The booming real estate market in Nigeria is expected to be on the increase in the next few years. According to PricewaterhouseCoopers (PwC), Nigeria’s real estate investment is expected to increase by 49 percent by the year 2020. With the increase, the estimated value will be about $13.65 billion.
The report titled ‘Real Estate: Building the future of Africa’ predicted the sector will grow at 8.7 percent making it the sixth largest in the economy. The growth will be on the back of increased investment in properties by high net worth individuals in the oil rich country.
Major cities in Nigeria are predicted to witness an influx of institutions, foreign and private businesses, which will lead to increased demand for commercial real estate.
The report estimated that there is a shortfall of 17 million housing units in Nigeria, with a funding requirement of about $363 billion. “The significant investment shortfall creates opportunities for investors in the long run,” PwC said in the report. Nigeria offers huge potential, where a substantial population and a fast growing economy and middle class are creating significant demand for retail options. Most of the demand is seen in metropolitan areas where retail space is currently undersupplied,” it added
On the flip side, the PwC’s study said there were some problems facing the real estate industry in the West African nation, include problems with access to finance, especially with a lack of long-term debt financing and underdeveloped mortgage market, as mortgage loans represent less than one per cent of the nation’s gross domestic product.
The cumbersome and time-consuming processes for land acquisition and ownership documentation; expensive land in urban areas; high cost of building materials and construction and over-reliance on expatriate workers was also stifling the local construction industry.
Insecurity, especially in the northern part of the country, was also a big concern to investors and needed to be tackled for the sector to attain its full potential.
By Pita Ochai