CONFERENCE PAPER PRESENTED AT UNILAG RESEARCH CONFERENCE 2014 A REVIEW OF IMPACT OF FLOODING ON REAL ESTATE VALUE 1E. O. Thontteh Department of Estate Management, Faculty of Environmental Science, University of Lagos, Akoka, Lagos, Nigeria Email: estherthontteh@yahoo.com 2M. M. Omirin Department of Estate Management, Faculty of Environmental Science, University of Lagos, Akoka, Lagos, Nigeria Email: momirin@unilag.edu.ng Abstract Investors and building professionals would be more concerned if properties in areas susceptible to flooding reduce in value to a large extent since sustainability of value is the utmost goal of every investor. This paper examined impact of flooding on land and buildings in Oniru and Lekki Phase 1 areas of Lagos, Nigeria. Population considered for the study is practicing firms of The Nigeria institution of Estate Surveyors and Valuers in Lagos State. A systematic random sampling technique was adopted in sample selection giving a sample size of 55 for the study, out of which 48 was retrieved representing 87% of the sample size. Data was analyzed using descriptive statistics, relative importance index and correlation. The study explored the degree of influence of flood occurrence on land and building value in the study locations. Empirical findings showed that there exists a significant relationship between flooding and land price but not with rental values of office and residential buildings. A key implication of the finding is that the effect of flooding on land value, traffic as well as psychological effect on occupiers is severe. Hence, a concerted effort by government in the construction of drainages and embankments for easy passage of excess water needs to be adopted to prevent loss of property values, man-hour loss in traffic and advancement of good health. Key Word: Demand, Flood, Health, Lagos, Land value, Traffic 1.0 Background Study Disaster is the resultant effect of actualized hazard. Han (2012) defined a hazard as an activated threat to life, health, property or ecosystems. It involves something that could potentially be harmful. It is a phenomenon that can cause damage to life and property and destroy the economic, social and cultural life of people (Stone, 2009). Therefore, when a dormant hazard comes to fruition, it will cause physical damage or destruction, loss of life or drastic change to the environment and result in an incident, accident emergency event or disaster. Omojola (2009) also defined hazard as the climate‐induced stresses on the city and are identified through observed trends and projections derived from global climate models (GCMs) and regional downscaling. He further stated that extreme events affected by climate change include heat waves, droughts, inland floods, accelerated sea level rise, and floods for coastal cities. According to Turnbull, Herbert and Mothorpe (nd) all real estate is subject to natural disaster which ranges from tornado, flooding, earthquake, landslide amongst others and the effect ranges from minor inconvenience to complete devastation. Furthermore, unlike many other natural disasters, the risk of flooding can be measured and it varies systematically across locations within a particular area. Flooding according to Odunuga, Oyebande and Omojola (2012) is a serious disaster in the world, which not only causes serious damage but disturbs normal life and working conditions. Moreover, several reports have shown that thousands of lives and property worth billions in monetary terms have been lost in various affected areas in Lagos, Nigeria (Emordi, 2012). Furthermore, according to World Health Organization (WHO) flooding accounts for 40% of all natural disasters worldwide. The main health impacts are deaths, injuries, waterborne disease and emotional trauma during the flood event itself, during the restoration process, or from knock-on effects brought about by damage to major infrastructure including displacement of populations. However, on average, the higher the water depth and the greater the flow velocity of a flood, the greater the damage to property (Gayelord, 2008). Several studies have been conducted to assess relationship between flood and human health. However, its implication on land and building value has often been assumed without knowing the degree of variability in the study location. This study therefore focuses on impact of flood on land and buildings. Empirical studies conducted outside the study location have found that real estate properties situated in designated flood plains are valued less than comparable properties situated outside the floodplain; usually by 4–12% in Australia (Lambley and Cordery, 2013), 15–35% in UK (Lamond, 2008), average of 5.8% in North Carolina (Bin and Polasky, 2003) and 1.27–4.7% in Japan (Fukozono and Ikeda, 2003). However, in Nigeria a negative impact of flooding on land and property value has often been assumed without knowing the degree of variability and impact. This assumption, though yet to be fully tested in the study area is a fundamental research gap which this paper has aimed to fill with the following research questions: does flooding affect land and building values in the study areas and to what extent has flooding impacted land and building values in the selected areas? This is to enable real estate managers, financiers, government agencies, residents, communities, insurers and investors to be well informed in order to fashion out necessary policy actions, adjustment coping strategy to enhance investment as well as its rate of return and profitability. The overall purpose of this paper is to review the impact of flood disaster on the market value of land and buildings in selected locations in Victoria Island and Lekki Phase 1, Lagos, Nigeria while the specific objectives are as follows; to identify the general and specific effects of flood on land and building value in particular and to compare the magnitude of effects of flood disaster on land and property values in the selected areas. Floods can devastate a country and have a range of impacts; short and long term upon their victims. The selected areas include Water Corporation Road in Oniru, Victoria Island, Lagos popularly referred to as Victoria Island annex and Admiralty Way, in Lekki Phase 1 as they have a common geographical location. The areas were selected because they form an extension of the Central Business District (CBD) where development is yet to fully take place in terms of building construction, furthermore, it is a preferred location for expatriates, hence its international outlook as rents and sales price are sometimes quoted in US dollars. In addition, the area, being regarded as an international market was selected in order to assist international investors on the choice of location for investment purpose. The areas examined at Oniru are Water Corporation Road being a low-lying area adjacent to ocean and beach, hence, its susceptibility to seasonal and frequent flooding and Admiralty Way in Lekki Phase 1. which is adjacent to Oniru and not directly on flood plain area. The maintenance of property value is a key element in the sustainability of local communities (Bramley, Munro and Pawson, 2004). It is of importance not only to property owners and their agents, financiers and investors but also to local and national governments. If flooding leads to vacant and derelict property then local blight could ensue. A flood disaster can destroy decades of development gains in moments. People and buildings are often the most physically affected and needs more time to recover economically and psychologically (Lamond, 2008). The World Bank International Development Association (IDA) in its report of 2009 affirmed that impact of natural disasters in terms of fatalities and losses in economic growth is on the rise, and is more severe in developing countries. This situation will be exacerbated by the fact that natural disasters are expected to increase in frequency and severity due to climate change, increased urbanization and continued environmental degradation. Furthermore, a deep understanding of the full impacts of flooding is necessary in order to guide investors and implement flood management policies in the best interests of all (Green, Vanderveen, Wierstra and Penningrowsell, 1994) as disasters pose an increasing threat to development efforts. 2.0 Literature Review Flooding may result from increased volume of a body of water such as a river or lake that over flows or breaks levees which then result to some of the water escaping boundaries, in addition, it can also form where there is no stream as for example when abnormally heavy precipitation falls on flat terrain at such a rate that the soil cannot absorb the water or the water cannot run off as fast as it falls (Grima et al., 2011). Lakshmanan (2011) also added that flood is a state of high water level along a river channel or on the coast that leads to inundation of land which is not usually submerged. Against the belief that flooding will seemingly have a major adverse effect on real estate value, Kropp (2012) identifies the following as the most important value influencing factors of real estate: flooding or flood risk, demographic structure, neighborhood, traffic situation, business situation, social facilities, environment influences urban greening, legal situation, development status, contamination, types and degree of building and land use, protection of historical monuments, form and size of the property, topography, unemployment rate, cost of living, purchasing power, interest on capital and population development. Furthermore, Lamond (2008) concluded that measured impacts of flooding on property price are temporary in nature as they appear to be a reaction to flood events rather than to flood risk designation while the effect of flood status on property value is small relative to location, property size and type. There are several extant literature both locally and internationally on the impact of flooding on lives and buildings based on events and data such as Omojola (2009), Emodi (2008), Lamond (2008) amongst others. However research on the effect of flooding on the market value of real estate seems to be limited. Flood Risk Perception According to Meldrum (2011) there are often no discounts in property price in flood plain areas as flood risk is subjective in nature. However, increasing risk perceptions correspond to decreasing property values. Furthermore, the difference in values of properties inside or outside a flood plain area reflects the subjective flood risk assessments made by investors and occupiers. Yeo (nd) further reviewed the spatial and temporal effects of flood disclosure on property values in United States, Canada, New Zealand and Australia. He stated that disclosure of flood-liability whether by flooding or flood plain mapping should result in differentiation of market value between flood liable properties and those that are not. Furthermore, he stated that in Oregon, USA; in 1964 and 1971 flood had a depressing effect on land values particularly for water front land between 19% - 26%. However, it also affected lots that were apparently not flooded by 3% while the depressed effect lasted for 5-8 years; in llinois, USA between 1986 -1987, flood had a more pronounced effect on property values by 15% - 21% for both flooded and non flooded property. Here the depressed effect lasted for more than 2 years. In Ontario, Canada; in 1974 as a result of influence of flooding and flood disclosure at sites in Ontario province, assessments revealed no significant difference between flooded and non flooded areas either before or after major flood. In fact sales price were significantly higher after the flood. In addition rental value, sales price, assessed value and length of period for house sale in London between 1978 and 1989 found no significant difference between houses situated in and out of designated flood plain. In coromandel, New Zealand; in 1985 immediately after flooding, selling prices were significantly lower by 9% for all properties in the town including the non hazard areas for up to 4 years. Also in 1985 properties in Georges R. catchment in Australia fell by 25% and in 1991 properties in Parramatta R. catchment situated on highly flood liable land fell by 11% but recovered within a year. As a result, kellens, Zaalberg, Newtens, Vanneuville and De Maeyer (nd) affirmed that the study of risk perception involves the examination of people awareness, emotions and behavior with regard to hazards. Flooding in Nigeria Flooding refers to the inundation of an area by unexpected rise of water by both dam failure or extreme rainfall duration and intensity in which life and properties in the affected area are under risk (Nyarko, 2002). There is no doubt that globally natural disasters are on the rise. Over the past two or three decades, the economic losses and the number of people who have been affected by natural disasters have increased more rapidly (UNEP, 2007). Globally, about 200 million people were affected by natural disasters in the 1990s with about USD 63 billion lost in terms of market value of damaged properties (World Disaster Report, 2002). Historical studies indicate that major floods in Nigeria date back to the 1933 incident which occurred in Ibadan. Thereafter, there were others in Ibadan in 1951, 1960, 1963, 1980, 1985 and 2011. Ilorin, 1976; Lagos, 1985 and 1988; Cross river and Akwa Ibom, 1989 (Emordi, 2012). In fact flooding has become a recurring phenomenon in most cities in Nigeria with the most recent occurrences in Lagos on the 10th and 11th July, 2011 after about 12 hours of torrential rainfall which resulted into loss of lives, farmlands, household goods and landed properties. Flood disaster in Lagos is only an indication of the magnitude of flooding problem in Nigerian cities. Also on 29th June, 2012, a portion of Murtala Muhammed International Airport Road by Mobil Filling Station was submerged, as were some areas in Mafoluku, Oshodi, Victoria Island, Ikoyi, Lagos Island and some other parts of Eti-Osa Local Government Area. Many residents could not get to their offices and business places as most areas in the state were heavily flooded. Many properties were swept away and some major roads in the state were blocked (Vanguard Newspaper, June 30th, 2012). Causes of the Frequent Flood Situation in Lagos, Nigeria Human settlements may be affected by four types of flooding which includes localized flooding due to inadequate drainage; flooding from small streams whose catchment areas lie almost entirely within built-up areas; flooding from major rivers on whose banks the towns and cities are built; and coastal flooding from the sea or from a combination of high tides and high river flows from inland (Douglas et al., 2008). It is estimated that the required drainage channel to avert flooding is short by about 45%; and the existing ones are only about 30% maintained (Aderogba, 2011). Furthermore, causes of flooding in Lagos as affirmed by Aderogba (2011) includes the following: torrential rain, base water flow, spring water flow, filled/silted/dirty drainage channels, ocean/lagoon surge, illegal channelization of drains, constructions and reconstructions, blockage of canals, inadequate drainage channel, non-compliance with regulations, illegal structure on drainage channels, encroachment, negligence, collapsed bridges/culverts, farming along flood plains, and nature of terrain. Theoretical Framework: Value and Price Theory Theory of value is a generic term which encompasses all the theories within economics that attempt to explain the exchange value or price of goods and services. Key questions in economic theory include why goods and services are priced as they are, how the value of goods and services comes about, and for normative value theories how to calculate the correct price of goods and services. Theories of value fall into two main categories: Intrinsic (objective) theories which hold that the price of goods and services is not a function of subjective judgments and subjective theories which hold that for an object to have economic value the object must be useful in satisfying human wants and it must be in limited supply. This is the foundation of the marginalist theory of value. In either case what is being addressed are general prices, i.e. prices in the aggregate, not a specific price of a specific good or service in a given circumstance. Theories in either class allow for deviations when a particular price is struck in a real-world market transaction, or when a price is set in some price fixing regime. Furthermore, the subjective theory of value is a theory which advances the idea that the value of a good is not determined by any inherent attributes of the good, nor by the amount of labor required to produce the good, but instead value is determined by the importance an acting individual places on a good for the achievement of their desired ends. Hence, for the purpose of this study, the subjective theory of value and its application to land and building values are adopted. Furthermore, the study is comparative in nature examining land and property market value in relation to flood risk rather than attempting to predict movement of the land market. Moreover, land price is driven by investors’ decision and their unique assessment of the relative infrastructures of the area (Lamond, 2008). For value to be determined, price theory is an inevitable mechanism which could further be explained through the mechanism of demand and supply and how it affects land value vis-à-vis its general performance. Furthermore, the theory contends that the price of any specific good or service is the relationship between the forces of demand and supply and that the point at which the benefit gained from those who demand the entity meets the sellers marginal cost is the most optimal market price for the good (Weber, 2013). In addition, Weber (2013) affirmed that value is derived as a result of relative scarcity which determines their real price; thereafter, concluded that strategic and non strategic pricing of resources is affected by the presence of externalities, asymmetric information and behavioural anomalies. This generally explains the imperfection of the property market. 3.0 Methodology This review is structured according to a series of questions that serve to demonstrate the spatial effects of flooding on land value. In this review, more attention is given to the assessed rather than perceived influences of flooding on land values in the study areas. The approach adopted includes document review, structured questionnaire and direct observation. For most qualitative studies, purposive sampling technique is used in which subjects are selected based on their relationship with the research question (Bryman, 2008). This study is no exception. Purposive sampling technique was used to select sample areas which include Lekki phase 1 and Victoria Island in Lagos, Nigeria. Lagos is the smallest State in the Federation yet with a population of about 13.5 million people and currently rated as the second African country after Cairo as having reached mega city status (Omirin, 2013). Furthermore, Victoria Island is surrounded entirely by water, bordered by the Atlantic Ocean on the South, the mouth of the Lagos Lagoon on the West, the Five Cowrie Creek to the north North, and Oniru Estate on the East. A quasi experimental approach was adopted in the study location for the purpose of assessing the variability of land and building values between areas susceptible to flooding because of their closeness to the ocean and beaches compared to other areas which are not. This is to facilitate the determination of the degree of variability of land and building values in the study area. The magnitude of the effect will be estimated from repeated sales and rental price, average mean, relative importance index and Pearson product –moment correlation. Correlation is a technique used to measure the degree of relationship between variables. It can be used descriptively to find the degree of relationship or inferentially to test hypothesis of significance. The populations considered for the study are the 318 practicing firms registered with The Nigerian Institution of Estate Surveyors and Valuers, Lagos State Branch. A systematic random sampling technique was adopted in the sample selection in which every 6th firm on the registration list was selected for the study. This gives a total of 55 firms, representing the sample size for the study location. 4.0 Study Findings Characteristics of the Respondents Real estate practitioner that is Estate Surveyors and Valuers were the respondents. This study consists of 48 Estate Surveyors and Valuers with age distribution and the distribution on the position in the organization. There were 24 (that is, 50%) respondents within the age bracket 41-50 years and only 4 (8.3%) and 5 (10.4%) in the 21-30 and 51-60 age bracket, respectively. This implies that most respondents were above 40 years in age. On the position in the organization, there were three positions involved; namely principal partner, partner and staff. While principal partners were 14, representing 29.2 percent, the associate partners and staff were 16 each and representing 33.3 percent, respectively. Thus, the respondents mostly consisted of partners and staff members of their respective firm. The Degree of Seriousness of Flood Occurrence The finding in table 1 shows a high level of occurrence of flood incidence in the study area. In 13 cases was the flooding categorized as being extremely serious in degree of occurrence while in 23 cases was it considered as serious. These evaluations together represent the opinion of 75% of the total respondents to the study. This implies that occurrence of flood is an issue of concern in the study areas. Table 1: Degree of Seriousness of Flood Occurrence   Frequency % Extremely serious 13 27.1 Serious 23 47.9 Uncertain 7 14.6 Fairly unserious 5 10.4 Number of Hours Water remains on the Land before Receding In table 2 most respondents (72.3%) indicated that during flooding incidents the water remains on land for 1 to 24 hours before receding. Meaning that, in most cases the water remain for a day at maximum. Only in few cases, (17%) has the water lasted beyond a day or up to 2-4 days. Table 2: Number of Hours Water remains on the Land before Receding Finally   Frequency % Less than 1 hour 5 10.6 Between 1-24 hours 34 72.3 Between 2-4days 8 17.0 Physical Effect of Flooding Based on the rating provided by the respondents in table 3, the flood has higher impact on traffic than on any other areas observed in the study. The impact of flooding on traffic was found within the band of 4.5 and 5.0, and categorized as being very high. Following the impact on traffic, is the impact on buildings, with 4.13 and categorized the impact as high. Others in this same categorization are impact on on-going construction, 3.77, occupiers’ health 3.32. The least effect was on open land, 3.29 and household item, 3.26. This implies that physical effect on traffic is high as it increases the number of waiting time at designated bus-stops, high traffic jam and slow movement of vehicles due to flooding of the roads. Impact on buildings was also rated high as it increases maintenance cost due to physical damage especially on façade of the building. This is followed by effect on on-going construction work on site as it increases labour and material cost as well as total construction time. Moreover, long term effects of flooding on psychological health may perhaps be even more important than illness or injury and at times emotional trauma may continue long after water has receded. Effect on open land was rated low with mean of 3.29 as well as effect on household items with the lowest mean of 3.26. This could be as a result of flood measure put in place during construction, for instance, raising the foundation high to avoid risk of been flooded. Table 3: Physical Effect of Flooding   Std. Deviation Mean Effect of flood on traffic 0.771 4.54 Effect of flood on buildings 0.841 4.13 Effect of flood on on-going construction 0.729 3.77 Effect of flood on occupiers health 0.911 3.32 Effect of flood on open land Effect of flood on household items 0.973 1.073 3.29 3.26 Average Depth of Flooding Examining the depth of flooding on the average, the study obtains response from 60% of the respondents who indicated a depth between ground level and up to 1 metre while the remaining 40% indicated a depth at basement level. Thus, the water level was 1 meter deep, at maximum. Degree of Relevance in determining Market Value Estate Surveyors and Valuers considered damage to buildings as the most relevant (with 4.40 out of 5) in determining sales and rental value of landed property. Market’s perception of risk and cost of repairs are second and third, rated on 4.06 and 4.04, respectively. This implies that often times, damage to building will have a rapid effect on the sales and rental value of buildings than the perception of risk, cost of repairs and lastly cost of insurance. Frequency of Flood Occurrence In general, the occurrence is considered to be frequent in the two locations. Only little differences are noted between the locations. For instance, while 14.6% of the respondents indicated that flooding occurred very often in Oniru, 10.4% posted similar rating for Lekki phase I. That flooding rarely occurred, the responses were distributed as 8.3% for Oniru and 14.6% for Lekki phase I- this distribution is comparably low. Effect of Flooding on Demand for Land and Building From the analysis, the effect of flooding on the rate of demand for land and building is rated averagely between 1-20%. This implies that the effect of flooding will reduce demand averagely by 1-20%. In Oniru, 33.3% of the respondents rated the effect flooding will have on demand below 1 to 10% and 45.8% provided similar rating in Lekki Phase I. About 45.8% rated the effect on demand between 11 and 20% in Oniru and 22.9% considered a similar view for Lekki Phase I. On this rating, the effect between the two locations stood at ratio 2 to 1 with Oniru having ratio 2 over Lekki Phase I. A similar ratio is shared on effect that is above 30%. This implies that the occurrence of flooding has a more negative implication on demand for land and buildings in Oniru than Lekki Phase 1. Effect of Flooding on Market Value of Land and Building Oniru recorded high effect of flooding on reduction of market value for land and buildings. Approximately 30% of the total respondents indicated impact is above 30% reduction for both sales and rental value in Oniru and only 10.4% for Lekki phase I on similar view. For degree of impact between 11-20% and between 21-30%, Oniru equally recorded high number and percentage of respondents compared to Lekki phase I, emphasizing higher impact of flooding on sales and rental value reduction in Oniru. Correlation Analysis of Flooding Occurrence and Value of Landed Property in the Study Areas Relationship between occurrence of flooding and landed property value is examined with Pearson Product- Moment Correlation and the result is given on table 4. Table 4: Correlation Analysis of Flooding Occurrence and Value of Landed Property in the Study Areas Water Corporation Road ONIRU Admiralty Way LEKKI Land Value/m2 Residential Building (rent/m2) Office Building (rent/m2) Land Value/m2 Residential Building (rent/m2) Office Building (rent/m2) r -0.343* -0.290 -0.053 -0.403** -0.479** 0.004 p-value 0.030 0.070 0.747 0.010 0.002 0.982 Remark Relationship exists No Relationship No Relationship Relationship exists Relationship exists No Relationship From the result, the p-value indicates statistical significance of correlation coefficient between flooding and land value in Oniru; r =0.343, p < 0.05, implying a relationship between the two variables. Meanwhile, the p-value indicates statistical significance of correlation coefficient between flooding and land value in the two location, and residential building rental value in Lekki; r =0.403, p < 0.05 and r =0.479, p < 0.05, respectively. For each of these findings, a negative relationship exists, meaning that the less frequent is flooding the higher the value of landed property and vice versa. It therefore implies that while flooding is related to land value in Oniru, there is no such relationship for residential and office rental values in Oniru. We equally found no relationship between office rental value and flooding in Lekki Phase I. Factors Determining Value of Land and Buildings The findings according to evaluated factors in table 5 show that flooding occupies second position, with relative importance index (RII) of 0.938, in the rank of factors considered important in determining value of land and property in area susceptible to flooding. The importance of flooding is considered after that of location with RII being 0.983. Security of property rights, fear of attack, size of property and neighbourhood and traffic congestion are other five important factors ranked after flooding with 0.913, 0.881, 0.872, 0.860 and 0.855 RII, respectively. Table 5: Important Factors Determining Value of Land and Buildings   Std. Deviation RII Ranking Location 0.351 0.983 1 Flooding or flood risk 0.689 0.938 2 Security of property rights 0.741 0.913 3 Insecurity/fear of attack 0.948 0.881 4 Size of property 0.764 0.872 5 Neighbourhood 0.749 0.860 6 Traffic congestion 0.682 0.855 7 Environment influences 0.624 0.855 7 Property type 0.648 0.852 9 Ocean view 0.871 0.851 10 Topography 0.601 0.850 11 Urban landscape and vegetation 0.582 0.842 12 Types of building 0.613 0.838 13 Social facilities 0.559 0.833 14 Land use 0.688 0.813 15 Economic recession 0.746 0.809 16 Business situation 0.571 0.796 17 Form and size of the property 0.633 0.788 18 Interest on capital 0.821 0.783 19 Population structure 0.757 0.775 20 Development status 0.947 0.762 21 Population development 0.832 0.757 22 Living cost 1.000 0.729 23 Purchasing power 0.890 0.725 24 Insurance premium 0.748 0.702 25 Unemployment rate 0.922 0.608 26 Land and Buildings Values in the Study Area Figures 1-3 gives and compare values of residential and office buildings in the two locations over a period of 2007-2013. The occurrence of flooding showed a reduced demand on land and building averagely between 1-20%. 11-20% in Oniru while Lekki phase 1 only recorded between 1-10% reduction in respect of demand of land and building. Oniru further recorded high impact of flooding on market value than Lekki phase 1. It was further observed that effect of flooding on rental value of residential and office buildings in the study area was mild as rent remained constant over a period of time. This could be adduced to the custom of rent payment per annum and in advance in the study area as well as cravings for the study location by investors for building development. This was evident in the study where respondents rated location higher than flooding or flood risk in determining market Discussion of Findings and Conclusion Findings of this study have shown that impact of flooding on land price and rental value of properties is temporary in nature. They appear to be a reaction to flood events rather than the perceived risk of flooding, damage to buildings and cost of remediation (repairs). Although about 75% of the respondents acclaimed seriousness of flood occurrence in the study location, the depth has not exceeded between ground level and up to 1 meter deep. This could be as a result of government concerted efforts at developing and reconstruction of drainages for easy passage of excess water. However, during incidence of flooding, water remained on land for 1 to 24 hours before receding. The study further showed the effect of flooding on traffic, buildings, on-going construction open land and household items with mean of 4.54, 4.13, 3.77, 3.32 and 3.26 respectively. The effect of flood on traffic was considered very high compared to the effect on building which was considered high. However with effect on open land, on-going construction and household items, respondents were indifferent. The occurrence of flooding showed a reduced demand on land and building averagely between 1-20%. 11-20% in Oniru while Lekki phase 1 only recorded between 1-10% reduction in respect of demand of land and building. Oniru further recorded high impact of flooding on market value than Lekki phase 1. At Oniru, the degree of effect on the market value of land varies averagely between 5-25% discounts while in Lekki phase 1, below 1-10% discount. In fact some respondents ascribed no effect on market value of land in lekki. This emphasizes a higher degree of flood impact in Oniru than lekki Phase 1. This further corroborates studies that flood risk results in discount in land value. For instance, Fukozono and Ikeda (2003) ascribed a discount of between 1.27 and 4.7% to land values in Japan, Bin and Polasky (2003) ascribed 5 and 8% discount in North Carolina, Lambley and Cordery affirmed between 4 and 12% discounts in Australia while Lamond (2008) ascribed a discount of between 15 and 35% to land values in the UK. In testing for the relationship between occurrence of flooding and landed property values, the study establishes that a negative relationship exists between land in Oniru, Lekki Phase1 and residential buildings in Lekki which implies that less frequent flooding will result in higher property value and vice versa. However, there is no such effect on rental value of residential and office building in Oniru and office building in Lekki which implies that flooding has no implication in determining rental values of this class of buildings in the study location. This could be attributed to the other factors that affect property performance other than occurrence of flooding or flood risk as the result further showed that location is the major determinant of land and property values as it ranked first in the study location. This further affirms Meldrum (2011) and Lamond (2008) statement that flood risk is subjective in nature, hence often times there are no discount in property values in flood plain areas. This study therefore concludes that the occurrence of flooding significantly affects the sales price of land in both Oniru and Lekki Phase1 than it does on rental values of office and residential buildings in the study location. Therefore, there is need to improve on the drainage systems to aid quick flow of excess water in less than an hour to reduce the physical impact on traffic and implementation of building code. 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Risk Frontiers – N H R C Macquaries Unversity Assessed28th October, 2013from www.riskfromtiers.com/yeo property values/Report3.doc Figure 1: Trend in Land Value in the Study Areas Oniru 2008 2009 2010 2011 2012 2013 89750 86000 83925 83500 89175 94437.5 Lekki Phase I 2008 2009 2010 2011 2012 2013 65000 67950 69075 72875 84875 80890.95 Year Sales/M2 Figure 2: Trend in Rental Value of Residential Buildings in the Study Areas Oniru 2008 2009 2010 2011 2012 2013 14862.5 15625 16000 16150 17875 19700 Lekki Phase I 2008 2009 2010 2011 2012 2013 13325 13175 14800 15650 17600 18162.5 Year Rent/M2 Figure 3: Trend in Rental Value of Office Buildings in the Study Areas Oniru 2008 2009 2010 2011 2012 2013 24025 24275 25500 25812.5 25737.5 27775 Lekki Phase I 2008 2009 2010 2011 2012 2013 22125 23062.5 22387.5 23475 23462.5 25550 Year Rent/M2 1 image1.gif