A strengths, weaknesses, opportunities, and threats (SWOT) analysis of investment in Nigeria shows that there are so many threats real estate investors have to contend with in the country’s major cities. But of these, five stand out and they are more pronounced in major cities.
These threats, among others, include inadequate enforcement of property laws, and absence of strict regulatory oversight which has led to numerous cases where investors are defrauded or deprived of properties they have legally acquired. Others are multiple allocations of the same property to different tenants, inflated rents, and substandard construction projects.
These issues not only discourage investors, but also pose a serious threat to public trust and investor confidence as key elements of property investment in the sector.
In many of these cities, many housing schemes have been initiated by various investors who could not continue because enabling laws are inadequate in terms of enforcement to provide the needed protection.
For instance, the Rent-to-Own housing scheme, a structured scheme that allow tenants to acquire their houses, pay rents over a period and own those houses, which some estate developers, public and private operators alike, introduced into the rental market.
This scheme, according to Odunayo Ojo, CEO, UPDC, is not making as much impact as it should because the justice system in the country is not providing enough protection for the investors.
“Investors don’t see laws like what foreclosure laws that will enable them to recover or repossess their property from a sitting tenant in the event of repeated rent payment default or outright inability to pay as and when due,” Ojo said in an interview.
Similarly, poor regulation is the reason some contractors and developers fail to adhere to proper construction standards and therefore do not face strict penalties to deter negligence and ensure public safety. The implication of this is the frequent building collapse incidents that have destroyed lives and people’s investment, especially in Lagos where it happens most frequently.
Lagos is a reflection of Nigeria’s urbanisation and also one of the fastest growing urban areas in the world. But the increasing demand for residential, commercial, and industrial properties in the city has given rise to fraudulent practices in the city such as inflated rents and use of substandard construction materials for buildings.
Available records show that the city receives, on a daily basis, about 6,000 people and that about 50 percent of these ‘immigrants’ do not have any plan of returning to where they came from. This, on incremental basis, is pushing up demand for accommodation which is already grossly inadequate.
The State Government is, however, addressing the challenges with a number of interventions. One of such interventions is the Lagos State Real Estate Regulatory Authority (LASRERA) which is aimed at eliminating unethical practices and enhancing transparency in the real estate sector that offers investors a healthy playing ground for property investment.
However, “the growing appeal of Lagos state as a tourism and a business destination attracts millions of people each year despite the stringent economic situation being experienced and this is a major opportunity investors should continue to leverage,” Barakat Odunuga-Bakare, Special Adviser to Lagos State Governor on Housing, said at a real estate event.
The Special Adviser, who was represented at the event by Temitope Akinbola, Director, Monitoring and Compliance at LASRERA, added that this appeal had created a surge in the demand for short-lets which, unlike hotels, offer a homely atmosphere and are more affordable and offer quick financial returns for investors, adding that the rise in remote work adds to this need for short-lets.
“In Lagos, we are committed to transforming the real estate industry. Through LASRERA, we have leveraged technology to improve ease of doing business for investors. Our online platform provides access to accredited real estate practitioners, ensuring transparency and protecting investors from fraudulent activities.
“As we continue to regulate and professionalize the sector, I urge all stakeholders —investors, developers, and real estate professionals—to advocate for ethical practices and also register with LASRERA to enhance regulation and credibility as well as foster an environment where real estate investments can thrive safely and sustainably,” Akinbola said.
He assured that the State Government remains committed to providing an enabling environment for real estate growth, ensuring that lives and properties were protected.
