The real estate sector in Nigeria, especially, in Lagos is going through many challenges in the year 2024. There are several factors that are affecting the business but due to inflation and certain government policies, the sector has witnessed some troubling challenges that can hinder the progress and development of the sector. Below are at the top ten issues affecting real estate in Nigeria presently.
HIGH COST OF CONSTRUCTION
The cost of construction materials and labor in Nigeria is exceptionally high. Some factors such as inflation, import tariffs on building materials, and the lack of local manufacturing drive up prices. These make property development expensive, which in turn affects affordable housing for buyers and renters.
The construction part of the sector is gradually fading off as more and more developers are moving to other things. Most of them are now into land brokerage; buying and reselling of land. While some are into agriculture and selling land for others to farm. The reason for this new development is that, there are several estates that they have promised to deliver at a certain period to their various customers but the inflation and high cost of materials have made it difficult for them to deliver as promised. Some of these projects have been abandoned. In the midst of these, their staff and other aspect of the company must be running, hence the company has to generate funds to be able to meet its demands.
ECONOMIC INSTABILITY
Nigeria’s economy is highly dependent on oil, and fluctuations in global oil prices can lead to economic instability. These changes affect disposable income, investors confidence, and the overall demand for real estate. Economic downturn can also lead to a slowdown in construction and lead to rise to low patronage which inturn gives birth to the existence of vacant properties. Since the beginning of this administration, Nigeria’s economy has been unstable despite all the measures put in place, making it very difficult for real estate firms/agents to sell enough products.
INSECURITIES IN MAJOR PARTS OF THE COUNTRY
In real estate, there are investors who come in as investors to provide liquidity but once there is insecurity in that part of the region, they withdraw their funds. Nigeria has been blessed with local and foreign investors who come to the sector with large fund in the last few years.
Other security concerns, including issues such as terrorism, kidnapping, and communal conflicts, can negatively impact real estate values and development. These issues are rampant and then the areas perceived as unsafe are less attractive to people who want to buy and also residents, these can as well limit growth and development.
LAND OWNERSHIP AND TITLE ISSUES
Titling is a major issue in the Nigeria real estate market. A lot of investors are always very sceptical about buying properties that do not have CofO in Nigeria. Even some CofO get revoked due to one reason or the other. A lot have lost billions due to this factor. We also have a case of forging land titles which makes it very difficult for buyers to know which one is genuine or not.
Land ownership in Nigeria is filled with complications. The Land Use Act of 1978, which vests land ownership in the hands of state governors, often creates bureaucratic red tape and delays. Many lands have unclear titles or are subject to disputes, which makes transactions risky and tiring.
LEGAL AND JUDICIAL CHALLENGES
The legal system in Nigeria can be very slow, making the enforcement of property rights and resolution of disputes a lengthy process. This can deter investors who seek a clear and efficient legal framework to protect their investments and ensure smooth transactions.
POPULATION GROWTH AND URBANIZATION
Rapid population growth and urbanization put a huge pressure on housing and infrastructure in Nigeria. While they can drive demand for real estate, they also maintain the need for sustainable development plans to ensure that growth is managed effectively and that the necessary infrastructure is in place to support it.
ENVIRONMENTAL CONCERNS
Environmental issues such as flooding, erosion, and climate change are sometimes risky to real estate development. These challenges need careful planning and investment in strong infrastructure, which can increase costs and complicate development efforts.
INADEQUATE INFRASTRUCTURE
Nigeria lacks essential infrastructures such as roads, electricity, water supply, and sewage systems, which impacts real estate development. Many areas, like some local states here in Nigeria, suffer from poor infrastructure. Therefore, it raises the cost of development and reduces the appeal of potential investments.
POPULATION GROWTH AND URBANIZATION
Rapid population growth and urbanization put huge pressure on housing and infrastructure in Nigeria. While they can drive demand for real estate, they also maintain the need for sustainable development plans to ensure that growth is managed effectively and that the necessary infrastructure is in place to support it.
INEFFECTIVE PROPERTY LAWS GOVERNMENT POLICIES
Frequent changes in government policies and regulations can create an unpredictable environment for real estate investment to thrive. Real estate agents and investors often face delays and additional costs due to unclear or changing regulations, which can deter long-term investment also.
-Isaac Abimbade
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