Investors value perception and its influence on investment decisions in flood risk areas

People’s risk perceptions are generally regarded as an important determinant of their decisions to adjust to natural hazards. Several studies have explored the effect of flood risk on property investments. However, mixed results were reported. This study conceptualises three non-monetary value characteristics of property investment (utility, desirability, and marketability) to examine the influence of flood risk on residential property value and the subsequent decision to invest. The study evaluates private investors’ perceptions of these characteristics and compares them with estate agents’ to understand how they influence investment decisions in areas liable to flooding in Lagos, Nigeria. The survey data was gathered through questionnaires administrated to private investors and estate agents within the study location in Lagos, Nigeria. Findings broadly show a consensus among the respondents on the contribution of each variable that makes up the usability, desirability, and marketability of property investment at risk of flooding. Out of these factors, the desirability to own/rent properties within flood risk neighbourhoods is significant in driving private investors’ decisions. Surprisingly, there was also a low level of trust and confidence in insurance activities among private investors.