Evaluating The Effects of Facilities Management Costs On Real Estate Investment Decisions in Lagos Island

@article{1722845,
      author = {Adah Okechukwu Uchenna, Ogbogo Rosemary Nwannedinma, Adarugo Elohor},
      title = {Evaluating The Effects of Facilities Management Costs On Real Estate Investment Decisions in Lagos Island},
      journal = {Iconic Research And Engineering Journals},
      year = {2026},
      volume = {10},
      number = {2},
      pages = {3722-3736},
      issn = {2456-8880},
      url = {https://www.irejournals.com/formatedpaper/1722845.pdf},
      abstract = {Facilities management (FM) costs constitute an important component of the operating expenses of commercial and high-density residential real estate and may significantly influence net operating income, investment returns, asset values, and long-term investment performance. In Lagos Island, Nigeria, persistent inflation, exchange-rate volatility, energy challenges, infrastructure deficits, and the increasing cost of maintaining technologically complex buildings have intensified the financial burden associated with property operations. Consequently, investors and asset managers are increasingly required to consider operational expenditure alongside acquisition cost, rental income, capital appreciation, and other conventional investment indicators. This study evaluated the effects of facilities management costs on real estate investment decisions in Lagos Island, Nigeria. The study adopted a cross-sectional descriptive and analytical survey design. Data were obtained from 182 practicing Estate Surveyors and Valuers, facilities management professionals, institutional real estate asset managers, and corporate property portfolio managers using structured questionnaires and property financial audit schedules. Descriptive statistics, including frequencies, percentages, mean scores, and standard deviations, were used to summarize the data, while Pearson product-moment correlation and simple linear regression analyses were employed to test the study hypotheses. The findings revealed a statistically significant negative relationship between the facilities management cost ratio and net real estate investment returns (r = −.684, p < .001). The regression analysis further indicated that the facilities management cost ratio significantly predicted real estate investment decision outcomes, explaining approximately 52.8% of the observed variance in the investment decision score (R² = .528, F(1, 180) = 201.34, p < .001). The findings also identified energy and power generation, mechanical and electrical maintenance, and security services as major components of facilities management expenditure. Furthermore, the study highlights the potential role of building automation and Computerized Maintenance Management Systems (CMMS) in improving operational efficiency and supporting systematic cost management. The study concludes that rising facilities management costs can adversely affect real estate investment performance and influence investors' decisions regarding asset retention, reinvestment, upgrading, and divestment. It recommends the adoption of life-cycle costing, improved service-charge management, energy-efficiency strategies, building automation, CMMS, and more comprehensive operational cost analysis during real estate investment appraisal. These measures may improve the long-term financial sustainability and resilience of commercial property investments in Lagos Island.},
      keywords = {facilities management costs; real estate investment decisions; Lagos Island; net operating income; investment returns; life-cycle costing; building automation; Computerized Maintenance Management Systems.},
      month = {August},
      doi = {https://doi.org/10.64388/IREV10I2-1722845}
  }