Investors’ enthusiasm for real estate dampened by poor paperwork.
According to experts, poor paperwork and a lack of access to credit are key obstacles for real estate investors in Africa’s largest economy.
The experts, speaking at BusinessDay’s inaugural Property Investment Show in Lagos on Friday, said that resolving the issues would necessitate concerted efforts from all stakeholders, as well as an increase in investors’ willingness to make long-term commitments, drive innovation, and boost the real estate market.
The absence of titles for landed properties, according to Obinna Onunkwo, deputy CEO of Purple Capital Partners Limited, an investment firm focused on Nigeria’s real estate market, has resulted in losses for investors.
“Investors who own land without a title are losing money,” Onunkwo remarked. “Once a piece of property obtains a title, its worth rises.”
Banks, he claims, will only finance real estate projects whose documents have been verified by the government.
Poor paperwork, according to Olaposi Lawore, managing director of HEREl, a real estate investment business based in Lagos, is a key impediment to boosting the value of real estate investments in Nigeria and giving more alternative sources of investment.
“Documentation is required to access the stock market or the financial sector in general,” he stated.
“The documentation process and the expense of getting it done is nothing to write home about,” he added of the difficulties developers confront.
Lawore asked investors to think about the structure’s quality as well.
“Look for fundamental issues beyond being overly positive about the structure,” he added. “The last thing you want to do is invest your money someplace you won’t extract value in the long term.”
Lawore recommended investors to learn about the economics and technicalities of real estate investment.
He recommended real estate investors not to be seduced by enticing offers, but to conduct thorough research and identify the differences in the offers’ functionality and thought processes.
“Our latest survey showed that Nigerians in the diaspora account for 70% of real estate investment in Nigeria, while Nigerians at home account for 30%,” Ugoada Orji, managing director of Romax Properties Limited, stated.
Nigerians living overseas, she claims, are bringing in new wealth to mimic the infrastructure that exists in affluent nations.
“Every area in Nigeria’s real estate market is shifting the demographic for investments,” Orji remarked.
According to Modupe Anjous, CEO of Rydal Mews, there is an increasing disparity between Nigerian bank facilities and mortgage loans, making it impossible for the typical Nigerian employee to invest.
“What we’re seeing now are investments from Nigerians in other countries,” she added.
According to the National Bureau of Statistics’ recently issued GDP report, Nigeria’s real estate industry grew by 2.26 percent in the fourth quarter of 2021, which is 0.3 percent lower than the previous quarter.