The real estate industry in Nigeria, despite all its challenges and limitations has indeed come of age. It is important to note that the journey so far has not been one which has been unavoidable and most importantly, indispensable.
Throughout the world, the evolution and historical growth of economies has been closely tied to real estate and housing engagements and with the global economic challenges currently ongoing, this sector can create the necessary thrust to propel Nigeria’s economy to its potential heights, allowing it compete effectively with other economies.
The Nigerian Real Estate sector, despite its enormous social and economic potential and contribution is still plagued by a myriad of problems. The housing sector particularly has suffered especially in the area of policies and the drive by the government to provide lasting solutions to our housing shortage problem which appears to be age-long. The private sector has mostly been the driver of this initiative and this has come to the populace at a high cost usually. On occasions, the government made interventions like budgetary allocations to housing sector and in other cases, carrying out construction themselves but these contributions have not had the desired effect as the housing deficit continues to increase. This failure has mainly been attributed to an absence of a properly structured Housing and Mortgage Finance Scheme.
With the recent introduction of some policies by the government like the new tax regimes and also social trends are expected to engineer some real growth in the sector which would be the first time since the 2015 recession.
These policies include the Finance Bill 2019 which is expected to favor Real Estate Investments Trust as soon as it becomes active. Other steps include:
- Recapitalization of Mortgage Banks and insurance companies
- The Family Home Fund
- The Nigeria Mortgage Refinance Company
- Ministry of Works and Housing N10 Trillion Naira National Infrastructure Bond to bridge funding gaps for construction of housing and other infrastructures.
Experts who attended a recent Real Estate event titled “The Nigerian Real Estate Market Outlook” applauded these policies and moves by the government and are confident of a more positive response from the market within a short period of time. Some recommendations were made which include government rolling out legislation that would make affordable housing a reality, easier access to land approval process and control.
With our improvements on the World Bank Ease of Doing Business ranking, it is a big positive signal for investors as 2020 is already showing signs of increase in demand for industrial and commercial real estate. This is due to stimulation in the manufacturing and production sector as a result of favorable government policies.
Agriculture is one of the biggest beneficiaries of some of the recent policies and interventions. With a constantly rising demand for food and raw materials for production, especially with the impact of the Covid-19 pandemic on global food industry, agriculture as a part of real estate (because of use of land) with its limitless potentials will serve a Special Purpose Vehicle (SPV) to drive the needed change and expansion in real estate and also in economic recovery.
Although it has been quite a journey for real estate in Nigeria, the next couple of years ahead, it appears, would be exciting, progressive and very importantly, profitable.