An Assessment of the Financial Feasibility and Viability of Shopping Mall Development in Kubwa, Abuja

Abstract

Rapid urbanisation and expanding commercial activities in Kubwa, Abuja, have intensified demand for modern retail facilities, yet the area remains underserved by purpose-built shopping malls. This study assessed the financial feasibility and viability of developing a shopping mall in Kubwa using established real estate investment appraisal techniques. A descriptive case study design incorporating quantitative and qualitative approaches was adopted. Primary data were collected from 120 respondents comprising estate surveyors and valuers, property developers, retail business owners, commercial property managers, and residents, while secondary data were obtained from published literature and market reports. Descriptive statistics, Discounted Cash Flow (DCF), Net Present Value (NPV), Internal Rate of Return (IRR), Benefit-Cost Ratio (BCR), and sensitivity analysis were employed. The findings indicate strong market demand, with 78.3% of respondents expressing a high need for a modern shopping mall and 77.5% indicating willingness to patronise the proposed development. The project requires an estimated investment of ₦10.00 billion. The Investment is projected to generate annual revenue of ₦2.30 billion and net operating income of ₦1.20 billion in the first year respectively. Financial appraisal produced a positive NPV of ₦2.203 billion, an IRR of 13.74%, and a BCR of 1.22, confirming financial viability under base-case assumptions. Sensitivity analysis identified rental income, development cost, and financing cost as the principal determinants of investment performance. The study provides empirical evidence to support commercial real estate investment and urban retail planning in rapidly urbanising Nigerian cities.