Real estate security and other investment assets: A comparison of investment characteristics in the Nigerian stock markets

Quite a substantial number of academic papers have examined the performance of both direct and indirect real estate relative to other investment assets. While these studies are valuable in the field of real estate investment performance measurements, a gap still exist in the literature on the comparative performance of investment assets in the various sectors of the stock markets of most emerging economies. This paper aims to fill the gap by providing analysis of the historical performance of real estate and other securities in the Nigerian capital market. Annual open and closing market prices of shares and dividend of sampled listed companies in addition to data on all share index (ASI), consumer price index (CPI) and yield on 90-days T-Bill were obtained for the period 1999-2005. These were then analyzed using descriptive, risk-adjusted measures and regression models. The empirical evidence suggests that while real estate outperformed the market on a nominal basis, it underperformed the market stock on a risk-adjusted basis over the time period of analysis. Unexpectedly, real estate security did not provide a good protection against inflation and is also uncorrelated with the stock market. This paper provides empirical evidence of the investment characteristic of indirect real estate investment in Nigeria. The results suggest that real estate security does not after all provide a good substitute to direct real estate investment. [PUBLICATION ABSTRACT]