Challenges of Real Estate in a Developing Country like Nigeria

THE CHALLENGES OF REAL ESTATE IN A DEVELOPING COUNTRY
The challenges of Real Estate in a developing country like Nigeria as a point reference are quite enormous considering the insincerity on the part of the government in tackling the housing need of the country Nigeria. With a population of over 140 Million, 40% of the population cannot boost of a house of their own or even pay for a comfortable accommodation. The fact is that there are no affordable house in Nigeria for people to even take on mortgage and repay over time. This still bulges down to the fact that their is over 18 Million housing need in the country and 18 Million opportunity to tap into in the Real Estate business. Lets assume that it will cost an average person 150,000.00 Naira to rent a two bedroom flat in any of the beautiful state capitals in Nigeria excluding cities like the FCT, Lagos, and Port Harcourt.
It then means that there is a turnover of #150,000.00 Naira multiply by 18,000,000.00 People = #2,700.000,000,000 Naira. We are talking of a yearly turnover of 2.7 Billion assumed to be required to meet the housing needs of average Nigerian who desires to live in a comfortable 2 Bed room flat in a capital city in year. Assuming that you as an Entrepreneur taps into 1% of these housing needs, that means that you are taking home a whooping sum of 270,000,000.00 Naira/annum. Lets assume that you are not aggressive about it and you get half of 250,000,00.00, then we are equally taking about a reasonable amount of money as an entrepreneur in the real Estate. Residing in a City like Federal Capital Territory, Lagos, Port Harcourt it then means that the figure has to at least double, and we are talking of about twice the figure above for Rents alone. These are Cities where a plot/parcel of land in choice locations goes for 1/2 a Billion Naira and above. Nevertheless challenges exist in the Real Estate among which are
1.)Poor funding
2.)Lack of Professionalism
3.)Land Use Act
4.)Corruption
5.)Poor Banking Support
6.)High Interest rate
7.)Attitude of Local Land Owners
8.)Overwhelming needs
9.)Distrust
10.)Lack of Standardization
11.)Poor Record System
12.)Poor Planning
13.) Government Ineptness
14.)Attitude of Labour and Practitioners
1.)POOR FUNDING
Poor funding on the part of the government is a major concern in real estate development. The Federal Mortgage Bank which is a government Bank embodied with the statutory role of providing the masses with mortgage loans are not performing it function effectively. The government at both the federal. state and local level are not doing the right thing in ensuring that the housing needs of the country are meet. Government on the other hand are not adequately exploring the opportunities that are bound in the Public Private Partnership initiative in the provision of affordable housing units.
2.)LACK OF PROFESSIONALISM
Lack of professionalism in the Real estate business is a big challenge. Some real estate developer goes as far as importing the specialised skills for some specialised jobs in the real estate development. These development adds to the overall overhead in the development of properties in Nigeria. Again the rising rate at which structures and buildings collapse in the country is a clear indication that Nigeria is not getting building/ construction professionalism right in the country
3.)LAND USE ACT
Another major source of worry and set back in real estate development especially as it concern getting land title and and occupancy certificate. Many Real Estate developer from the sincerity of their heart will tell you that land use act is a major threat to real estate business in Nigeria.
4.)CORRUPTION
Corruption is a big worm that is eating deep into the fabrics of the country. Corruption actually makes things not to work properly as planned. Corruption affects the Real Estate business to the extent that virtually the prices of building and construction material are on the high side. Its a chain reaction thing such that ones their is a leakage at one end as a result of corruption,it has triple effect at the other end and in most cases the masses are at the receiving end which translate into high cost of properties in the country.
5.)POOR BANKING SUPPORT
The issue of funding is a very serious one as long as the challenges in Real Estate is concern. Financial Institutions in the country are not proving loans to investors and Entrepreneur who wants to venture in the Real Estate business. The recent clamp down in August 2009 by the Apex Regulatory body CBN on some of the Top Executives of 5 Banks in Nigeria for indiscriminate rending and non performing loans has even made Banks to tighten their rending requirement in order to avoid the hammer of the Apex Bank. With adequate fund,Nigeria has the potential to actualise the housing needs of its citizenry
6.)HIGH INTEREST RATE
High Interest rate is also related to poor banking support discussed above. The Banks are not giving out loans and when they do the Interest rate is always outrageous and unacceptable for investors to key in. Nigeria is one of the OPEC nations that are still operating a double digit interest rate at the expense of real economic growth

7.)ATTITUDE OF LOCAL LAND OWNERS
The attitude of local land owners is a major concern in real estate development and enterprising. The local land owner called by different names depending on the state in question. Enugu State for instance has the umu nike as their major land owners threat in the state. Lagos has the Omole as threats to land development in the state. These people demand for outrageous amount of money from a legitimate land owner before meaningful development / construction project can be allowed to that place on the site under development. However This attitude of land owners can be taken care of by effective Public Private Partnership. This kind of arrangement allows the government to deal with the community in their own way whilst the developer are allowed to engage in their developmental projects.
8.)OVERWHELMING NEEDS
9.)DISTRUST
This is a major challenge in the development of real estate in Nigeria. General for their to be effective and sustainable growth in business. They should be some degree of trust existing between the business partners. The lack of trust existing between individual players in the real estate development and the government has not gone well for real estate growth in Nigeria
10.)LACK OF STANDARDISATION
This a major threat in real estate development. The Real Estate Developer is not saddled with a standard on the quality of materials to be used in the property development that will ensure that the property developed are of high standard. This has resulted in incessant collapse of building especially in Lagos state where the terrains demands that developers should properly test the strength of the soil materials before erecting multi-million edifice on them.
11.)POOR RECORDING SYSTEM
The recording and filling system of most department in charge of land allocation, allotment, usage and development control is a nightmare most developer would not want to encounter in a hurry. File for one development approval or the other stays longer than necessary in the desk of personnel in charge waiting for one protocol or the other which indirectly result to kickbacks and lobbying to ensure that the approving process is facilitated. This development does not encourage key plays in the real estate which also increases the overall cost of properties in Nigeria.
12.)POOR PLANNING
Effective Planning is key to Economic growth. The inability of the government to plan well has created a huge housing deficit in Nigeria. Any country that fail to plan very well, plans to fail. Real growth is all about real planning. Government should plan on measures to improve the Public Private Partnership to ensure that many people are directly or indirectly encouraged to participate in real estate development. Effective planning can guarantee affordable housing units for Nigerians in the nearest future. In America for instance the Government build Houses for people to take on Mortgage at a single digit interest rate. Loan facilities are provided for people to invest in the Real Estate or better still off set their long term mortgage facilities. The insurance companies are their to provide cover to the houses from the point where they are under construction to the point when the property is taken on mortgage. This what is called effective planning and no sector of the economy is left out.
13.) GOVERNMENT INEPTNESS
Government Ineptness centers on the non-challant attitude of government over the housing need of its citizenry. this has been discussed in our previous discussions
14.)ATTITUDE OF LABOUR AND PRACTITIONERS
This attitude of local labour and practitioners which leads to importation of labour and indirectly high cost of properties to the end house in Nigeria.
15.)GREED
Element of greed on the part of the Real Estate Developer has result in the outrageous high cost of houses in Nigeria. Many Developers in the quest to make huge profit, double the prices of houses developed for the end users which makes it almost impossible for some class of people(the low class) to afford these houses.
However its important to inform me esteem reader and prospective entrepreneur that though much emphasis has laid on the developer instead of the entrepreneur as our discussion topic suggests. We are of the view that whatever affects the developer also affects the enterprenuer. The more Building the Developer constructs for the end user, the more money the enterprenuer makes in the acts of renting the property, reselling of the property and other brokerage and real estate related services
For Softwares for Forex, Crypto, Options and Stocks Market Trading,
Visit this Link now

Should you desire to invest in the capital market and also to learn more on how to tap into the stock market visit http://pennystockmarketinvestment.blogspot.com
Also should you desire to study in Europe for free tuition visit
http://freetuitionuniversities.blogspot.com
Lastly do your want to plan your future using life assurance polices that are investment packed. visit
Life Assurance Policies
Freds 5000 Do-it-yourself Building Plan
Learn how
Learn Real Estate with no credit checks
Learn more
Model Train Layout Ideas- Tip and Answers
Learn how
Furniture Craft Plan
Learn more here
Join ClickBank University and sign up on Clickbank to learn everything about Affiliates Marketing and how to make it big with Click Bank
Click here to learn more
https://tinyurl.com/y87pqjgr