THE SIMPLE QUESTIONS YOU NEED TO ASK WHEN THINKING ABOUT REAL ESTATE IN NIGERIA.
It is usual to hear investors say of the real estate environment as being opaque, unstable and that they don’t understand what happens there. Yet every day enquiries are being made and new markets are being discovered in Nigeria.
I will agree that though the Nigerian real estate market is opaque and you can’t understand what drives this market; it remains the most unexplored sector – The housing deficit within the country already speaks for itself, the retail sector is at kindergarten stage and totally underserved. The industrial distribution and logistics segment remains untapped, whilst the commercial office sector continues to be overrated with high rents and undersupply. The hospitality sector only caters for the business traveler and does not reckon with the tourist or holiday maker.
With an active population of at least Ten million and with an overall population of One Hundred and Fifty Million, there is so much that remains possible within the country; the biggest challenge remains information.The major absence of information greatly affects the sector and its as simple as WHAT, WHERE, WHO & HOW.
- WHAT IS AVAILABLE?
- WHERE IS IT?
- WHO OWNS IT?
- HOW DO WE QUANTIFY IT?
If we can easily and consistently provide answers to the above questions then the economic potential of the land assets within the country will be unleashed. It’s that simple.
It is therefore a must that the government and allied professionals begin to gather verifiable information relating to real estate and its development.We must gather information from 1960 and if possible from beyond that date and begin to develop a sustained data pool to support real estate activities.
The yields from property are phenomenal however, nobody will believe this as it remains unproven and thereby not sustainable and secure.There must be ease of access and a corresponding ease of exit. Information that will enhance the possibility of this must be freely available and not remote and isolated within one individual or governmental department. There must be consistency in the dissemination of such information.
THE NEXT CHALLENGE REMAINS POLICY.
Policy flip flops will not give confidence, Policy inconsistency will also not give confidence.
So these are the questions to ask
- WHAT CAN WE DO?
- WHERE CAN WE DO IT?
- WHO HAS THE RIGHT?
- HOW DO WE PROCEED?
The answers to these questions must be consistent for everybody. In Lagos state everybody is familiar with the challenges of change of use. This is a major problem for serious minded investors. It limits the possibilities in the decision making process when one does not have real facts. A location may not be commercial, yet you see commercial activities; however the authorities have said you need a change of use permit to convert the use code, but the Governor embargoed this yesterday!!!!
Incredible! yet the next door neighbor just rented for commercial use. The economic implication is that the Landlord /Owner may not rent that property for a Longtime or a prospective tenant may not find a suitable enough property in the location it seeks.This results in the implications of rents going up in certain locations andremaining stagnant in others.
This is simple and straight forward. Fill in your form 1c, sign and submit your conveyance documents. However in reality it is a nightmare – a probable 6 months nightmare. The problem here is linked to documentation and process and of course the bottleneck of so many files needing the governor’s autograph. This frustrating process has seen some call for the scrapping of the Land Use Act. I do not agree; I see it more as a requirement for the amendment of the Act and that the power and also process be properly delegated to the Lands Bureau.
The Lands Bureau process and systems should be made completely automated and all lands must be registered, documented and continuously processed. Transactions and registration should not take more than one week after legal documents have been exchanged. Monthly transactions can then be released to open source systems for all to verify and validate.
The Lands bureau must also ease off on documentation requirements for registration, as some of these requirements do not actually exist or the peculiarity of the system does not allow for some the documents to be immediately available.
So is the Nigerian real estate market opaque?Yes it is and so are many other situations and sectors for investment and opportunities, but let’s begin with the “WWW&H”(i.e. the WHAT, WHERE, WHO & HOW) questions whenever we decide on real estate or real estate transactions in Nigeria.
IT’S THAT SIMPLE. SEEK ADVICE.
Gbenga Ismail MRICS SIOR.