3 10.71
Total 38 100
Source: Field survey 2008.
58
From table 4.14, 89.29% of those that acknowledged the existence of recovery
conflicts in question 32 responded in the affirmative that recovery conflicts hinder the
payment of rent by tenants while 10.71% responded negatively.
Based on the analyzed questions above and several oral interviews it is evident that
recovery conflicts do exist in the plazas in Abuja and they contribute immensely to
the shortfall of rent. Eviction arises due to the need by the landlord/management to
recover the accommodation for whatever purpose that may be necessary. If the
eviction notice that arose is acrimonious and malicious it may lead to litigation that
may require a court injunction restraining subsequent payment of rent until the
substantive case is settled. If there is a protracted suit the judgment will be longer and
there will be a resultant longer shortfall of rent. For instance, the research discovered
that, there are some tenants who are involved in eviction conflicts with the
management, they are still under occupation and are not paying rent.
4.3.4 SHREWD ATTITUDE OF SOME TENANTS.
Shrewd attitude of some occupants with regards to fulfilling their own part of the
tenancy agreement in the aspect of regular rent payment is a problem of management.
It was discovered that most educated professionals running corporate offices in the
plazas hardly pay rent. The analysis is below and it is based on answers to question 20
in the type A questionnaire posed to the management of the plazas.
59
Question 20 type A: In your view, what category of tenants default more in
rent payment?
Table 4.15: Analysis of the Views of the Management on the Category of
Occupants with High Rent Default.
Options Frequency Percentage
Uneducated traders/business men 7 17.5
Educated traders/business men 12 30
Educated professionals running corporate offices 21 52.5
Total 40 100
Source: Field survey 2008.
From table 4.15 above, 17.5% of uneducated traders/business men default in rent
payment. 30% of educated traders/business men default in rent payment. While 52.5%
of educated professionals that run corporate offices defaults in rent payment.
Based on oral interviews with the management, it was discovered that the culprit is
more on lawyers running corporate offices in the plazas. They posit that this category
of tenants capitalizes on any mistake by the management in order to evade rent. When
these mistakes are noticed by them, they keep hold to them; refuse to pay rent while
awaiting any action by the management. This attitude is rooted with the belief that,
based on such mistakes, whatever legal action taken by the management will be
foiled.
The educated professional corporate tenants gave their reasons for acting in such a
manner to include: inconsistencies in management policies, obnoxious management
policies, exploitative management intent, inefficient delivery of agreed services and
gross managerial inefficiency which as alleged by them have abundant evidences in
the event of litigation.
60
4.3.5 INABILITY TO HONOUR REPAIRS AND MAINTENANCE
OBLIGATION BY BOTH THE MANAGEMENT AND
TENANTS
Inability by both the tenants and management (Landlord) to honour repairs and
maintenance obligation is a problem of management. It was also discovered that this
inability contribute to the shortfall of rent. These discoveries were made known based
on answers to the questionnaire.
While responding to question 34 in the type A questionnaire the management of the
plazas acknowledged the existence of inability to honour repairs and maintenance
obligation. This is thus analyzed below:
Question 34 type A: Do the tenants fulfill their obligation of interior repairs,
maintenance and decoration?
Table 4.16: Analysis of the Views of the Management on Interior Repairs and
Maintenance Obligation by the Occupants.
Option Frequency Percentage
Yes 17 42.5
No 23 57.5
Total 40 100
Source: Field survey 2008.
According to the views of the management as shown in table 4.16 above, 42.5% of
the tenants undertake interiors repairs, maintenance and decoration while 57.5% does
not.
From the views of the occupants the management/landlord does not carry out repairs,
maintenance & renovation of the plazas. This is evident from the answers to questions
posed to them as analyzed below:
61
Question 23 type B: Does the management carryout repairs and maintenance
of the plaza?
Table 4.17: Analysis of the Views of Occupants on Repairs and Maintenance
Obligation of the Management.
Option Frequency Percentage
Yes 75 87.21
No 11 12.79
Total 86 100
Source: Field survey 2008.
Table 4.17 above shows 87.21% of the occupants accepting that the management
undertake repairs and maintenance while 12.79% does not.
Question 24 type B: If yes to question 23 above, how promptly does the
management respond to your repairs and maintenance
complaints?
Table 4.18: Analysis of the Views of Occupants on the Promptness of the
Management in Responding to Repairs and Maintenance Request.
Option Frequency Percentage
Immediately 18 24
Routinely 23 30.67
Rarely 34 45.33
Total 75 100
Source: Field survey 2008.
In table 4.18 above, 24% of the tenants said that repairs and maintenance is
immediately undertaken by the management, 30.67% said that it is routinely
undertaken and 45.33% said that it is rarely undertaken.
62
Question 25 type B: Since taking occupation, have you encountered any
comprehensive renovation and refurbishment of the
entire plaza by the management?
Table 4.19: Analysis of the Views of Occupants on Comprehensive Renovation
and Refurbishment of the Plazas.
Option Frequency Percentage
Yes 18 20.93
No 68 79.07
Total 86 100
Source: Field survey 2008.
From table 4.19 above, 20.93% of the occupants said that they have encountered
comprehensive renovation and refurbishment of the entire plaza while 79.07% said
that they have not.
Based on the analyses above it is evident that there is a high level of inability of both
the management and occupants to honour their own part of repairs and maintenance
obligation. It is a problem of management and either party accuses the other of
default. Based on further interviews conducted orally, the research concludes that the
default in repairs and maintenance obligation is more on the part of the management.
It was discovered that every occupant repairs, maintains and decorates the interior
part of his/her accommodation at least to a very fair extent. While, in most plazas the
management/landlord has never or hardly carry out comprehensive renovation and
refurbishment of the plazas. The management, when confronted with this argument,
blames their inability on; shortfall of rent and inflation as it affects repairs and
maintenance cost. On the other hand, the occupants accuse them of lack of will.
Inability to repair, renovate and refurbish the plaza brings about blight and
deteriorated condition on the physical fabric of the buildings. This blighted and
deteriorated condition drives away intending tenants from taking occupation and
sitting tenants from extending their tenure. When this scenario prevails generation of
63
revenue from rent reduces and the more it is protracted the more there will be poor
flow of rent revenue.
4.3.6 INSECURITY OF GOODS AND PROPERTIES IN THE
PLAZAS
Insecurity of goods, properties and other valued items of tenants as a result of theft is
a problem of management. This problem leads to shortfall of rent due to refusal to pay
as a result of anger by tenants when they lose valued items to theft. This discovery
was made by the respondents when giving answers to questions in the questionnaire.
Question 26 type B: Has there been any recorded incident of theft in the
plaza since you took occupation?
Table 4.20: Analysis of the Views of Occupants on the Issue of Theft in the
Plazas.
Option Frequency Percentage
Yes 64 74.42
No 22 25.58
Total 86 100
Source: Field survey 2008.
In table 4.20 above, 64 tenants responded in the affirmative that there are recorded
incident of theft while 22 responded negatively.
64
Question 27 type B: If yes to question 26 above, how often is the theft of
valued items?
Table 4.21: Analysis of the Views of Occupants on the Frequency of Theft of
Valued Items in the Plazas.
Options Frequency Percentage
Daily 10 15.63
Weekly 21 32.81
Monthly 14 21.88
Others 19 29.69
Total 64 100
Source: Field survey 2008.
In table 4.21 above, 10 out of the 64 persons that responded in the affirmative in
question 26 said that theft of valued items occurs on daily basis, 21 said that it is on
weekly basis, 14 said that it is on monthly basis, and, 19 chose other specifications.
The analysis above, thus show that theft of valued items occurs more on weekly basis.
While responding to oral questions the management of the plazas confirmed recorded
incidences of theft of valued items in the plazas. Most of the items lost to theft are that
of the tenants which at times run into millions of naira. When such huge losses are
incurred the tenants are angered. They blame it on managerial laxity on security
issues. Their anger results to refusal to pay subsequent rent until such losses are
recouped. Some of them take the management to court when the losses run into
millions of naira. When such situation suffices shortfall of rent is inevitable.
Theft of valued items in the plazas is caused by inefficiency of the existing security
apparatus. From the analyses below, it is clear that all the plazas sampled have a
formal security arrangement but their efficiency is questionable.
65
Question 45 type A: Is there any formal security arrangement in the plaza?
Table 4.22: Analysis of the Views of the Management on the Existence of
Security Arrangement in the Plazas.
Option Frequency Percentage
Yes 40 100
No 0 0
Total 40 100
Source: Field survey 2008.
From table 4.22 above, it is evident that there is one form of formal security
arrangement or the other in all the plazas sampled, which in the view of the
management is enough.
Question 28 type B: Is there any formal security arrangement in the plaza?
Table 4.23: Analysis of the Views of Occupants on the Existence of Security
Arrangement in the Plazas.
Option Frequency Percentage
Yes 86 100
No 0 0
Total 86 100
Source: Field survey 2008.
The views of the tenants as analyzed in table 4.23 above confirmed the existence of
formal security arrangement in the plazas.
66
Question 46 type A: If yes to question 45 above, kindly score their
performance?
Table 4.24: Analysis of the Views of the Management Showing the Score Card
on Performance of the Security Arrangement in the Plazas.
Options Frequency Percentage
Very poor 10 25
Poor 12 30
Good 11 27.5
Very good 6 15
Excellent 1 2.5
Total 40 100
Source: Field survey 2008.
The views of the management as analyzed in table 4.24 above shows that there is high
level of inefficiency in the performance of the security apparatus in the plazas.
Question 29 type B: If yes to question 28 above, kindly score their
performance?
Table 4.25: Analysis of the Views of Occupants Showing the Score Card on
Performance of the Security Arrangement in the Plazas.
Options Frequency Percentage
Very poor 21 24.42
Poor 29 33.72
Good 18 20.93
Very good 12 13.95
Excellent 6 6.98
Total 40 100
Source: Field survey 2008.
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The views of the tenants as analyzed in table 4.25 confirmed that the security
arrangement in the plazas is poor and very poor in some cases.
4.3.7 PROBLEM OF SUBLETTING OF ACCOMMODATION
Subletting of accommodation in the plazas was discovered to be one of the problems
of management. It was also discovered to be one of the factors causing shortfall of
rent. Subletting of accommodation exists in all most all the plazas sampled and it is
incessant as could be evidenced from the analyses below:
Question 41 type A: Are there cases of subletting of accommodation in your
plaza?
Table 4.26: Analysis of the Views of the Management on the Existence of
Subletting of Accommodation in the Plazas.
Option Frequency Percentage
Yes 29 72.5
No 11 27.5
Total 40 100
Source: Field survey 2008.
From table 4.26 above, 72.5% of the respondents acknowledged the existence of
subletting of accommodation in their plaza while 27.5% said that subletting of
accommodation does not exist.
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Question 8 type B: How did you secure the accommodation?
Table 4.27: Analysis of the Views of Occupants on Methods of Taking
Occupation.
Option Frequency Percentage
From the management 55 63.95
Through sublet from former occupant 31 36.05
Total 86 100
Source: Field survey 2008.
From table 4.27 above, 63.95% of the respondents accepted taking occupation of the
accommodation from the management, while 36.05% of the respondents took
occupation through sublet from the former occupant. The number of tenants that took
occupation through sublet represents over 1/3 (one-third) of the respondents. That
shows that cases of subletting of accommodation are very high.
The incessant nature of subletting of accommodation in the plazas is evident from the
analysis below:
Question 42 type A: If yes to question 41 above, how periodic is subletting
of accommodation?
Table 4.28: Analysis of the Views of the Management on the Frequency of
Subletting of Accommodation.
Option Frequency Percentage
Rarely 7 24.14
Regularly 22 75.86
Total 29 100
Source: Field survey 2008.
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Table 4.28 shows that subletting of accommodation is at regular occurrence where
75.86% of the respondents that responded in the affirmative to the existence of
subletting in question 41 affirmed the view.
The problem of subletting of accommodation is a contributor to shortfall of rental
income. It is the view of the management as evident from the analysis below:
Question 43 type A: If yes to question 41 above, do you consider subletting
of accommodation as one of the managerial problems
causing shortfall of rental income?
Table 4.29: Analysis of the Views of the Management on the Effect of
Subletting of Accommodation on Rent Generation.
Option Frequency Percentage
Yes 22 75.86
No 7 24.14
Total 29 100
Source: Field survey 2008.
From table 4.29 above, 75.86% of the respondents accepted the view that subletting of
accommodation is one of the problems of management that contributes to the shortfall
of rental income while 24.14% rejected the view.
The research verified this view as correct based on extensive oral interviews to both
the management and tenants. It was discovered that in most cases when an
accommodation is subletted the subleasor deceitfully hands over an accommodation
with huge rent arrears to the subleasee. Due to desperation to take occupation, most
subleasees do not contact the management of the plazas to verify whether there are
arrears of rent or not in the accommodation. At the exit of the subleasor and at the
beginning of a direct tenancy relationship with the management the subleasee
discovers the huge rent arrears on the accommodation that could be overwhelming. If
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the arrears are huge and overwhelming he might find it extremely difficult to pay
thereby contributing to shortfall of rent.
4.3.8 TENANCY COMMENCEMENT DATE PROBLEM
The research discovered that dispute on the precise date of tenancy commencement is
one of the problems of management. This problem as was discovered prevents the
payment of rent renewal particularly by stubborn and adamant tenants on the
contention that the debacle must be resolved first. This discovery was made by the
respondents, while responding to questions in the questionnaire.
Question 30 type A: Are there cases of disputes on the precise date of
tenancy commencement in the course of management?
Table 4.30: Analysis of the Views of the Management on the Existence of
Tenancy Commencement Date Disputes.
Option Frequency Percentage
Yes 22 55
No 18 45
Total 40 100
Source: Field survey 2008.
From table 4.30 above, 55% of the respondents acknowledged the existence of
tenancy commencement date disputes while 45% did not.
Also a reasonable number of the tenants/occupants affirmed the existence of tenancy
commencement date disputes in the type B questionnaire. This is thus analyzed
below:
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Question 33 type B: Do you have tenancy commencement date dispute with
the management?
Table 4.31: Analysis of the Views of Occupants on the Existence of Tenancy
Commencement Date Disputes.
Option Frequency Percentage
Yes 41 47.67
No 45 52.33
Total 86 100
Source: Field survey 2008.
From table 4.31 above 47.67% of the respondents confirmed having tenancy
commencement date disputes with the management, while 52.33% said they do not
have. This 47.67% of tenants having tenancy commencement date disputes with the
management is huge. This goes to show that tenancy commencement date dispute is a
serious problem of management.
The issue of whether tenancy commencement date dispute hinder payment of rent or
not is analyzed below:
Question 34 type B: If yes to question 33 above, is it hindering your
payment of subsequent rent renewal?
Table 4.32: Analysis of the Views of Occupants on the Effect of Tenancy
Commencement Date Disputes on Rent Renewal.
Option Frequency Percentage
Yes 35 85.37
No 6 14.63
Total 41 100
Source: Field survey 2008.
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From table 4.32, 35 out of 41 persons who accepted having tenancy commencement
date disputes with the management said that it is one of the reasons causing their
default in rent payment.
When this view was noticed, the research put further questions through interviews to
the management of the plazas to confirm this assertion or not. From their responses it
was made clear that tenancy commencement date disputes is one of the problems of
management that hinder the payment of rent by tenants.
Tenancy commencement date dispute is usually encountered in newly constructed
shopping malls, where intending occupants pay advance rent for accommodation
when the building is still under construction. When the building is completed, the
research discovered that there is usually a disagreement between the management and
tenants on the precise date of tenancy commencement. Some shrewd management
capitalizes on this and fix arbitrary date which the occupants usually disagrees. When
this stalemate is encountered subsequent rent renewal is made difficult particularly by
stubborn and adamant tenants on the contention that the debacle must be resolved
first. In positing defence to this, the management said that some tenants in a
desperate move to secure accommodation pay and walk away, and will not take
occupation on time even when contacted that the accommodation is ready.
4.3.9 INADEQUATE PARKING SPACE IN THE PLAZAS
Inadequacy of parking space for vehicles was discovered as one of the managerial
problems contributing to shortfall of rental income from the plazas. This was made
evident from the responses to the questionnaires as the analyses below will show.
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Question 49 type A: In all sincerity, are there enough parking spaces in the plaza?
Table 4.33: Analysis of the Views of the Management on the Adequacy of
Parking Space in the Plazas.
Option Frequency Percentage
Yes 12 30
No 28 70
Total 40 100
Source: Field survey 2008.
From table 4.34 above, 30% of the respondents accepted having adequate parking
space while 70% rejected having adequate parking space.
Question 32 type B: Are there enough parking space in the plaza?
Table 4.34: Analysis of the Views of Occupants on the Adequacy of Parking
Space in the Plazas.
Option Frequency Percentage
Yes 18 20.93
No 68 79.07
Total 86 100
Source: Field survey 2008.
From table 4.33 above 20.93% of the respondents accepted having adequate parking
space while 79.07% rejected having adequate parking space.
Inadequacy of parking space was confirmed when the researcher paid visit to most of
the plazas, where it was observed that most of the vehicles were parked outside the
premises. The tenants complained bitterly that they have lost most of their customers
and clients due to this problem. They further posit that, instead of the management to
look for remedy to the precarious situation they tend to maximize profit by extending
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the building to supposedly areas marked for parking. This verdict was also confirmed
by the research when visit was paid to some of the plazas.
Inadequacy of parking space has resulted to loss of sales and low patronage as
complained by the tenants. They posit that they no longer generate enough revenue
from their various businesses in order to pay their bills such as accommodation rent.
If this situation is left unmitigated there will be continuous rent default.
4.3.10 LACK OF TRANSPARENCY AND INEFFICIENCY IN THE
USE AND ADMINISTRATION OF SERVICE CHARGE FUND
There is noticeable lack of transparency and inefficiency in the use and administration
of service charge fund by the management in most of the shopping malls sampled.
This is one of the problems of management and it accounts for the disenchantment
among tenants, the non-payment of rent and non-payment of service charge in
particular. These discoveries were made evident by the respondents while supplying
answers to the questionnaire.
Question 21 type A: Do you collect service charge from tenants?
Table 4.35: Analysis of the Views of the Management on the Existence of
Service Charge Payment.
Option Frequency Percentage
Yes 32 80
No 8 20
Total 40 100
Source: Field survey 2008.
In table 4.35 above, 80% of the management of the shopping malls sampled
responded affirmatively that, service charge is payable in their plaza while 20%
responded negatively.
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Question 16 type B: Is service charge payable in the plaza?
Table 4.36: Analysis of the Views of Occupants on the Existence of Service
Charge Payment.
Option Frequency Percentage
Yes 64 74.42
No 22 25.58
Total 86 100
Source: Field survey 2008.
In table 4.36 above, 74.42% of the tenants responded affirmatively that service charge
is payable in their plaza while 25.58% responded negatively.
The two questions analyzed above shows that service charge is payable in most of the
shopping malls. The issue of lack of transparency and inefficiency in the use and
administration of the service charge fund comes to the fore. It is thus analyzed below:
Question 23 type A: To the best of your opinion, does the management
render, provide and maintain efficiently those services
that the service charge fund is expected to cover?
Table 4.37: Analysis of the Views of the Management on Proper and Efficient
Use of Service Charge Fund.
Option Frequency Percentage
Yes 14 43.75
No 18 56.25
Total 32 100
Source: Field survey 2008.
The analysis in table 4.37 above, shows a candid response from the management
where 56.25% of the respondents affirmed that the management is inefficient in the
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use and administration of service charge fund, while 43.75% alleged that the services
are efficiently provided and maintained.
Question 21 type B: Do you think that the management render efficiently
those services that the service charge fund is expected
to cover?
Table 4.38: Analysis of the Views of Occupants on Proper and Efficient Use of
Service Charge Fund.
Option Frequency Percentage
Yes 22 34.38
No 42 65.62
Total 64 100
Source: Field survey 2008.
The analysis in table 4.38 above shows 34.38% of the tenants saying that services
covered by the service charge fund are rendered efficiently while 65.62% said they
are not rendered efficiently. This proves that there is inefficiency in the use and
administration of service charge fund.
The lack of transparency and inefficiency in the use and administration of the service
charge fund as was discovered by the research is a contributor to the default in
payment particularly payment of service charge. This is thus analyzed below:
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Question 24 type A: Kindly score the level of compliance to service charge
payment by tenants?
Table 4.39: Analysis of the Views of the Management on Compliance to
Service Charge Payment.
Options Frequency Percentage
Very poor 5 15.63
Poor 11 34.38
Good 8 25
Very good 6 18.75
Excellent 2 6.25
Total 32 100
Source: Field survey 2008.
In table 4.39 above, the level of compliance to the payment of service charge is
15.63% very poor, 34.38% poor, 25% good, 18.75% very good and 6.25% excellent.
Question 19 type B: If you pay service charge, do you make payment
promptly and regularly?
Table 4.40: Analysis of the Views of Occupants on Prompt Compliance to
Service Charge Payment.
Option Frequency Percentage
Yes 25 39.06
No 39 60.94
Total 64 100
Source: Field survey 2008.
Table 4.40 above shows that, 39.06% of the tenants pay service charge promptly and
regularly while 60.94% affirmed that they do not make prompt and regular payment.
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The analyses of the two tables above shows that there is high default in the payment
of service charge. This default as was discovered from the responses to the
questionnaire is summarized to be caused by the noticeable lack of transparency and
inefficiency in the use and administration of the service charge fund by the
management.
The disenchantment among tenants due to the lack of transparency and inefficiency in
the use and administration of the service charge fund also contributes to irregular
payment of rent. The tenants complain of poor service delivery in the plaza. They
complain of the erratic nature of essential amenities. They accuse the management of
impropriety and mismanagement of the service charge fund. All these have led to
anger and vehement refusal by some tenants to pay service charge. Some of them as
was discovered extended this anger by refusing to pay rent.
4.3.11 SABOTAGE, IMPROPRIETY AND SHREWD ATTITUDE OF
SOME MANAGEMENT STAFF
The research discovered that there is high level of sabotage and impropriety amongst
the management staff in most of the plazas. This is a problem and it contributes to the
shortfall of rent. This discovery was made from extensive interviews where it was
discovered that there is high level of corrupt practices amongst the management staff.
Some management staff perpetrates fraud such as diversion of rent for personal use.
Some receive bribe and other forms of gratification from tenants at the expense of
management objectives. For instance, there were reported cases where some
management personnel fraudulently carted away rent worth millions of naira and fled
overseas. Also there were instances where some management staff shies away from
active rent recovery due to the gratification they received from tenants.
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4.4 TEST OF HYPOTHESIS
Managerial problems encountered in the course of managing shopping malls in Abuja
were discussed and analyzed above. The causes of those managerial problems and
their threat on investment through shortfall in rental income were also discussed and
analyzed. Therefore, it is important to establish through the test of hypothesis whether
managerial problems like the ones unraveled by the research caused default in rent
payment or not.
HYPOTHESIS
H0 - Managerial problems do not cause default in rent payment.
Hi - Managerial problems cause default in rent payment.
Question 18 in type A questionnaire posed to the management and question 13 in type
B questionnaire posed to the tenants were used to test the research hypothesis. It is
thus stated below:
What do you think is the major cause of rent default by tenants?
Table 4.41: Analysis of Responses on the Major Cause of Rent Default by
Occupants.
OPTIONS TENANTS MANAGEMENT TOTAL
Managerial problems 31 (40.27) 28 (18.73) 59
Present economic difficulties 19 (17.75) 7 (8.25) 26
Managerial inefficiency 28 (21.16) 3 (9.84) 31
No idea 8 (6.83) 2 (3.17) 10
TOTAL 86 40 126
Source: Field survey 2008.
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To test the hypothesis, the above data were subjected to a Chi-square (X2) test at 3
degree of freedom and 0.05 level of significance.
X2
=
Where X2 = Chi-square,
OF = Observed frequency,
EF = Expected frequency,
∑ = Summation.
DECISION RULE
If the calculated Chi-square value is greater than the table value (X > X ) reject the
null hypothesis.
DECISION
After the calculation (which is shown in appendix i) the calculated Chi-square value is
14.59, and, the tabulated Chi-square value at 3 degree of freedom and 0.05 level of
significance is 7.815. Therefore, since the calculated value of Chi-square is greater
than the table value at 3 degree of freedom and 0.05 level of significance, the null
hypothesis is rejected and alternative hypothesis accepted. Thus, since the null
hypothesis is rejected, it is concluded that, managerial problems causes default in rent
payment.
2
e
2 0
∑
(OF – EF)2
EF
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CHAPTER FIVE
SUMMARY, RECOMMENDATIONS AND CONCLUSION
This research has established that problems arising in the course of managing
commercial shopping malls in Abuja hinder returns on investment as a result of
shortfall in rental income. In view of the foregoing, this chapter focused on
recommending strategies towards solving or at least mitigating the effects of those
managerial problems in order to enhance the flow of rent. It achieved this by firstly
summarizing the findings below.
5.1 SUMMARY OF FINDINGS
1. Litigation between tenants and management.
2. Incessant increases of rent.
3. Eviction conflicts arising from recovery of possession.
4. Shrewd attitude of some tenants.
5. Inability to honour repairs and maintenance obligation by both the
management and tenants.
6. Insecurity of goods and properties in the plazas.
7. Problem of subletting of accommodation.
8. Tenancy commencement date problem.
9. Inadequate parking space in the plazas.
10. Lack of transparency and inefficiency in the use and administration of the
service charge fund.
11. Sabotage, impropriety and shrewd attitude of some management staff.
5.2 RECOMMENDATIONS
The recommendations towards solving the problems of management as discovered by
the research were based on the circumstances of every problem. This guaranteed
clarity of every recommendation which is based on details of each problem.
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5.2.1 LITIGATION BETWEEN TENANTS AND MANAGEMENT
Litigation between tenants and management especially when protracted could lead to
shortfall of rent. This arises particularly when injunction restraining payment of
subsequent rent is given by the court. In order to avoid litigation and to prevent such
situations from arising the following recommendations are proffered:
a) Management should treat the tenants fairly and squarely to avoid issues
leading to litigations.
b) Management should respect and fulfill their part of the tenancy agreement.
This will erase tension between tenants and management and enhance peaceful
and quiet occupation of the demised premises.
c) Management should seek for out of court settlement on all matters before
resorting to the court for adjudication.
d) In case of litigation, management should make sure that they have cogent
reasons backed with abundant evidences to enhance expeditious judgment.
5.2.2 INCESSANT INCREASES OF RENT
The research revealed that incessant increases of rent anger tenants. They feel
exploited and extorted. Some of them become stubborn and refuse to pay rent while
some seek solace at the rent tribunal. When this situation suffices and is protracted
rent payment is made difficult. The following recommendations will not deter flow of
rental income as a result of increases of rent:
a) Rent increases should be reasonable and should be based on prevailing
property values.
b) Rent increases should also be based on a reasonable and fair assessment of
inflation as it affects repairs and maintenance cost.
c) Management should ensure qualitative service delivery and should undertake
regular repairs and maintenance of the entire premises in order to justify rent
increases.
d) Based on field experience, the research recommends that there should be
stable rent for at least 3 years (terms).
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5.2.3 EVICTION CONFLICTS ARISING FROM RECOVERY OF
POSSESSION
If there is conflict in the process of eviction for recovery of vacant possession, there
could be litigation. When litigation arises and is protracted, there might be court
injunctions restraining payment and this will lead to shortfall of rent. The remedies to
this problem and which will ensure regular flow of rental income are recommended
below:
a) The research discovered that most eviction process for recovery is applied as a
method of dispute resolution. This notion is wrong and it is recommended that
the management should apply other methods of dispute resolution and not
always resorting to eviction of tenant as the only option.
b) Eviction process should be the last resort to dispute resolution. In view of this,
management should ensure that they have abundant reasons and evidences in
order to facilitate expeditious eviction process.
c) Management should adopt legal eviction process through the courts. They
should not resort to unorthodox method in evicting tenants. If eviction process
is legal, the court will still demand the arrears of rent from the evicted tenant.
d) Management should make sure that recovery of possession decision is not
malicious. It should not be acrimonious and the tenant must be made to
understand that recovery of possession attempt is sincere. This will not anger
the tenant and he will pay his rent and any arrears before vacating.
e) The management is advised to continue treating the tenant nicely until the
eviction for recovery process is completed. The adoption of this approach will
not anger the tenant and will convince him on the sincerity of the recovery
intention. He will therefore pay his rent and arrears before vacating the
accommodation.
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5.2.4 SHREWD ATTITUDE OF SOME TENANTS
Some tenants adopt shrewd attitude in order to evade rent. This problem of
management causes the shortfall of rent revenue. The research discovered that
educated professionals running corporate offices particularly lawyers are the culprit.
In order to remedy this problem and ensure regular flow of rent the following
recommendations are proffered:
a) Management should ensure that tenant selection process is taken seriously and
it should be guided on individual experiences of each plaza in the aspect of
rent payment.
b) Management should make the tenancy agreement stringent on issues
concerning rent payment in order to prevent evasion.
c) Management should avoid making managerial mistakes that might be
capitalized by some difficult tenants, providing them with reasons to evade
rent.
d) Management should ensure consistent policies. They should avoid obnoxious
policies. They should avoid exploitative intent. Furthermore, management
should be fair, transparent and efficient in the delivery of agreed services to
tenants. If all these recommendations are heeded there will be no room for
mistakes that might be capitalized for rent evasion by tenants no matter how
learned and crafty the person is.
e) In the event of litigation, management should assemble cogent reasons backed
by evidences and should seek for accelerated hearing and judgment.
f) Out of court settlement is always recommended first on managerial issues
because of the protracted nature of litigations.
5.2.5 INABILITY TO HONOUR REPAIRS AND MAINTENANCE
OBLIGATION BY BOTH THE MANAGEMENT AND TENANTS
Inability to repair, renovate and refurbish the plazas causes blight and deteriorated
physical fabric of the buildings. As discovered by the research, both the management
and tenants are the culprit, but guilt is more on the management. Blighted and
deteriorated condition of the plazas drives away intending tenants from taking
85
occupation and sitting tenants from extending their tenure. If this situation prolongs,
generation of rent revenue reduces. In order to remedy this problem and enhance flow
of rent the following recommendations are proffered:
a) The management should respect and honour their part of repair obligation
which is major repairs, external repairs and decoration.
b) The management should undertake comprehensive renovation and
refurbishment of the entire shopping mall at least once every three years. This
will keep the building in good repair condition and make it attractive to both
intending and sitting tenants which they will reciprocate by paying rent
regularly.
c) The tenancy agreement should be made explicit on repairs and maintenance
obligation of both the tenants and management.
d) The management should include enforceable clauses in the tenancy agreement
with regards to interior repair obligation of the occupant. This will regularly
keep the interior of the accommodation in good repair condition and attractive
to command the maximum rent.
e) Management should repair and renovate every vacated accommodation in
order to make it attractive for letting.
5.2.6 INSECURITY OF GOODS AND PROPERTIES IN THE PLAZA
This managerial problem leads to the refusal to pay rent due to anger by tenants when
the loose valued items to theft. As discovered by the research, they blame insecurity
of the plaza on managerial laxity and vow not to pay rent until they recoup. The
following recommendations are remedies to the problem:
a) Management should engage reputable security companies with track record
for efficiency in safeguarding the plazas.
b) Management should ensure that adequate number of security personnel is
engaged considering the size of the entire premises.
c) Management should ensure that security personnel are well motivated through
adequate remuneration.
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d) Management should ensure that what is due to every security personnel
bargained for in the contractual agreement is paid, because, it was discovered
that some security companies deduct the salaries of their staff in order to make
excess profit.
e) The management should monitor and supervise the security company and their
personnel closely for efficiency.
f) Management should pay unscheduled visits especially at night to ascertain the
level of performance of the security personnel.
g) Management should apply stringent measures on the security organization for
example, making them to accept some loss liability arising from theft of
valued items.
h) Management should make functional all the security lights in order to enhance
the efforts of the security personnel.
i) Management should give all necessary support and assistance to the security
personnel in order to avoid their excuses in the event of theft.
5.2.7 PROBLEM OF SUBLETTING OF ACCOMMODATION
Subletting of accommodation contributes to shortfall of rental income when an
accommodation with rent arrears is handed over to the subleasee by the subleasor. If
the rent arrears are huge and overwhelming, it might be extremely difficult for the
subleasee to pay. The remedies to subletting of accommodation as it affects flow of
rent are recommended below:
a) Personal data of all the tenants including residential address should be
documented at first entrance. This should be reviewable at the beginning of
every renewal term in order to dictate any illegal occupant.
b) Constant inspection of the demised accommodation is recommended to ensure
that the original tenant is still in occupation.
c) Knowledge of all tenants through personal contact and regular inspection of
the demised accommodation.
d) Formalization of tenure of subletted accommodation through fresh offer.
e) Eviction of subleasee who do not agree to the terms of formalization of tenure.
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f) Management should include stringent clauses in the tenancy agreement
prohibiting subletting of accommodation.
g) As discovered in one of the plazas, fresh tenancy agreement at every renewal
term is recommended. This will help dictate subletted accommodation.
5.2.8 TENANCY COMMENCEMENT DATE PROBLEM
The research discovered that unresolved tenancy commencement date disputes make
tenants not to pay rent, particularly, stubborn and adamant ones on the contention that
the debacle must be resolved first. The following recommendations are geared
towards solving the problem which will enhance flow of rent:
a) The management should not start letting of accommodations until the building
is completed.
b) Intending occupants should not pay for accommodation when the building is
still under construction.
c) Intending tenants should make sure that they are ready to take possession and
to commence business immediately before payment.
d) Letting should be fashioned in a way that payment and handing over of keys
takes place simultaneously.
e) Tenancy agreement should be explicit on the precise date of tenancy
commencement which must be agreed and signed by both parties.
f) There should be honesty on both sides with regards to the precise date of
tenancy commencement.
5.2.9 INADEQUATE PARKIKNG SPACE IN THE PLAZAS
Inadequacy of parking space resulted to loss of sales and low patronage as
complained by tenants. They assert that they now generate low revenue from their
various businesses and this has hampered the payment of their bills such as
accommodation rent. In order to mitigate this problem which will enhance flow of
rent the following recommendations are proffered:
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a) The management should reorganize the parking arrangement for optimum use.
This is important because wrong parking arrangement causes shortfall of
parking space.
b) The security personnel should direct and enforce parking arrangement to avoid
wastages of parking space.
c) The management should not extend building development to supposedly areas
marked for parking.
d) The Development Control Department should insist on provision of adequate
parking space before any building design is approved.
5.2.10 LACK OF TRANSPARENCY AND INEFFICIENCY IN THE USE
AND ADMINISTRATION OF SERVICE CHARGE FUND
The lack of transparency and inefficiency in the use and administration of the service
charge fund angers tenants and has led to the refusal by some of them to pay service
charge. This anger as was discovered by the research has extended to the vehement
refusal by some to pay rent. The following recommendations are geared towards
solving the problem:
a) The management should be transparent in the use and administration of the
service charge fund. This will make it clear to the tenants whether the fund is
sufficient or not.
b) The management should be efficient in the use and administration of the
service charge fund with regards to regular delivery of agreed services to
tenants. This will convince the tenants on the efficient use of the fund no
matter how little is the amount generated.
c) Service charge fund is the tenant’s money. The management should not
manage it alone. Representatives of the tenants should be included in the
service charge fund management committee. This will make tenants
stakeholders to the fund, ensure transparency and ginger them towards regular
and prompt payment of service charge and rent.
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5.2.11 SABOTAGE, IMPROPRIETY AND SHREWD ATTITUDE OF
SOME MANAGEMENT STAFF
Sabotage, impropriety, shrewd attitude and corrupt practices of some management
staff deter management objectives towards rent recovery. This problem could be
remedied through the following recommendations:
a) Management should recruit honest personnel that will render selfless services
against personal gain.
b) There should be strict supervision of staff to guard against corrupt practices.
c) Management should remunerate staff adequately and improve their working
conditions to guard against corrupt practices.
d) Management should apply penal measures to erring members of staff which
will serve as deterrent to others.
e) The research discovered that plazas managed by professional estate
management firms are better run than those that have direct involvement of the
landlord. Therefore, in order to curtail sabotage and impropriety amongst
management staff, it is recommended that landlords should hand over their
plazas to professional estate management firms who will have the
responsibility of hiring and supervising their staff in order to achieve the
contractual agreement with the landlord.
5.3 CONCLUSION
This research extensively investigated the problems encountered in the course of
managing commercial shopping malls in Abuja. It extensively investigated the causes
and effects of the managerial problems.
The research established that inefficiency in management and poor managerial
approach coupled with shrewd and un-corporative attitude of some tenants/occupants
are the major causes of the problems of management. It entrenched that these
managerial problems hinder returns on investment as a result of shortfall in rental
income. This assertion was affirmed by the acceptance of alternative hypothesis that,
“Managerial problems cases default in rent payment”.
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Based on these discoveries recommendations were proffered on strategies towards
solving or at least mitigating the managerial problems. If these recommendations are
applied by owners of commercial shopping malls in Abuja and beyond, there will be
guaranteed regularity in rent generation which will in essence maximize returns.
5.4 SUGGESTION FOR FURTHER RESEARCH
It was discovered by the research that commercial shopping malls managed by
professional firms of estate surveyors and valuers are better run and they encounter
less managerial problems than those that have direct involvement of the landlord. This
should be a subject for further research. It is recommended that further research on
this subject should focus on investigating and discovering the reasons why
professional estate firms manage better than the landlords.
91
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97
Appendix i
TEST OF HYPOTHESIS WITH CHI-SQUARE (X2)
FORMULAE FOR CHI-SQUARE (X2)
X2
=
Where X2 = Chi-square,
OF = Observed frequency,
EF = Expected frequency,
∑ = Summation.
EF = Row total X Column total
Overall total
FORMULAE FOR DEGREE OF FREEDOM (DF)
DF = (C − 1)(R − 1)
Where DF = Degree of freedom,
C = Number of columns,
R = Number of rows.
Therefore, DF = (2 − 1)(4 − 1)
1 × 3 = 3
HYPOTHESIS
H0 - Managerial problems do not cause default in rent payment.
Hi - Managerial problems do cause default in rent payment.
∑
(OF – EF)2
EF
98
CONTINGENCY TABLE
OPTIONS TENANTS MANAGEMENT TOTAL
Managerial problems 31 (40.27) 28 (18.73) 59
Present economic difficulties 19 (17.75) 7 (8.25) 26
Managerial inefficiency 28 (21.16) 3 (9.84) 31
No idea 8 (6.83) 2 (3.17) 10
TOTAL 86 40 126
WORKINGS
OF EF OF − EF (OF − EF)2
31 40.27 − 9.27 85.93 2.13
19 17.75 1.25 1.56 0.09
28 21.16 6.84 46.79 2.21
8 6.83 1.17 1.37 0.20
28 18.73 9.27 85.93 4.59
7 8.25 − 1.25 1.56 0.19
3 9.84 − 6.84 46.79 4.75
2 3.17 − 1.17 1.37 0.43
14.59
X2
=
X2
= 14.59
Since the computed value of Chi-square is greater than the critical value (14.59 >
7.815) at 3 degree of freedom and 0.05 level of significance, it is concluded that,
managerial problems causes default in rent payment.
∑
(OF – EF)2
EF
(OF – EF)2
EF
99
Appendix ii
Department of Estate Management,
University of Nigeria (Enugu campus),
Enugu,
Enugu State.
16 July, 2008.
Dear Respondent,
I am a post-graduate student carrying out a research on, “Risk management in
commercial shopping malls in Abuja, a study of investment implications”. This
questionnaire is designed to assist me in getting information to undertake the research
successfully.
You are assured that all information obtained from you will be treated confidentially.
Therefore, do not be restrained in supplying correct answers.
Thank you.
Yours faithfully,
Okeahialam, Chukwunyere O.
100
PRELIMINARY QUESTIONNAIRE ADMINISTERED ON THE SENIOR
MANAGEMENT OF THE SHOPPING MALLS IN ABUJA.
1. Name of respondent: ……………………………….…………………………..
2. Name of shopping mall/ plaza managed by the respondent: .…………………..
3. Location of shopping mall managed by the respondent:
Garki Wuse Maitama Asokoro CAD
4. Age of respondent: ……………………………………………………………..
5. Position held in the hierarchy of management of the shopping mall/ plaza
…………………………………………………………………………………..
6. Gender of respondent: Male Female
7. Do you accept the view that the problems of management causes shortfall of
rental income as a result of default in rent payment by occupants?
Yes No
8. If yes to question 7 above, do you believe that, shortfall of rent as a result of
default in payment hinders returns on investment and could be considered as
the risk in the investment portfolio?
Yes No
9. If yes to questions 7 and 8 above, kindly enumerate those problems of
management that you think causes default in rent payment.
(a) . ………………….. (b) …………………. (c) ……….……….
(d) . ………………….. (e) ..………………... (f) ………….…….
101
Appendix iii
Department of Estate Management,
University of Nigeria (Enugu campus),
Enugu,
Enugu State.
18th
August, 2008.
Dear Respondent,
I am a post-graduate student carrying out a research on, “Risk management in
commercial shopping malls in Abuja, a study of investment implications”. This
questionnaire is designed to assist me in getting information to undertake the research
successfully.
You are assured that all information obtained from you will be treated confidentially.
Therefore, do not be restrained in supplying correct answers.
Thank you.
Yours faithfully,
Okeahialam, Chukwunyere O.
102
TYPE A QUESTIONNAIRE ADMINISTERED ON THE MANAGEMENT OF
THE SHOPPING MALLS IN ABUJA.
1. Name of respondent: ...........................................................................................
2. Name of shopping mall/plaza managed by the respondent:
………………………………………………………..........................................
3. Location of shopping mall/plaza managed by the respondent:
……………………………………………………………..................................
4. Age of respondent: (Optional) …….....................................................................
5. Position held in the hierarchy of management of the shopping mall:
…………………………………………………………………..………...…….
6. Gender of respondent: Male Female
7. Number of shops/accommodation in the shopping mall: ...……………….....…
8. Number of shops/accommodation occupied at present: ………..………………
9. Do you consider screening in selection of tenants as crucial in letting out
accommodations? Yes No
10. What is the annual rate per metre square? (a) Ground(first floor) ..……….
(b) Second floor …….................................... (c) Third floor ...……………….
(d) Fourth floor ………………………......... (e) Others ...……………………
11. What are the bases for arriving at the annual rates per metre square?
(a) ……………………… (b) .................................... (c) .......…...……….…
(d) ……………………… (e) ……………………… (f) ……………………
12. What is the method of rent payment?
(a) Complete advance (b) Installment (c) Arrears
13. Is rent subject to review periodically? Yes No
14. If yes to question 13 above, what are the reasons prompting the review?
(a) ……………………… (b) .................................... (c) ...….......……….…
(d) ……………………… (e) ……………………… (f) ……………………
15. If rent is subject to review, at what interval is the review undertaken?
(a) Annually (b) Biannually (c) Interval of 3 years (d) Others.
16. Do you encounter shortfall of rent? Yes No
17. If yes to question 16 above, to what extent?
(a) Negligible (b) Moderate (c) High (d) Excessively high
103
18. What do you think is the major cause of rent default by tenants?
(a) Managerial problems (b) Managerial inefficiency
(c) Present economic difficulties (d) No idea
19. What are the other likely causes of rent default by tenants?
(a) ………………………… (b) .................................... (c) …..………….…
(d) ………………………… (e) ……………………… (f) …………………
20. In your view, what category of tenants default more in rent payment?
(a) Uneducated traders/business men (b) Educated traders/business men
(c) Educated professionals running corporate offices
21. Do you collect service charge from tenants? Yes No
22. If yes to question 21 above, what services does the service charge fund cover
and maintain?
(a) ………………………… (b) .................................... (c) …………..….…
(d) ………………………… (e) ……………………… (f) …………………
23. To the best of your opinion does management render, provide and maintain
efficiently those services that the service charge fund is expected to cover?
Yes No
24. Kindly score the level of compliance to service charge payment by tenants?
(a) Very poor (b) Poor (c) Good
(d) Very good (e) Excellent
25. If poor or very poor to question 24 above, what do you think are their reasons for
non-compliance?
(a) ………………………… (b) .................................... (c) ………..…….…
(d) ………………………… (e) ……………………… (f) …………………
26. Are there incidences of litigation in the course of management? Yes No
27. If yes to question 26 above, to what extent are the litigations?
(a) Negligible (b) Moderate (c) High (d) Excessively high
28. If yes to question 26 above, what are the incidences leading to such litigations?
(a) ………………………… (b) .................................... (c) …………...…….….…
(d) ………………………… (e) ……………………… (f) ………….……………
29. Do you think that litigations and court cases cause rent default by tenants?
Yes No
104
30. Are there cases of disputes on the precise date of tenancy commencement in
the course of management? Yes No
31. If yes to question 30 above, do you think disputes on the precise date of
tenancy commencement contributes to default in rent payment by tenants?
Yes No
32. Have you encountered conflicts arising from eviction and recovery of
possession attempts in the course of management? Yes No
33. If yes to question 32 above, do you think that conflicts arising from attempts
to recover vacant possession cause non payment of rent? Yes No
34. Do the tenants fulfill their obligation of interior repairs, maintenance and
decoration? Yes No
35. How prompt does the management attend to repairs and maintenance requests
from tenants? (a) Immediately (b) Routinely (c) Rarely
36. If rarely to question 35 above, state reasons?
(a) ………………………… (b) .................................... (c) …...……...….…
(d) ………………………… (e) ……………………… (f) …………………
37. What is the nature of repairs/maintenance requests from tenants?
(a) ………………………… (b) .................................... (c) ……..……….…
(d) ………………………… (e) ……………………… (f) ….…...…………
38. Does the management carry-out routine renovation/refurbishment of the entire
plaza? Yes No
39. If no to question 38 above, state reasons?
(a) ………………………… (b) .................................... (c) ……..……….…
(d) ………………………… (e) ……………………… (f) …………………
40. If yes to question 38 above, at what schedule does the routine renovation take
place? (a) Annually (b) Biannually
(c) Interval of 3 years (d) Others
41. Are there cases of subletting of accommodation in your plaza?
Yes No
42. If yes to question 41 above, how periodic is subletting of accommodation?
(a) Rarely (b) Regularly
43. If yes to question 41 above, do you consider subletting of accommodation as
one of the managerial problems causing shortfall of rental income?
Yes No
105
44. Based on your managerial experience suggest possible control measures to
subletting of accommodation?
(a) ………………………… (b) .................................... (c) …...…...…….…
(d) ………………………… (e) ……………………… (f) …………………
45. Is there any formal security arrangement in the plaza? Yes No
46. If yes to question 45 above, kindly score their performance? (a) Very poor
(b) Poor (c) Good (d) Very good (e) Excellent
47. Do you provide enough cleaners for the plaza? Yes No
48. If yes to question 47 above, kindly assess the level of their performance?
(a) Very poor (b) Poor (c) Good
(d) Very good (e) Excellent
49. In all sincerity, are there enough parking spaces in the plaza?
Yes No
50. Based on your experience, kindly recommend the strategies to check default in
rent payment?
(a) ………………………… (b) .................................... (c) ...…...……….…
(d) ………………………… (e) ……………………… (f) …………………
(g) ………………………… (h) .................................... (j) ………………....
106
Appendix iv
Department of Estate Management,
University of Nigeria (Enugu campus),
Enugu,
Enugu State.
18th
August, 2008.
Dear Respondent,
I am a post-graduate student carrying out a research on, “Risk management in
commercial shopping malls in Abuja, a study of investment implications”. This
questionnaire is designed to assist me in getting information to undertake the research
successfully.
You are assured that all information obtained from you will be treated confidentially.
Therefore, do not be restrained in supplying correct answers.
Thank you.
Yours faithfully,
Okeahialam, Chukwunyere O.
107
TYPE B QUESTIONNAIRE ADMINISTERED ON THE
TENANTS/OCCUPANTS OF THE SHOPPING MALLS IN ABUJA.
1. Name of respondent: …………………………..……………...…………….….
2. Name of shopping mall/plaza occupied by the respondent: ……………....……
3. Location of shopping mall/plaza occupied by the respondent: ………..……….
4. Age of respondent: (Optional) …………………….……………………………
5. Gender of respondent: Male Female
6. What is the suite number of your accommodation? ………………………...….
7. What use do you put the accommodation for? Shop Office
8. How did you secure the accommodation?
From the management Through sublet from former occupant
9. What is the rent per annum? ……………………………………………………
10. How do you make rent payment?
(a) Complete advance (b) Arrears (c) Installment
11. Do you default in rent payment or do you owe arrears of rent?
Yes No
12. If yes to question 11 above, how many years arrears? …………………………
13. To the best of your knowledge, what do you think is the major cause of rent
default by tenants? (a) Managerial problems (b) Managerial inefficiency
(c) Present economic difficulties (d) No idea
14. What are the other causes of rent default by tenants?
(a) ….……...………………… (b) ………………..……… (c) ……...….…….
(d) …………………………… (e)…….………………….. (f) ………..……...
15. How periodic has your rent been reviewed? (a) Annually (b)Biannually
(c) Three years interval (d) Others ………..……………………...
16. Is service charge payable in the plaza? Yes No
17. If yes to question 16 above, how many percentage of rent is the service
charge? ……………………………………………………………………….....
18. If you pay service charge, what services does the service charge fund cover?
(a) ….……...………………… (b) ………………..……… (c) ……………….
(d) …………………………… (e)…….………………….. (f) …………..........
19. If you pay service charge, do you make payment promptly and regularly?
Yes No
108
20. If no to question 19 above, state your reasons?
(a) ….……...………………… (b) ………………..……… (c) ……………….
(d) …………………………… (e)…….………………….. (f) …………...…...
21. Do you think that the management render efficiently those services that the
service charge fund is expected to cover? Yes No
22. Do you think that there is impropriety, mismanagement and lack of
transparency in the use and administration of the service charge fund by the
management of the plaza? Yes No
23. Does the management carry out repairs and maintenance of the plaza?
Yes No
24. If yes to question 23 above, how promptly does the management respond to
your repairs and maintenance complaints?
(a) Immediately (b) Routinely (c) Rarely
25. Since taking occupation, have you encountered any comprehensive renovation
and refurbishment of the entire plaza by the management? Yes No
26. Has there been any recorded incident of theft in the plaza since you took
occupation? Yes No
27. If yes to question 26 above, how often is the theft of valued items?
(a) Daily (b) Weekly (c) Monthly (d) Others …..………
28. Is there any formal security arrangement in the plaza? Yes No
29. If yes to question 28 above, kindly score their performance?
(a) Very poor (b) Poor (c) Good
(d) Very good (e) Excellent
30. Does the management provide cleaners for the cleaning of the common parts
in the Plaza? Yes No
31. If yes to question 30, kindly score their performance?
(a) Very poor (b) Poor (c) Good
(d) Very good (e) Excellent
32. Are there enough parking space in the plaza? Yes No
33. Do you have tenancy commencement date dispute with the management?
Yes No
34. If yes to question 33 above, is it hindering your payment of subsequent rent
renewal? Yes No
109
35. Have you encountered any litigation or court case with the management since
taking occupation in the plaza? Yes No
36. If yes to question 35 above, do you consider litigation and court cases as a
reason for not paying rent? Yes No
37. Since taking occupation, do you have any knowledge of the existence of
conflicts arising from attempt to recover vacant possession in the plaza?
Yes No
38. Have you decorated the interior of your accommodation since taking
occupation in the plaza? Yes No
39. In your view, do you think there is efficiency in the management of the plaza?
Yes No
