REAL ESTATE INVESTMENT AND ITS
ASSOCIATED CHALLENGES IN NIGERIA
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
Real estate has continued to play a
significant role in man’s evolution. It is not a coincidence that food, shelter
and clothing believed to be the three essentials that sustain mankind, also
have some linkage to land. Food grows out of land while shelter is affixed to
it, and man’s clothing is made largely from what grows out of land. Indeed,
whether in ancient times or today’s modern system, land constitutes a
significant index for man’s wealth, and as economic activities have assumed
more sophistication over time, land has continued to play a central role in
their development (Lewis , 1994). There is hardly any business venture that
does not require to be supported by some form of real estate: from the small
business that requires real estate as offices from where its business can be
organized, to the major venture that needs it for its factory.
Consequently, through some very robust and
well thought out land policies comprehensively address challenges that are
encounter in the real estate sector. This is not exactly the situation here in
Nigeria and the result is that there is a myriad of problems in the real estate
sector (Adewale, 2000). In the course of this study, the researcher will
provide an overview of real estate investments in Nigeria and its associated
challenges.
Real estate
investment
is intrinsically connected to the economic development and well being of any nation,
thereby necessitating some intervention by prudent governments. Such
interventions vary in degrees, depending on the nation. In Nigeria, individual
could rarely lay claim to any part of it as owner and therefore could not alienate
it without the consent of the head.
Proper financing is all-important to successful property/real
estate investment and development. Various forms of finance on varying terms
from diverse investing agencies are available to the property/real estate market.
The principal field where various forms of investment finance are employed is
that of development where every loan has to be specially tailored for an
individual scheme and the particular stages within the scheme. Since real
estate and property development in particular involves huge capital
expenditure, finance is therefore an essential input, the nature of which is to
provide capital to enable the enterprise operate commercially (Ratcliff, 1999).
The cost and availability of finance for real estate development can influence
the viability of such project. It is necessary to examine the nature of real
estate investment in Nigeria with a view of finding solutions to the associated
challenges.
1.2 STATEMENT OF THE PROBLEM
In recent times, research
on real estate investment has been on the front burner has it is the major
source of housing for man. In the hierarchy of man’s needs, housing has been
ranked second and as a result of this; housing provision has become a paramount
cornerstone of the policies of various governments both at federal and state
levels since independence in Nigeria. The consequences of the rapid rate of urbanization
are most visible in the rapid deterioration of urban housing resulting in urban
housing poverty especially as there is no proportionate increase in the number
of housing stocks.
.
During the period of
economic boom in the 1970s in Nigeria, there was surplus capital, the economic
climate then was favorable for the development of real estate and the prospect
of gain was over blown and so were the rate of development. Due to the recent
drop in the prices of crude oil world wide and corruption, government has not
been able to invest in real estate. Overpopulation and urbanization has led to
massive increase in property development.
Financial houses readily obliged
developers’ loans, as they perceived minimum risks.
Since real estate
development requires huge capital outlay, there is always the need for real
estate developer to source for fund. However, this study will examine the scope
of real estate in Nigeria and its associated challenges with a view of making
useful suggestions on the way forward for real estate in Nigeria.
1.3 OBJECTIVES OF THE STUDY
The
following are the objectives of this study:
1. To
provide an overview of real estate investment in Nigeria.
2. To
examine the challenges associated with real estate investment in Nigeria.
3. To
identify the way forward for real estate in Nigeria.
1.4 RESEARCH QUESTIONS
1. What
is the level of real estate investment in Nigeria?
2. What
are the challenges associated with real estate investment in Nigeria?
3. What
is the way forward for real estate in Nigeria?
1.5 HYPOTHESIS
HO:
Real estate investment has no challenges in Nigeria.
HA:
Real estate investment has several challenges in Nigeria.
1.6 SIGNIFICANCE OF THE STUDY
The
following are the significance of this study:
1. The
findings from this study will educate the general public on the benefit of real
estate investment and its associated challenges which will form the basis for
guidance in decision making.
2. This
research will also serve as a resource base to other scholars and researchers
interested in carrying out further research in this field subsequently, if
applied will go to an extent to provide new explanation to the topic.
1.7 SCOPE/LIMITATIONS OF THE STUDY
This
study on real estate investment and its associated challenges in Nigeria will
cover the extent of real estate investment in Nigeria looking at the factors
that has facilitated or hindered it. It will also cover the challenges
associated with real estate investment in Nigeria.
LIMITATION OF STUDY
Financial constraint– Insufficient fund tends to impede the
efficiency of the researcher in sourcing for the relevant materials, literature
or information and in the process of data collection (internet, questionnaire
and interview).
Time constraint– The researcher will
simultaneously engage in this study with other academic work. This consequently
will cut down on the time devoted for the research work.
1.8 DEFINITION OF TERMS
Investment:
an investment is a monetary asset purchased with the idea that the asset will
provide income in the future or appreciate and be sold at a higher price.
Real
estate: property consisting of land or buildings.
REFERENCES
Adewale, J.R. 2000: Real
Estate Investment Analysis. Lexington Books.
Lewis, M.G. (1994): When
Real Estate Becomes Big Business: Mergers, Acquisitions and Joint Ventures.
Cahners Publishing.
Ratcliff, R.U. (1999): Real
Estate Analysis. McGraw Hill, New York.