For decades, the Real Estate market was driven by one simple formula, buy land cheap, fence it, and resell it at 200% profit. That era however seems to be ending.
Developers, especially in Lagos, Abuja, Ogun and Ibadan corridors are abandoning the old land-banking model for a more profitable, more difficult, but more rewarding strategy of construction and sale of houses.
From Mowe-Ofada to Epe, Ibeju-Lekki, Ikorodu, Moniya in Ibadan and Lugbe in Abuja, the billboards have changed. It is no longer “Buy a Plot for N800k”. Now it is “2-Bedroom Bungalow N25m, with 12 Months Payment Plan.”
Property watchers say that sale of bare land has dropped drastically in the last 3 years in these locations due to inflation in Cement, fear of Omonile, and government’s demolition threats, while demand for finished, habitable homes has risen beyond limits.They say the development is driven mostly by diaspora buyers, young couples, and Nigerians tired of paying rent.Perhaps the biggest reason is the problem of Omonile ,which many buyers of land run from.
According to a prominent real estate player, Kehinde Bankole, he stated that building construction provides immediate cash flow and better physical security against land grabbers, whereas bare land only offers passive long-term appreciation. “In the fast-moving Lagos real estate market, choosing to construct a building instead of just holding raw land offers distinct practical advantages,” he said.
Also speaking on the issue is Mr. Stanley Obi, a prominent figure in the real estate sector in Lagos, having been active for over 13 years.
Known as the “Apostle Landlord,” Mr. Obi leads Salescraft Properties Limited, an innovative and rapidly growing real estate company in Nigeria. In a recent discussion, he highlighted unique challenges that have become significant issues for many developers.
“Real estate developers in Lagos face numerous challenges, including high land costs, regulatory hurdles, infrastructure deficits, and volatile economic conditions. We also contend with rising construction costs, difficulties in securing financing, and risks associated with project completion and market fluctuations. However, there are additional challenges specific to developers in Lagos.
In his words: “The biggest problem we have in the real estate industry, number one, is our Customers. They buy land but often don’t develop it, leaving the land abandoned. They won’t pay for security, expecting the real estate firm that sold the land to secure it for them. They may only pay a development fee, and some don’t even pay that”.
Continuing, Obi says “Developers also contribute to their own problems. In our pursuit of profit, we sometimes fail to tell customers the truth. We neglect to advise them to start development immediately and to take physical possession of the land right away. Another issue is the Government. Both the Lagos State and Ogun State governments may recognize land with excision but still allocate it to someone else. We have observed this happenings in Ibeju-Lekki. The government can often act as the biggest land-grabbers. There are many instances of double Certificates of Occupancy and title revocation, which can put developers in a difficult position after having collected money from their subscribers.
Lastly, I must mention the Omo Oniles. They can be formidable adversaries. If you have to deal with land matters, you may find yourself battling significant issues years later. Many prominent cases resolved at law enforcement agencies like Alagbon, Panti, and Zone 2 involve disputes over land. These Omo Oniles are often at the center of such disputes. If one can manage these issues properly, they can achieve success in the real estate business. However, even 10 years after selling land, you might still be dealing with related problems, it’s a significant challenge.”
Obi also explained what makes his company unique, “Salescraft Properties is renowned for its exceptional service delivery and the distinctive qualities of its staff. Wherever you encounter a Salescraft Properties employee, you can expect the same culture, the same relationships and the same high quality of service, all contributing to a shared sense of belonging.” Within just 5 years, Salescraft Properties has grown into a major brand in the industry.
However, there are several other challenges facing the real estate market. They are as follows, Rapid Population Growth and Urbanization: These factors place immense pressure on housing and infrastructure in Nigeria. While they can stimulate demand for real estate, they also highlight the need for sustainable development plans to manage growth effectively and ensure necessary infrastructure is in place. Legal and Judicial Challenges: The legal system in Nigeria can be very slow, making the enforcement of property rights and the resolution of disputes a lengthy process. This can deter investors who are looking for a clear and efficient legal framework to protect their investments and facilitate smooth transactions. Environmental Concerns: Environmental issues such as flooding, erosion, and climate change pose risks for real estate development. Addressing these challenges requires careful planning and investment in robust infrastructure, which can increase costs and complicate development efforts. Access to Finance: Securing funding for real estate projects is a significant challenge. High-interest rates, stringent loan conditions, and a lack of specialized real estate financing options make it difficult for Agents and homeowners to obtain the capital they need, thereby limiting the scope and scale of potential projects. The narrative is that anybody can sell land but it takes a real player to build a house and deliver keys.
-ISAAC ABIMBADE
(08155107955)
