Fundamental sources of uncertainty in real estate development: Perspectives from an emerging market

This study examines the fundamental sources of uncertainty in real estate development (RED) and the management measures adopted from the perspective of the Nigerian market. A closed-ended questionnaire was served on property development/appraisal firms, and the data were analysed using descriptive statistics and principal component analysis. The findings showed that uncertainty sources in RED are attributable to firms/stakeholders' influence, project team’s capability, economic/market data and project information. These sources have variances of 18.080%, 12.303%, 12.013% and 10.462%, respectively, and cumulatively explain 52.859% of the total variance. Furthermore, the results showed that 'clearly defined project objectives and priorities', 'clearly spelt out relationship between project stakeholders', 'SWOT analysis of the project', 'conducting pilot studies' and 'clear communication between project stakeholders' were the most adopted uncertainty management measures. The study concluded that there is a prevalence of external uncertainty sources impacting on development projects in the Nigerian market, and the management approaches are directed towards stakeholders' management and a thorough analysis of the project and market variables. An understanding of these uncertainty sources and the management measures adopted reduces the chances of wrong appraisal advice and decision, thereby resulting in increased investors' confidence and the professional relevance of the development advisor is justified.