Macroeconomic dynamics and property investment returns: Evidence from time series econometrics

Abstract

The paper examines macroeconomic variables influencing returns on investment in hostel property in Akure and its policy implications at both a local and a national level. The study drew on rental and capital values of off-campus hostels in Akure from 2003 to 2023, with macroeconomic data sourced from the Central Bank of Nigeria and the National Bureau of Statistics. The Augmented Dickey-Fuller test determined stationarity, Granger causality established directional relationships between variables, and the Fully Modified Least Squares methodology assessed the impact of macroeconomic variables on hostel property returns. Results show that macroeconomic factors have a causal relationship with hostel property returns, accounting for 65.5 percent of the variation. The Granger causality test confirmed that macroeconomic variables drive hostel property returns, but not the reverse. The Engle-Granger cointegration test established a long-run convergence between variables. Future predictions of dependent variables were reasonable when exogenous variables were applied. The study recommends that macroeconomic variables be treated as significant tools in predicting the direction and fluctuation of hostel property investment returns.