Highest and Best Use Analysis of Real Estate Investment in Selected Cities in South Africa and Nigeria

Investors and property developers are dealing with increased vacancy because of the recent COVID-19 pandemic, which primarily hit office buildings and commercial centers in urban areas. Vacancies and increased abandonment of particular property classes are increasing at an alarming rate in both Nigeria and South Africa. The national vacancy rate, according to the South African Property Owners Association (SAPOA) in 2022 was 11.6%, with Johannesburg having the highest vacancy rate at 15.8% in the first quarter of 2021 and 19.4% in the first quarter of 2022. In Ibadan, South-West Nigeria, 20% of residential houses developed in the last 50 years remain vacant. As a result, investors and property developers are constantly looking for new uses for unoccupied properties such as office buildings and commercial spaces. The highest and best use (HBU) analysis was described in this research to solve the vacancy problem in South Africa and Nigeria. The physically achievable, appropriately supported, and economically feasible use of vacant land or improved property to produce the most benefits as well as the highest land value at any given time. This study investigates how investors and property developers might utilize the concept of HBU analysis to remodel buildings and commercial spaces to ensure that they are not only profitable but also provide optimal value to cushion the aftermath of the recent global pandemic. The paper’s key question is, “What are the best alternative uses for vacant property in the selected cities?”.