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!
