Determinants Of Listed Property Stock Prices In Nigeria: A Macro Economic Perspective

PURPOSE: The paper analysed the movements in the prices and returns of property listed stock and the determinants of these prices in the Nigerian Capital market for the period of 2000 to 2010.DESIGN/METHODS/APPROACH: Data on the prices and dividend payments on the only listed property stock, (UACN Property Development Company (UPDC)) in Nigeria, was collected from the Nigerian Stock Exchange’s daily price list. Information on macro economic variables, which included inflation rate, GDP, consumer price index, GDP Deflator, interest rate, employment and exchange rates, were also sourced from the Central Bank of Nigeria (CBN) Statistical Bulletin and the Nigerian Labour Force for the same period. The time series changes in the price of listed property stock were analyzed with the use of holding period returns while the determinants of the price movements were established by analysing the relationship between property listed stock prices and the economic variables in the market using the arbitrage pricing models.FINDINGS: The result showed that real estate total return averaged 37.34% and ranged from -25.99% to 93.64% for the period of measurement, while the macro-economic variables explained about 82.5% of the variations in the total return. At individual level, Interest Rate had the highest effect on real estate performance with beta of -16.13, while Consumer Price Index had the lowest effect coming with a beta of 0.619.RESEARCH LIMITATIONS/IMPLICATIONS: The paper concluded that decision to invest in property listed stock in Nigeria should be on short or medium term basis as investors who stayed too long might gradually lose their investments.ORIGINALITY/VALUE: The paper is one of the few attempts at examining the relationship between listed property stock returns and economic variables, especially from the perspective of African emerging market.