Background of the Study
Investment in property is viewed as an engine of sustainable growth (Ahn & Hemmings, 2000). However, in less developed countries (LDCs) the national level of savings is very low (Javorcik & Smarznska, 2004). Thus, there is a wide gap between the required rate of investment in property market and the existing rate of such investments (Asiedu, 2006). The Brussels Declaration enclosed 30 worldwide development goals for LDCs, together with the realization of an investment to GDP ratio of 25 per cent and an annual GDP growth rate of at least 7 per cent in order to attain sustainable progress and poor quality reduction in LDCs (United Nations, 2010).
Behavioural economists attribute the imperfections in property markets globally to certain biases. These biases include cognitive biases such as overconfidence, overreaction, representative bias, information bias, and various other predictable human errors in reasoning and information processing. These have been researched by psychologists such as Kahneman (1979), Tversky (1979), Thaler (1994), and Slovic (2000). A cognitive bias is a systematic discrepancy between the “correct” answer in a judgmental task, given by a formal normative rule, and the decision makers and experts' actual answer to such a task (Kahneman, Slovic, Tversky, 1982; and Gilovich, Griffin, Kahneman, 2002). Thus, cognitive biases can further be viewed as a negative consequence of adopting heuristics. They are a discrepancy between someone´s judgment and reality and can be cognitive (Virine & Trumper, 2008).
Decision makers also tend to make judgments based on an initial assessment as anchor, but fail to make sufficient adjustments later on. It is the tendency to rely on one trait or piece of information when making decisions. Virine and Trumper (2008) categorized several cognitive biases into four types: (i) behavioural biases and biases related to perception; (ii) biases in estimation of probability and belief; (iii) social and group biases; and (iv) memory biases and effects. Studies have also been conducted all over the world on the relationship between behavioural patterns of investors and investment decisions. Hussein and Al-Tamimi, (2006) investigated the factors influencing the United Arab Emirates (UAE) investor behaviour where it was found that six factors were the most influencing factors; expected corporate earnings, get rich quick, stock marketability, past performance of the firm's stock, government holdings, the creation of the organized financial market.
The Nigerian property market has evolved extensively with great opportunities for investors, particularly in states like Rivers, Kano, Enugu, Kaduna, Oyo, Lagos and the capital city Abuja have witnessed great upturn of investors, plunging millions of dollars in the real estate sector, especially in the commercial sectors. The growing interest in the Nigerian Market is due to high demand raised by the increase in urban population and change in shopping culture among the increasing population. These factors have resulted in the up-spring of numerous shopping malls. The Nigerian property market remains attractive with numerous opportunities in the following sectors of the market; Retail Real Estate, Office blocks and Serviced Apartments (FHA, 2015).
Nigeria is made up of thirty states with Abuja as the capital city. Plateau State is situated in the North-Central and the middle belt zone of Nigeria. Jos is the capital city of Plateau State, linked by road, rail and air to other parts of the country. Plateau state is known among the thirty-six states in Nigeria to be endowed with cool and temperate climate as against other states in the country with hot weather conditions. This has attracted both serving and retired top government officials and businessmen from all parts of the country to invest in the property market in the state as most of them prefer to reside in the state after their retirement. The state has often been classified as a miniature Nigeria with virtually all the tribes in the country residing there. Apart from its favourable climate and tourist attractions, the state is also known to be blessed with natural resources such as tin, columbite, and lead among others. These resources have attracted investors from within and beyond which has resulted in the increase in property development by investors (Nwude, 2012). However, most of the investors tend to exhibit certain biases in making their investment decisions in the property sector in Nigeria (Obamuyi, 2013).