Nigeria, the acclaimed “Giants of Africa,” has maintained its position as the country with the most Real Estate investment on the African continent for the past two decades and counting. This achievement is largely attributed to the country’s growing population of 200 million people.

However, Nigeria, like most African countries, is plagued by numerous economic and political issues, which have had a negative impact on the country’s real estate market.

Here are the seven most critical concerns confronting the Nigerian property investment sector:

#Problem 1: Expensive Residences

The ongoing rise in the price of most Nigerian homes is posing a significant challenge to the country’s real estate sector. Most Nigerian cities are overpriced, which discourages potential investors. Rivers, Lagos, and Abuja are the most affected cities, all of which are important commercial hubs.

Furthermore, the exorbitant price tag has widened the social divide between different income earners. In short, there are some areas where a middle-income earner, let alone a low-income earner, cannot afford to rent a home.

For example, in Lagos State, certain housing units are occupied by the wealthy and cannot be afforded by low-income earners. When this happens, combined with the country’s rising economic woes, people tend to flock to less expensive areas, putting a damper on hopes of a possible drop in rent costs.

#Problem 2: Capital Market Threat

The risk in the capital market has increased as a result of coronavirus. The volatility of the equity capital market in this post-pandemic period is one of the reasons for Nigeria’s low returns.

As a result, because the real estate sector is a component of this financial system, most protective investors will reconsider investing in real estate. Moreover, the raising capital for lands, fees, and construction costs will make things more difficult for estate agents.

Farther from the real estate clime, this financial problem will eventually have an impact on the Nigerian economy by limiting the flow of cash in the real estate sector, thereby affecting the country’s Gross Domestic Product.

 #Problem 3: ESG

ESG is an acronym for Environmental, Social and Governance. It is a set standard that is used to evaluate the environmental and climate effects of housing units.

In Nigeria, most apartments are characterised by pollution, prevalence of waste in public areas, lack of trash bins for proper waste disposal, and more. This is not just mostly prevalent in big cities such as Lagos and Abuja but is also common in some rural communities.

Furthermore, according to the Global Housing Standard, real estate professionals should be concerned about greenhouse gas emissions. Some real estate practitioners in Nigeria disregard this standard, resulting in widespread environmental and climate change in most areas of the country.

Furthermore, statistics show that Nigeria’s ESG indexes grew by an additional 40% in 2020. This increase was primarily influenced by matrices determined by how Nigerians handled waste and how conducive their environment was. Another important factor that contributed to the exponential increase was the high proportion of healthy residents compared to the low rate of medical cases caused by environmental factors.

#Problem 4: Naira Depreciation

The rate at which the Naira is depreciating is a major source of concern for all sectors of the Nigerian economy, including real estate. The Nigerian government’s failure to subsidize the cost of building materials adds insult to injury, forcing contractors and building engineers to purchase this expensive construction equipment at exorbitant prices.

Nonetheless, housing experts have made several recommendations for the country to become self-sufficient in the manufacturing of building materials. These recommendations have yet to bear fruit, but in the meantime, Nigerian Real Estate Investors will most likely be purchasing construction materials at exorbitant prices, aided by rising naira depreciation.

#Problem 5: Increased Rural-to-Urban Migration

One of the issues confronting Nigeria’s real estate sector is the increased rate of rural-to-urban migration. The large influx of renters from rural areas to urban areas has had a significant impact on property regulation in the country. As a result of this unchecked mobility, one of the major causes of high home rent is overpopulation.

Despite the fact that rent prices in rural areas are relatively low, people flock to urban areas in search of greener pastures due to a lack of investment opportunities. As a result, most real estate managers and agents capitalize on this flow by raising house rents.

#Problem 6: Ineffective Property Protection Laws

Estate laws are generally not properly implemented in Nigeria, which has resulted in many cases where investors have been deprived of the land they legally purchased. This is common in developed areas of the country, such as Lagos, and is primarily orchestrated by a group of land thiefs known as omo-onile. These well-known property scammers have a penchant for dubbing investors with the settlement fee tag. They are also commonly found on construction sites where building projects are in progress, where they either violently or deceitfully extort.

Furthermore, despite the city’s law, which guarantees offenders 21 years in prison, omo-onile (general term for land grabbers in Lagos) continues to thrive in certain areas of Lagos State. There have been numerous cases where people’s land has been forcibly taken and buildings demolished, rendering the property protection law ineffective. This appears to be deterring a significant number of real estate investors from investing in Nigerian property.

#Problem 7: Poor Building Quality

Cases of collapsed buildings in various parts of the country indicate that the construction materials used by some contractors are subpar. In short, some of these building contractors in Nigeria lack the necessary educational credentials and professional experience.

Furthermore, this persistent problem appears to have become a source of concern for the majority of Nigerians, and if allowed to persist, it may succeed in tarnishing the image of the country’s real estate sector. As things stand, some buildings in certain industrial areas of the country do not meet construction standards, which is largely due to the incompetence of the responsible building contractors.

Conclusion

The importance of real estate in Nigeria cannot be overstated. It is a major economic driver and has generated wealth for the country. However, despite being Africa’s largest sector, it has faced a number of critical challenges over the years.

Building collapses, for example, have increased the number of human casualties, instilling fear in the majority of residents. These concerns have made the country’s real estate sector’s prospects less promising and likely to drive away potential property investors if not corrected.

Dennis Isong Helps Individuals Invest Right in Real Estate. For Questions on This Article Or Enquiry About Real Estate Email: [email protected] or Whatsapp/Call +2348164741041

AMCON MD/CEO, Ahmed Kuru (left); Nigerian Ambassador to Egypt, His Excellency, Nura Abba Rimi and Hon. Justice Binta Nyako at the event in Cairo, Egypt

The Nigerian Ambassador to Egypt, His Excellency, Nura Abba Rimi has called for total reforms in the judicial system in Nigeria, which he said will provide the much-needed reassurance to investors that are ready and willing to come to Nigeria.

The ambassador made the call at the opening ceremony of the 2021 Federal High Court foreign training in Cairo Egypt.

The ceremony was also attended by the managements of Asset Management Corporation of Nigeria (AMCON) led by Mr. Ahmed Lawan Kuru; that of the Federal Competition & Consumer Protection Commission (FCCPC) also led by its Vice Chairman/CEO, Mr. Babatunde Irukera as well as the Director General-Legal Academy, Dr. Fatihu A. Abba among others.

The ambassador is surprised that agencies of the federal government of Nigeria have court cases that are dragging for years and posited that lack of a functional judicial system in Nigeria is hurting the economy.

He said while it is almost impossible to avoid dispute in commercial ventures, an investor is concerned about the mechanism in place for resolving any disputes that may arise in the course of his business. According to him, in as much as the popular phrase “time is money” cannot be over-emphasised, no investor is willing to tie down money, capital, or investment for an unascertainable period of time due to commercial disputes.

He said, “The fear is usually that the investment and/or capital would have lost its value at the time the dispute is eventually resolved. Thus, investors would be averse to investing funds in any country where dispute resolution is not reliable, effective and/or efficient. This is the case of the Nigerian judicial system. But this can be remedied or mitigated by judicial reforms through sustained dynamic training of the judiciary as demonstrated by the Hon. Chief Judge of the Federal High Court-Hon. Justice J.T. Tsoho.

“Many investors and investment have been lost over the years as a result of the failure to pursue efficient and/or effective judicial reforms. Indeed, timely disposal of cases in the OECD countries has sustained investor confidence in the economies of these countries. It demonstrates the remarkable efficiency of the judicial system in those countries. Accordingly, investors would be convinced that any dispute relating to their investments would be determined expeditiously by the   Courts in these countries.”

Rimi further explained that Court related litigations in Nigeria is majorly characterised by three (sometimes four) stages, commencing from the trial Courts, then the appellate court and then the Supreme Court. The journey to the Supreme Court in a commercial dispute could last for as long as eight to 20 years, which he said is very sad.

Again, he said, “For instance, in Bilante Intl Ltd v. N.D.I.C (2011) LPELR-781 (SC), the suit was commenced in 1992 and it continued till June 2011, when the Supreme Court delivered its judgment. Also, in Edilcon (Nig) Ltd v. UBA PLC (2017) LPELR-42342 (SC), the decision of the trial Court was delivered in December 1997, whilst the decision of the Supreme Court was delivered in May 2017 – about 20 years after.

Accordingly, it is recommended that the heads of Courts in Nigeria should consider prescribing measures geared towards decongesting the dockets of the Courts and restoring investor confidence in the Nigerian judicial system.”

The Judiciary especially the Federal High Court plays an effective role in boosting economic growth. Therefore, it is necessary for My Lord the Hon. Chief Judge of the Federal High Court to immediately embark on the desired, relevant, and critical   steps to reform his Court to mirror and address judicial expediencies of the present times, which is needed to expeditiously deal with the thousands of pending cases in courts.

“It is crystal clear that a working and functional judicial system plays a major role in the society in maintaining not just law and order but boosting the economy. The Government must as a matter of great importance take active steps towards reforming the judiciary with a view to ensuring the expeditious and fair administration of justice. No serious nation prioritizes matters relating to the elections over the economy. An efficient judicial system provides the framework for stability and economic development,” Ambassador Rimi noted.

Kuru in his remarks while appreciating the Chief Judge of the Federal High Court for the opportunity at the conference said the Corporation cannot over flog the important role the judiciary play in national development as earlier highlighted by Ambassador Rimi, and as such judges remain vital to the success of the Country.

He added that “Quick, efficient and fair dispensation of justice is not only necessary but Godly.

“With specific reference to AMCON He said, “We have repeatedly made the point at every opportunity that all stakeholders must view the AMCON mandate as one of serious national importance. If at sunset AMCON is unable to recover the huge debt of over N5trillion, it becomes the debt of the Federal Government of Nigeria for which taxpayers’ monies will be used to settle. The implication is that the public will be made to pay for the recklessness of only a few individuals who continue to take advantage of the loopholes in our laws to escape their moral and legal obligations to repay their debts. We should not allow a few individuals to escape with our commonwealth. And we want to do it within the confines of the law. “We must encourage a society where people must be made to honour their obligation and should not find solace under any guise in any institution of government.”

On his part, Hon.  Justice J.T. Tsoho, the Chief Judge of the Federal High Court who described the gathering as ‘very historic’ as it constitutes their first outing on an international training since the outbreak of the COVID-19 pandemic in early 2020 stated that the judiciary in Nigeria will continue to seek knowledge on how to better the economy and the country at large through trainings and knowledge sharing with their peers around the globe.

He said it was on that note that, “Today’s digital age and digital economy necessitated the need for our Court to be conversant with the technicalities of these regimes if we are to effectively adjudicate on matters relating to the concepts underpinning this Seminar.

Indeed, it is these underpinnings that educated my decision to theme the programme “The place of the federal high court in the digital age, for economic development and the stability of the financial system.”