According to industry experts, the Nigerian real estate market will grow alongside the country's expected overall GDP, boosted by President Bola Tinubu's reform plans and increasing investor confidence.

The experts, who spoke on a panel at the DETAIL Solicitors' Real Estate Business Series in Lagos, predicted that Nigeria's new administration would implement major reforms such as tax credit initiatives, lower interest lending, unification of foreign exchange (FX) rates, and economic growth through increased oil production.

According to them, these reforms, as well as macroeconomic issues like as interest rates and inflation rates, would have a substantial impact on the real estate sector.

Speakers at the event, titled 'Unlocking Opportunities: Real Estate Financing for Success,' included Saadiya Aminu, Managing Director/Chief Executive Officer of Urban Shelter Limited; Tola Akinhanmi, Head, Real Estate Finance at Stanbic IBTC; Adetola Nola, CEO of Veritasi Homes Limited; and Ereifemi Akeredolu, MD/CEO of Cardinal Stone Trustees Limited.

Olawunmi Alade, Associate Partner at DETAIL, moderated the workshop.

According to them, Nigeria's real estate  sector increased at a 5.31 percent annual rate in the first quarter of 2023 (Q1 2023), making it the country's fifth highest contributor to quarterly GDP growth.

They stated that the industry has the potential for additional expansion, and that demand for residential assets would likely increase following National Pension Commission (PenCom) approval of the use of Retirement Savings Account (RSA) as equity contribution for mortgages.

However, they stated that regulatory reforms such as direct financial interventions are required to improve sector participants, comparable to the support provided by the Central Bank of Nigeria (CBN) to the agriculture and power sectors.

"There is also a need to simplify and remove bureaucratic bottlenecks in Nigerian processes for owning and transferring real estate, as well as improve land management systems." This will necessitate changes to the rules and regulations that govern real estate .

In terms of financing, the panelists saw a danger of misalignment between the duration of real estate projects and the period of financing. As a result, they canvassed a good mix of debt and equity funding alternatives for projects rather than depending on a single financing source.

Bank loans, analysts say, are better employed as bridge finance in the face of the suffocating cost of funding real estate developments.

They stated that the activity of other developers in the market could have an impact on the ease of obtaining financing.

As a precaution, they advised real estate  companies seeking capital market funding to ensure that they have a solid investment grade rating and follow good corporate governance standards.

They also recommended real estate investors seeking funding to always consider.

They said that using professional advisers such as financial consultants and legal counsel will assist establish startup real estate  enterprises in a more feasible framework for getting capital.

Customers intending to buy a house in Nigeria should adopt the practice of requesting quality test certificates and proof of acquired approvals, according to the experts.

The panelists also urged real estate stakeholders in the early phases of establishing a market presence to cultivate relationships, use networks, and share critical information with like-minded individuals.

They also advocated for cross-sectoral coordination with powerful lobbying organizations such as the Nigeria Economic Summit Group (NESG) to strengthen public sector participation on behalf of real estate industry players.

According to the experts, recent building collapses, loan defaults, and other challenges continue to plague players in the industry, and considerable due diligence is now required for real estate transactions.

source: Guardian.ng