The Other Side of the Coin

Real Estate in Nigeria

• In the past weeks, I have endeavoured to portray real estate in Nigeria as the sector to invest, despite everything.

• This is for both Nigerians and foreigners.

• Today I venture into what this ‘everything’ entails. Everything that is an obstacle in facts and figures.

The Big Picture

• Nigeria is ranked 144 out of 177 countries in the corruption index by Transparency International. 

• That means it is one of the most corrupt countries in the world.

• Although the government has put in measures to curb this, the phenomenon is still rampant across board.

Corruption

• Fraudsters have been known to portray buildings as being on sale in cities whereas they were already bought by other parties.

Fraudsters

• Be careful and seek the right advice while investing here.

• Get a professional e.g. a surveyor to minimize the possibility of falling for fraudsters.

• Record the entire transaction.

• Clarify, clarify, clarify.

• This is what you would do in any other country anyway. Don’t assume.

What do you do?

• A quick search for reports on mortgage rates and other pertinent real estate information gives you nothing.

• Only real viable source is the global Knight Frank Africa Report.

Lack of real estate information

• In essence, real estate finance in Nigeria barely exists, at least not until recently with NMRC.

• Mortgage rates are among the highest in the world.

• Interest rates are about six times those in the U.S.

• Nigeria is Africa’s second-most expensive real estate market after Angola.

Mortgage rates

• The bureaucratic process is long enough to tire you out.

• A way around this is getting the right professionals and facts to back you in your real estate venture.

• It is not impossible to develop but you will definitely need a lot of grace to wallow through the jungle of the poorly funded real estate industry.

Mortgage rates

• Government policies regarding land ownership keep changing.

• Verify with the Lands Bureau if all government charges have been paid. 

• Allocation of land has often been based on political reasons without much concern for genuine players.

• The long processes of land acquisition again come in play.

• Too many agencies that are in charge of land matters which lead to confusion when registering for land and titles.

• The Land Use Act has been criticised many times for its crippling effect in the real estate market.

Complex land tenure system

• This can have enormous effects on the economy as a whole.

• For instance, in 2011, there was a huge dip in Nigeria’s gross domestic product (GDP) from a growth of 7.8% in 2010 to 6.7% attributed to the oil production shut-down.

• Oil also affects the real estate industry from a management perspective where it focus on it causes the overlooking of other sectors of the economy.

Over-dependence on oil and gas

• On the bright side, the growth recorded today as I noted earlier is driven by the non-oil sector.

• In that way, over-dependence is on a reduction scale now.

Growth

• This was just to paint an objective picture of Nigeria through my eyes and those of many other practitioners in the market today.

• We are a work in progress, Nigeria. Keep it here for more.

The future is bright!