The rise of industrial areas leads to rapid development and population growth. This creates lucrative opportunities for real estate investments in nearby residential areas that cater to the housing needs of the incoming workforce. In this article, we provide five compelling reasons why residential estates near industrial zones make sound investment choices. We support our arguments with a case study of the Idu Industrial Area in Abuja, Nigeria.
1. High Demand for Rental Properties
Industrial areas attract people seeking jobs from everywhere. This leads to a sudden increase in housing needs, especially rentals, to accommodate the transient workforce (Roberts, 2022). With limited housing options near workplaces, demand for rental properties surges. Investing in residential estates to provide rental apartments and quarters can give assured returns. For instance, the population of the Abuja Municipal Area Council (AMAC) where the Idu Industrial Area is located rose from 427,400 in 2006 to 1,406,900 in 2016 (City Population, 2022). This indicates the rising need for living spaces with a growing population.
2. Potential for Property Appreciation
As industrial areas grow, residential property rates in surrounding locations appreciate due to heightened demand for accommodation (Baker, 2020). Idu Industrial Area has expanded rapidly with many factories, warehouses, and workshops setting up base. This has led to real estate price surges in neighboring residential estates like Life Camp, Jabi, and Kado Estate (Centre for Affordable Housing Finance in Africa, 2018). Investing early in residential estates near upcoming industrial zones can help capitalize on property value appreciation over time.
3. Infrastructure Development Benefits
Industrial growth leads to increased government and private spending on improving infrastructure like roads, power lines, and sewerage (Oladunjoye, 2022). For instance, the Abuja phase 3 water project was initiated in 2021 to meet growing water demands in the Gwagwalada, University of Abuja, and Idu Industrial areas (This Day Live, 2021). Such infrastructure upgrades can increase residential property values. Also, well-connected roads, reliable electricity, and piped gas make industrial zones more habitable for citizens. Areas like Life Camp adjacent to the Idu Industrial Area have benefitted from the infrastructure boost.
4. Long-Term Location Stability
Established industrial areas tend to thrive for extended periods, providing residential estates nearby with locational stability (Reina et al., 2022). For over 30 years, the Idu Industrial Area has been a major manufacturing hub in Abuja. This has made nearby areas reliably attractive residential addresses without location risks. Choosing residential estates adjacent to established industrial zones can give the assurance of steady long-term growth.
5. Local Amenities Development
As the workforce increases, residential estates near industrial areas attract facilities and services like schools, supermarkets, and healthcare (Louw et al., 2013). For instance, the residential population boom around the Idu Industrial Area has led to private hospitals, international schools, shopping complexes, and entertainment centers opening in Life Camp and Jabi (Nweze, 2019). Access to such amenities can significantly enhance residential property attractiveness and rates over time.
Key Takeaways
Investing early in residential estates near upcoming or established industrial zones can deliver strong returns in the long run. Factors like rising housing demand, infrastructure upgrades, location stability, and growth of local amenities contribute to consistently increasing property values and rental incomes. Industrial activity tends to attract large working populations and government/private investments, leading to the socio-economic development of adjoining areas. Identifying residential estates that can benefit from such growth can be a prudent real estate investment approach.
References
Baker, D. C. (2020). How factories affect local housing markets and social capital. Housing Policy Debate, 30(3), 437-457. https://doi.org/10.1080/10511482.2019.1665839
Centre for Affordable Housing Finance in Africa. (2018). Housing and the economy in Nigeria. http://housingfinanceafrica.org/app/uploads/Nigeria-Housing-and-the-Economy.pdf
City Population. (2022). Abuja Municipal Area Council. https://www.citypopulation.de/php/nigeria-admin.php?adm2id=NGA008013
Louw, E., Needham, B., Olden, H., & Pen, C. J. (2013). Planning new residential areas in the urban periphery: A law and economics approach. Real Estate Research Quarterly, 12(3), 24-34. https://doi.org/10.2478/reseq-2013-0009
Nweze, N. (2019, June 10). Jabi Lake Mall: Showpiece of luxury, leisure in Abuja. The Sun Nigeria. https://www.sunnewsonline.com/jabi-lake-mall-showpiece-of-luxury-leisure-in-abuja/
Oladunjoye, P. (2022, March 10). Mainstreaming urban infrastructure development. Vanguard. https://www.vanguardngr.com/2022/03/mainstreaming-urban-infrastructure-development/
Reina, V., Guo, W. K., & Acolin, A. (2022). The capitalization of enterprise zones into housing values: Evidence from Texas. Regional Science and Urban Economics, 92, 103704. https://doi.org/10.1016/j.regsciurbeco.2021.103704
Roberts, B. W. (2022). Managing land use conflicts around major industrial facilities: Examining drivers of change and implications for local housing markets. Land Use Policy, 110, 105837. https://doi.org/10.1016/j.landusepol.2021.105837
This Day Live. (2021, January 11). AEDC Signs MoU with FCT On Abuja Phase 3 Water Project. https://www.thisdaylive.com/index.php/2021/01/11/aedc-signs-mou-with-fct-on-abuja-phase-3-water-project/
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