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Investment Opportunities in the Real Estate Industry 1

lagos building

The dwindling oil revenues, economic recession coupled with the recovering nature of the economy amongst other factors affecting the economic growth and development of Nigeria has called for a more subtle approach in diversifying and investing in a worthwhile investment opportunity. Thus, real estate has been described as a major source of investment with great return on investment and hedge against inflation as enshrined in its characteristics.

Real estate majorly refers to any landed property investments. However, it must be emphasized that the great potentials of real estate still remain largely untapped.
The Nigerian real estate market with its potentials, like similar markets in several emerging economies in Africa and the world, has not benefitted from varied property investment opportunities and still remains poorly tapped and harnessed. With surging rents, significant housing deficits and increased demand for a wide range of real estate investment opportunities, the Nigerian real estate market is a matrix of opportunity and unique challenges, which only optimistic, rational and good investors would be able to successfully convert into viable, long-term profits.

glass house

According to Akeju (2007), the status of the Nigerian housing market which remains highly untapped and undeveloped despite lot of opportunities that abound in the sector is attributed to many reasons amongst which include: lack of finance; government policy; lack of infrastructural development and high level of poverty, information generation and transmission as well as the responsiveness to changes in the real estate market. Real estate has become an asset class for individual and institutional investors seeking to diversify their investment portfolios.

A clear understanding of these situations is key to the effective development of the real estate market, generation of significant investment opportunities and high return on investment for prudent investors.

What Are the Real Estate Investment Opportunities?

Land Holdings

With a rapidly urbanizing population, city borders are rapidly appreciating creating an opportunity for land investments. However, venturing into this area requires deep insights into government plans in terms of infrastructure distribution and land allocations. This is because of the lapse in infrastructure spread across the country, especially in city outskirts.

Commercial Buildings

The first major opportunity in commercial real estate today is in retails, shops, stalls and office retail settings. Recently there has been a rush development of malls all over the country. In general, there is a lot of room for world-class retail spaces, even shopping centres, strips and mini markets. For years, Nigeria has operated a large and segmented market system where pricing on products are set according to your haggling ability but today as the majority of the population move into the city and a mass majority gain incredible global exposure there is a newfound push and acceptance of organized retail centres.

Residential Real Estate

Residential real estate offers an incredible array of investment opportunities, some with reasonable participation from current investors, others left idly still. Estates development is one of the areas with high opportunities and while there are a lot of participants in that arena scaled estates covering 100’s of acres is not the norm.

Land Flipping / Land Speculation

This means buying land and quickly reselling it for profit. This is one of the smartest investments in the industry and requires no effort whatsoever.

Open Space Leasing

This refers to letting out open space for the use of events.

This post is an extract of a paper delivered by ESV. (Dr.) Bolarinde J. Patunola-Ajayi, PPNIVS, FNIVS, FRICS on Opportunities in the Real Estate Industry

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