Relationship Between Structural Amenities And Rental Prices Of An Area

In determining the relationship between structural amenities and rental prices of an area, the value of amenities, services, and external factors must be highly considered.

 In recent times, research has proved that as the quality of an environment improves, it tends to attract more people in response. Conversely, if the quality degrades, one would expect individuals to depart for more conducive environment / area. Therefore, this proves that the value of an environment determines it's level of attraction which could be appealing to tourism, residence, business and some other commercial activities, hence, variably affects the rental prices.

 Environmental amenities can be defined to be the valued natural attributes and provisions of a place, which ranges from terrestrial and aquatic landscape, tropical qualities and climate in general. Additionally, physical structural amenities have greatly helped in the improvement of those aforementioned natural values. Physical amenities such as significant advances in communication, transportation technologies and some high end service developments have met the ability to attract productive labour. And these values, have, categorically, make understanding the determinants of residential segregation between the affluent and poor increasingly notable.

It is quite obvious that common apartment characteristics affect both rent and value. Gunterman and Norrbin (1987), shows that rent is a function of size, location, condition and number of amenities.

 A typical multifamily housing which attributed to structural amenities and services such as covered parking, modern kitchen and maid service, occupancy restrictions such as no pets allowed, and external factors such as traffic congestion, proximity to work, and access to public transportation do have a significant impact on rent. Some other structural amenities which also contains the physical characteristics of an area such as the size of the complex or apartment, steady power supply, good road networking suroundig the area/location and the ambience values can have a great deal on tax assessment and automatically affect rent greatly,which one should expect to be on a high estimate.

 In Nigeria, according to a research with a hedonic pricing methodology, proves that different critical factors influence rental values of different types of building in different residential densities. Number of bathroom, number of living room and existence of burglar alarm were critical to bungalow in a certain area, while number of toilets was critical to duplex. In low density area; residential location and existence of burglar alarm have a significant positive impact on rental value of bungalow while number of toilet, bedrooms, living rooms, existence of burglar alarm have a significant positive impact on detatched house. The study concluded that each of the residential densities is homogeneous and, therefore, every residential property stakeholders should recognise the importance of each factor on rental values so that their valuation estimates will be useful and reliable.

 However, though, property stakeholders/firms should understand that in measuring the degree of concentration, it is not simply the total number of amenities that is important but the diversity of the amenities. Therefore, in evaluation of rental estimates, property stakeholders is expected to build concentration on diverse amenities which enhances an areas appeal, and as a result, households will seek to live there regardless of the high rentage.

Article by: Agu Kelechukwu Ezekiel