AN APPRAISAL OF THE PERFORMANCE OF REAL ESTATE IN PENSION FUND ASSETS IN NIGERIA

Abstract

Pension funds are sources of long-term finance for capital investments (real estate inclusive), as there is access to longer-term funds through contributions by employers and employees towards retirement. Investment in real estate has an impact in both developed and developing economies. The impact of pension funds in real estate investment cannot be over emphasized, since it has pool of resources from contributions of employees of both public and private sector amounting to trillions of naira in their custody, conversely, performance of real estate (RE) has found short of expectation in pension fund portfolio (PFP). It is on this basis that study appraise the performance of real estate in pension fund assets in Nigeria. The study employed secondary sources of data. The employed descriptive and inferential method of analysis. The results revealed a low performance of RE in relative to other pension assets and is ranked 6th on the basis of risk-return at 59% (0.59) and having a least average return at 10.51%. the result of correlation revealed that Real Estate (RE) maintained a weak positive relationship with six assets which include FGs (federal government security), OCEF (open and close-end fund), LMMS (local money market security) , LOS (local ordinary shares) CDS (cooperate debt security) and SGs. RE maintained negative relationship with other three investment options in pension fund portfolio which include COA (cash and other asset), PEQ (private equity) and FINV (foreign investment). The study therefore concludes that for the real estate performance in PFP to add value to PFP performance, RE decision making must be linked to the strategic decision making level of the pension fund organization.