The federal Government and World Bank have stated that the country is still in need of 16 million units at cost of 381 billion US dollars.
To meet this demand, a staggering 720,000 units of houses per year will need to be built thus making investment in this sector very lucrative. This gap has created momentous opportunities for real estate in the country and this gap has increasingly widened over the years.
Ladi Adegbite, Vice president, Dove Management and Services, believes that development has moved from a consistent slow moving pace to very rapid in the last few decades.
An industry that started with the colonial times, with slave trade and the missionaries, the real estate sector is one that continues to thrive. Although, the nature of development has changed as a result of changes in the needs of the local people and foreigners alike.
“The markets that started with small market settlements across the nation along transport routes changed with the growth of those cities to big metropolitan cities from Lagos through the East, all the way to the North,” he said.
The oil boom of the 1970’s, is probably the single largest catalyst for modern development. The discovery of oil was the beginning of a new era and the country experienced a population explosion which followed the economic activity and development.
“The seventies saw a great governmental wealth that enabled the introduction of more states and a blanket development, of airports, light manufacturing and creation of educational facilities all over Nigeria,” said Adegbite.
Despite the country’s dependence on oil, there are still a lot of opportunities however, development has been restricted to major capital cities and is determined by the oil market, the portal cities or government establishments.
As such, there is a dearth in the supply of quality stock housing and commercial property in the nation as the supply side of the property sector hasn’t been developed properly yet.
“Ideally long-term investors such as Institutional Investors are the ones who drive development but in Nigeria these investors are competing in short term investments and ignoring long term ones such as, property development,” Adegbite said.
Government who usually took on this role have also abandoned long term property development leaving the development to individuals with short term goals. This combined with the expensive cost of building makes property development very expensive and out of reach to the general masses.
“Opportunities in real estate are abound. So long as people exist in Nigeria, there will always be a need for property either as a work place of residential,” he said.
There is no doubt that opportunities abound in the property sector in Nigeria, however, there is a need to make these properties more accessible to the end users, especially the masses.
Nonetheless, Nigerian real estate, especially Lagos still ranks amongst the highest in the world as far as land values go.
“We need more Government intervention. There is a need to enforce the balance of portfolio risk held by institutional investors such as insurance companies and pension funds.”
Furthermore, the government needs to influence land value and make it more affordable and improve infrastructure such as roads, power, schools and hospitals. Incentives should also be given to people to move them out of the overpopulated city centres.
Adegbite believes that Government needs to introduce new policies that encourage the development of other industries such as minerals as this will develop other states further.
While the economy of the country looks to remain healthy because of the amount of oil that exists, the per capita income is still very low and needs to come up by a lot to balance the shortfall as if economic activity increases, so will development.
Going forward however, Adegbite is very optimistic about the future of this sector in Nigeria.
“The future of real estate is very bright, opportunities abound but for a viable and sustainable development that impacts positively on the economy to be achieved, there is a need to change the approach of all the stakeholders. However, even if this is not done, the development will remain erratic and without structure,” he said.