Skip to main content

Real estate in Nigeria

Going Into Real Estate Or Building In Nigeria? Be Sure Of The Property And The People You Are Dealing With!

Real estate is the land and building attached to it. Real Property is the legal rights that run with land and building; leasehold, leased fee, fee simple and freehold.
Real estate is the 2-3 dimensional physical aspect of real property. Example of real property is fee simple or freehold; ownership in perpetuity except when interrupted by police power and or eminent domain of the state.
When a state in Nigeria grants one a Certificate of Occupancy, even though it is for a term certain (leasehold), it is considered real property given the initial term and renewal options. For land one owns in their village via Right of Occupancy, it is freehold, because such land is owned in perpetuity but is still subject to police power and eminent domain.


For a property that commands a gross potential rental income of N600,000, with possible sale price of N30m, is unimaginable in developed economy where income is the basis of value. Assuming one were to borrow to acquire such property and rely on the income to carry the mortgage note, it will not happen.
If rule of thumb, devoid of analysis, were to hold through and true in all cases of property valuation, the highest value one can expect from such property earning N600,000 annually is N6m or $40,000, that is a 10x factor.
Nigerian real estate, as most things in the country, is skewed and overly hinged on transactions often motivated by undue volume of cash chasing few investment assets. All things considered, Nigeria’s real estate market is very small; and even with that, the asset class and grade are hardly investment quality. That major foreign pension funds and insurance companies shun Nigeria’s real estate opportunities is due to the limited and confusing market fundamentals that direct and influence investment interests.
Because Nigerian financial institutions and service companies have limited exposure in real estate investments in the country, the cash driven investments are not at levels to produce desired trends. And given there are very few cities such as Abuja, Lagos and Port Harcourt that have some level of sophistication, the rest of the cities are bare and not attractive for considerable investment. Here is a measure of property class: Nigeria has less than 5,000,000 square feet of purpose built office buildings available for rent. This is an indication that the economy is not knowledge based and when it comes to R&D spaces, it is virtually non-existent.
Nigerians are trading people and even the retail real estate are denoted with street hawking, dominated with open space markets, and mom-pop shops/stores that sell anything and everything.
What many in Nigeria regard as shopping centres and malls are basically neighbourhood stores of less than 100,000 square feet. While definitions can be localised, certain grades of real estate assets are universal by definition, and when such definition seems to go counter to international standards, global investors shy away.
The consequence of such a culture is the absence of volumes of transactions and sophistication to help jump start the real estate market. As real estate in developed economies constitutes about 70 per cent of a nation’s economic wealth, the manner of its use must meet certain standards in order to add value to the overall economy. Most municipalities in the United States rely on real estate property taxes as a source of revenue. It is the highest single source of their revenue, bringing in up to 45 per cent. www.bcilimited.com

Comments

Post a Comment

Popular posts from this blog

Ogun plans low cost housing scheme

The Ogun State Housing Corporation has said that it is planning to deliver low and middle income housing estates across the state. In a statement, the corporation said its flagship scheme, Plainfields Estate, was already being developed as a community housing prototype that would provide the citizens an opportunity to buy into its plan over the next few years. According to the statement, the estate will, upon completion, have a variety of apartment units. The statement read in part, “The corporation will deliver houses and serviced plots across the three senatorial districts, but will avoid a blanket approach. “This means that these projects will be tailor-made to suit the needs of the locality and the market. Everyone who has recognisable means of livelihood in the formal and informal sectors is qualified to buy. “However, the corporation is keen to help those who need mortgages and who are first time buyers.  Because our objective is to encourage home ownershi
Post a Comment
Read more

Informal sector leads job creation in Nigeria

According to the International Labour Organisation (ILO), Africa’s working-age population is estimated to have reached over 490 million in 2012, representing a quantum leap of 259% since 2000 at an annual compound growth rate of 2.8%. Therefore, employment of the continent’s teeming labour population is key to economic development within the region and indeed, globally. Sub-Saharan Africa’s absorption of its working-age population in employment compares favourably to other regions as contained in the ILO’s 2013 global employment trends report.Subsequently, total estimated number of jobs created in the Nigerian economy for the first quarter of 2013improved by 12% over the previous quarter. This development, in line with the latest job creation report released by the National Bureau of Statistics (NBS), indicate that 174, 326 new jobs were added to the nation’s economy.  Overall, conducting quarterly labour force surveys is a positive trend for Nigeria considering the
Post a Comment
Read more

How to Make Yourself Work When You Just Don’t Want To

There’s that project you’ve left on the backburner – the one with the deadline that’s growing uncomfortably near.  And there’s the client whose phone call you really should return – the one that does nothing but complain and eat up your valuable time.  Wait, weren’t you going to try to go to the gym more often this year? Can you imagine how much less guilt, stress, and frustration you would feel if you could somehow just make yourself do the things you don’t want to do when you are actually supposed to do them?  Not to mention how much happier and more effective you would be? The good news (and its very good news) is that you can get better about not putting things off, if you use the right strategy.  Figuring out which strategy to use depends on why you are procrastinating in the first place:  
Post a Comment
Read more