Home • PRRES Inc. Journal • Read the Journal

Quantifying non-monetary value attributes of property investment: Implication on investors’ decision-making in flood risk ar

Author/s: Abiodun Kolawole Oyetunji, Chiemela Victor Amaechi, Olugbenga Timo Oladirin, Temitope Omotayo

Date Published: 19/06/2025

Published in: Volume 30 - 2025 Issue 1 (pages 34 - 56)

Abstract

Quantifying non-monetary value attributes of property investment: Implication on investors’ decision-making in flood risk areas

Risk perceptions have a crucial role in influencing people's decisions to adapt to environmental threats. Various outcomes have been achieved by diverse studies that have examined the implication of flood risk on property investment. This present study quantifies three themes (usability, desirability, and marketability) that revolve around non-monetary value attributes of property investment and assesses how their perceptions by property investors could sharpen investment behaviour in areas at risk of flooding. The study areas selected for the investigation were Ikorodu and Ibeju Lekki, an area that is mostly sought-after in Lagos, Nigeria. Data was collected through the distribution of questionnaires administered to the respondents within the study location. Findings from the survey indicate a general agreement on the impact of each thematic factor on property investments vulnerable to floods. Among the statements put forward, the appeal of owning or renting houses in flood-prone areas significantly influences investors' choices. Surprisingly, the study also discovered that these investors exhibited a very low degree of trust and confidence in insurance operations within the study location.

Download Full Article

Download the Full Article PDF

Website-Quantifying-non-monetary-value.pdf Website-Quantifying-non-monetary-value.pdf (589kB)

Keywords

Decision-Making, Flood Risk - Non-Monetary - Property Investment - Value Attribute

References

  • Akbar, D., Rolfe, J., Small, G., & Hossain, R. (2015). Assessing flood impacts on the regional property markets in Queensland, Australia. Australasian Journal of Regional Studies. 21(2):160-177. https://hdl.handle.net/10018/1038439
  • Atreya, A., Ferreira, S., & Kriesel, W. (2013). Forgetting the flood? An analysis of the flood risk discount over time. Land Economics 89(4):577-596. https://doi.org/10.1353/lde.2013.0040
  • Babcock, M. & Mitchell, B. (1980). Impact of flood hazard on residential property values in Galt (Cambridge), Ontario. Journal of the American Water Resources Association, 16(3):532-537. https://doi.org/10.1111/j.1752-1688.1980.tb03908.x
  • Baldauf, M., Garlappi, L., & Yannelis, C. (2020). Does climate change affect real estate prices? Only if you believe in it. The Review of Financial Studies, 33(3):1256-1295. https://doi.org/10.1093/rfs/hhz073
  • Beltrán, Allan; Maddison, David; Elliott, Robert J. R. Is Flood Risk Capitalised Into Property Values?, Ecological Economics, Volume 146, 2018, Pages 668-685, ISSN 0921-8009, https://doi.org/10.1016/j.ecolecon.2017.12.015.
  • Beniston, M. & Stephenson, D.B. (2004). Extreme climatic events and their evolution under changing climatic conditions. Global and Planetary Change, 44, 1-9. https://doi.org/10.1016/j.gloplacha.2004.06.001
  • Bernstein, A., Gustafson, M.T., & Lewis, R. (2019). Disaster on the horizon: The price effect of sea level rise. Journal of Financial Economics, 134(2):253-272. https://doi.org/10.2139/ssrn.3073842
  • Bhattacharya-Mis, N. (2014). A model to investigate the impact of flooding on the vulnerability of value of commercial properties. A doctoral thesis submitted to the University of Wolverhampton.
  • Bhattacharya-Mis, N. & Lamond, J.E (2016). Risk perception and vulnerability of value: a study in the context of commercial property sector. Int. Journal of Strategic Property Mgt. 20(3):252–264. https://doi.org/10.3846/1648715x.2016.1188174
  • Bin, O. & Kruse, J. (2006). Real estate market response to coastal flood hazards. Nat. Haz.Review, 7(4):137-144. https://doi.org/10.1061/(ASCE)1527-6988(2006)7:4(137)
  • Birkholz, S., Muro, M., Jeffrey, P., & Smith, H. M. (2014). Rethinking the relationship between flood risk perception and flood management. Science of the total environment, 478, 12-20. https://doi.org/10.1016/j.scitotenv.2014.01.061
  • Bond, S. (2000). Estimating stigma of ex-contaminated land: The "buyer beware" principle reigns. Sixth Pacific Rim Real Estate Society Conference, Sydney, Australia 23-27 January.
  • Creswell, J.W. (2009). Research design qualitative, quantitative and mixed methods approaches. 3rd Ed. London: Sage Publications Ltd.
  • Crichton, D. (2003). Flood risk and insurance in England & Wales: Are there lessons to be learned from Scotland? Benfield Greig Hazard Research Centre, Department of Earth Sciences, University College London, London.
  • Dahl, K., Cleetus, R., Spanger-Siegfried, E., Udvardy, A., & Worth, P. (2018). Underwater rising seas, chronic floods, and the implications for US coastal real estate. June, 1– 27.
  • Durdyev, S., Hosseini, M.R., Martek, I., Ismail, S. & Arashpour, M. (2019). Barriers to the use of integrated project delivery (IPD): A quantified model for Malaysia. Engineering,
  • Construction and Architectural Management, 27(1):186-204. https://doi.org/10.1108/ECAM-12-2018-0535
  • Eves, C. (2004). The impact of flooding on residential property buyer behaviour: An England and Australian comparison of flood affected property. Structural Survey, 22(2), 84-94. https://doi.org/10.1108/02630800410538613
  • Gerald-ugwu, G.C., Egolum, C.C., & Emoh, I. (2019). An investigation of factors accelerating rise in building in the flood prone areas of Port-Harcourt. Iconic Research and Engineering Journals. 3(1):375–384.
  • Green, C.H. & Penning-Rowsell, E.C. (1989). Flooding and the quantification of intangibles. Journal of the Institution of Water and Environmental Management, 3(1):27-30. https://doi.org/10.1111/j.1747-6593.1989.tb01363.x
  • Gutman, J. (1982). A means-end chain model based on consumer categorization processes. Journal of Marketing, 46(2):60-72. https://doi.org/10.1177/002224298204600207
  • Harris, J., Durdyev, S., Tokbolat, S., Ismail, S., Kandymov, N. & Mohandes, S.R. (2019). Understanding construction stakeholders’ experience and attitudes toward use of the structurally insulated panels (SIPs) in New Zealand. Sustainability, 11(5458):1-14. https://doi.org/10.3390/su11195458
  • Harrison, D.M., Smersh, G.T., & Schwartz, A.L. (2001). Environmental determinants of housing prices: The impact of flood zone status. Journal of Real Estate Research, 21(1/2), 3-20. https://doi.org/10.1080/10835547.2001.12091045
  • Hennighausen, Hannah and Suter, Jordan F. "Flood Risk Perception in the Housing Market and the Impact of a Major Flood Event." Land Economics, vol. 96 no. 3, 2020, p. 366-383. Project MUSE muse.jhu.edu/article/758939
  • Horn, D. & Mcshane, M. (2013). Flooding the market. Nature Climate Change 3(11):945- 947. https://ssrn.com/abstract=2351253
  • Keinonen, T. (1997). One-dimensional usability - Influence of usability on consumers’ product preference. Taideteollinen korkeakoulu, UIAH A 21, Helsinki.
  • Lambley, D.B. & Cordery, I. (1991). Effects of floods on the housing market in Sydney. In International Hydrology and Water Resources Symposium (National Conference Publication 91/19) (pp. 863-866). Barton, Australia: The Institution of Engineers Australia.
  • Lamond, J.E. (2008). The impact of flooding on the value of residential property in the UK. PhD Thesis. Wolverhampton: University of Wolverhampton
  • Lamond, J., Proverbs, D., & Hammond, F. (2010). The impact of flooding on the price of residential property: A transactional analysis of the UK market. Housing Studies, 25(3), 335–356. https://doi.org/10.1080/02673031003711543
  • Lessing, B., Thurnell, D. & Durdyev, S. (2017). Main factors causing delays in large construction projects: Evidence from New Zealand. Journal of Management, Economics and Industrial Organization, 1(2):63-82. https://doi.org/10.31039/jomeino.2017.1.2.5
  • Mind'je, R., Li, L., Amanambu, A. C., Nahayo, L., Nsengiyumva, J. B., Gasirabo, A., & Mindje, M. (2019). Flood susceptibility modeling and hazard perception in Rwanda. International journal of disaster risk reduction, 38, 101211. https://doi.org/10.1016/j.ijdrr.2019.101211.
  • Minnery, J.R. & Smith, D.I. (1996). Climate change, flooding and urban infrastructure. In Bosma, W.J., Pearman, G.I. and Manning, M.R. (eds.), Greenhouse. Coping with Climate Change, CISRO, Australia, 235-247.
  • Mundy, B. (1990). The impact of hazardous materials on property value. The Appraisal Journal 60(2):155-162. http://doi.org/10.1038/nclimate2025
  • Oppenheim, A. (1992). Questionnaire design, interviewing and attitude measurement. Continuum: London
  • Oyetunji, AK, Oluleye, IB, Olukolajo, MA & Chan, DWM (2022). 'Is green good: Unveiling the latent benefits of sustainable housing delivery', Cities, vol. 129, 103809. https://doi.org/10.1016/j.cities.2022.103809
  • Patton, M.Q. (2002). Qualitative research and evaluation methods. Sage, Thousand Oaks, CA.
  • Pitt, M. (2008). The Pitt review - Learning lessons from the 2007 floods. Cabinet office, London.
  • PRC (Property Research Centre). (1992). Effect of flooding on residential property values. (Final Report to the Upper Parramatta River Catchment Trust). Hawkesbury, Sydney: Faculty of Business and Land Economy, University of Western Sydney.
  • Queensland Flood Science, Engineering and Technology Panel (2012). Understanding the flood. http://www.chiefscientist.qld.gov.au/publications. Accessed on 13 Jan 2020
  • Rözer, V. & Surminski, S. (2021). Current and future flood risk of new build homes across different socio-economic neighbourhoods in England and Wales. Environmental Res. Letters. 16,1–16. https://doi.org/10.1088/1748-9326/abec04
  • Santoro, S., Pluchinotta, I., Pagano, A., Pengal, P., Cokan, B., & Giordano, R. (2019). Assessing stakeholders' risk perception to promote Nature Based Solutions as flood protection strategies: The case of the Glinščica river (Slovenia). Science of the total environment, 655, 188-201. https://doi.org/10.1016/j.scitotenv.2018.11.116
  • Shackel, B. (1991). Usability – context, framework, design and evaluation. In Shackel, B. and Richardson, S. (Eds), Human Factors for Informatics Usability, Cambridge University Press, Cambridge, pp. 21-38.
  • Shrubsole, D., Green, M., & Scherer, J. (1997). The actual and perceived effects of floodplain land-use regulations on residential property values in London, Ontario. Canadian Geographer, 41(2):173-193. https://doi.org/10.1111/j.1541-0064.1997.tb01156.x
  • Soentato, R. & Proverbs, D.G. (2004). Impact of flood characteristics on damage caused to UK domestic properties: The perceptions of building surveyors. Structural Survey, 22(2):95-104. https://doi.org/10.1108/02630800410538622
  • Terpstra, T., Lindell, M.K., & Gutteling, J.M. (2009). Does communicating (flood) risk affect (flood) risk perceptions? Results of a quasi-experimental study. Risk Analysis. 29(8):1141-1155. https://doi.org/10.1111/j.1539-6924.2009.01252.x
  • Tobin, G.A. & Montz, B.E. (1990). Response of the real estate market to frequent flooding: The case of Des Plaines, Illinois. Bulletin of the Illinois Geographical Society. 33(2):11-21. https://digitalcommons.usf.edu/geo_facpub/131
  • Tobin, G.A. & Montz, B.E. (1994). The flood hazard and dynamics of the urban residential land market. Journal of the American Water Resources Association, 30(4):673-685. https://doi.org/10.1111/j.1752-1688.1994.tb03322.x
  • Troy, A., & Romm, J. (2004). Assessing the price effects of flood hazard disclosure under the California natural hazards disclosure law (AB 1195). Journal of Environmental Planning & Mgt 47(1), 137-162. https://doi.org/10.1080/0964056042000189844
  • Turnbull, G.K., Zahirovic-Herbert, V., & Mothorpe, C. (2013). Flooding and liquidity on the Bayou: The capitalization of flood risk into house value and ease-of-sale. Real Estate Econs. 41(1):103–129. https://doi.org/10.1111/j.1540-6229.2012.00338.x
  • Worthington, A.C. (2008). The impact of natural events and disasters on the Australian stock market: A GARCH-M analysis of storms, floods, cyclones, earthquakes and bushfires. GlobalBus. & Econs Review, 10(1):1–10. https://doi.org/10.1504/GBER.2008.016824
  • Zhang, L. & Leonard, T. (2019). Flood hazards impact on neighborhood house prices. The Journal of Real Estate Finance and Economics, 58(4):656–674. https://doi.org/10.1007/s11146-018-9664-1