By Maduka Nweke
Real estate business is not for the faint-hearted and navigating its complexities can be daunting.
Nonetheless, industry experts have outlined key strategies for turning obstacles into opportunities or turning what appears as hurdles into high-rises.
From overcoming regulatory challenges to mastering market trends, battling rising interest rates, addressing technological disruption, steep mortgage rates and demographic shifts, a lot needs to be envisaged and addressed for both newcomers and existing players alike to succeed in the sector.
At the moment, there is an increasing need for affordable housing in Nigeria which impacts both investors and consumers.
But the road to meeting the need is littered with challenges.
While land and materials are critical, experts emphasise the importance of regulatory frameworks and government policies. The complex approval process for construction permits, alongside inconsistent enforcement of building codes and zoning laws, can slow down progress and increase costs.
They canvassed that stronger collaboration between developers and the government could help streamline the approval process and dismantle bureaucratic bottlenecks.
“Government intervention is key,” said Chidi Opara, a seasoned architect.
He continued: “We need a more transparent and efficient system that allows developers to move forward with projects without unnecessary setbacks.”
At a recent roundtable discussion, experts from various corners of the real estate industry came together to share strategies for navigating the hurdles in the sector and achieving success in estate developments.
The discussion also turned to the role of technology in overcoming these hurdles. Innovations like Building Information Modeling (BIM), drones for site inspections and prefabricated construction methods were highlighted as tools that can help reduce both time and cost in the development process. These technologies, though still relatively new to the Nigerian market, are gradually being adopted by forward-thinking developers eager to stay ahead of the competition.
As urbanisation continues to accelerate across Nigeria, the demand for affordable housing and commercial spaces will only grow. Experts urged developers to incorporate sustainability into their building projects by integrating energy-efficient technologies, utilising renewable materials and creating green spaces within developments.
The shift toward sustainability is not just a moral imperative but an economic opportunity as well, with environmentally conscious buildings increasingly attracting tenants and investors.
For social scientists, real estate is the biggest employer of labour in many countries and it has great potential to catalyse economic growth.
To them, real estate is an industry that deserves widespread recognition. When well-managed, its operations can be compared to those of the oil sector, especially given its extensive value chain. From the initial soil testing to construction, cement, sand and granite supply, the number of individuals employed across these stages is staggering.
Further, industries such as aluminum, timber and forestry form their own foundational markets, contributing significantly to the sector’s growth. Given its vast scope, the real estate industry warrants more attention and investment. However, despite its potential, the sector faces numerous challenges, some of which are manageable, while others remain formidable and difficult to overcome.
Dr. Ambrose Okikelomo, a seasoned real estate consultant, noted that while every lucrative sector offers significant rewards, it also carries inherent risks that require careful navigation. This, he explained, is why some individuals exit the industry, while others continue to flock in, eager to seize the opportunities it presents.
“Real estate has big challenges and restrictions for those who want to rush into it. For instance, we have market volatility. You know, Nigeria’s economy is marked by volatility, adding another layer of risk for real estate investors. Economic fluctuations, such as inflation, currency devaluation, and interest rate volatility, can significantly impact property values and investment returns.
“Also, a significant increase in interest rates, especially mortgage rates, can negatively impact the real estate market in Lagos by making borrowing more expensive, potentially reducing demand and leading to a slowdown in property price growth and increased rental demand. I use Lagos State here because the state has the highest level of real estate development in Nigeria. Any rule or practice that is in Lagos is a result of the level of sophistication of the people in the state. Lagos State can be a yardstick to measure the development of real estate in Nigeria,” he said.
Speaking in the same vein, Mrs. Monica Efe Osaghae, Managing Director of Efe Enterprise Limited, explained that real estate professionals are often labeled as money-driven individuals. However, she asserts, “There is no business that does not generate income. It all depends on how you approach it. Many entrepreneurs fail to allow their businesses to pass through the necessary gestation period before they start spending. As you grow your business, you will begin to see the rewards, and by then, you will have established valuable connections, including those who can offer credit facilities. If you borrow money from the bank to develop an estate, but instead of using it for development, you squander it entertaining visitors, you will end up undermining yourself.”
She further added, “Businesspeople, including governments, borrow money, but the funds must be used for developmental purposes. If you borrow for non-productive expenses, you are courting disaster. When the repayment time comes, if you are unable to pay, you will lose your collateral.”
Osaghae also emphasised the significant impact of supply chain disruptions, particularly in construction materials, on the real estate market. These disruptions can cause project delays, increase costs, and lead to a shortage of available space, especially in the industrial sector.
On technology, she noted; “Technology is rapidly transforming the real estate industry, boosting efficiency, transparency, and client satisfaction through innovations like online marketplaces, virtual tours, digital documentation, and AI-powered tools. Staying updated with these technologies will ensure you remain compliant and competitive in the real estate industry.”
She further highlighted the influence of environmental regulations on real estate. “Environmental regulations play a crucial role in shaping development practices, project costs, and property values, driving the industry toward more sustainable and eco-friendly practices. Affordability concerns also significantly impact the market, reducing demand and potentially lowering property values, which in turn shifts focus toward affordable housing options and affects investment patterns.”
Osaghae pointed out that urbanisation and infrastructure development also have substantial effects on the real estate market. “As urbanisation increases, demand for housing and commercial spaces rises, which can drive property values higher. However, this also brings challenges like shortages in affordable housing and increased construction costs.”
In reference to Lagos, she explained how real estate restrictions can arise from various sources, including the Land Use Act, deed restrictions, and homeowner’s association (HOA) rules. “The Land Use Act places land ownership under the state governor, requiring prior consent for any transfer of property, whether through sale, lease, or mortgage. Failing to obtain this consent renders the transaction illegal, and it can result in penalties. While this regulation aims to maintain oversight and prevent unauthorized transactions, it can also create bottlenecks in property dealings.”
She also discussed deed restrictions, which are written agreements that limit property usage. “These restrictions dictate what can be built on a property or how it can be used, and they can apply to individual properties or entire subdivisions, regardless of ownership. They may include limitations on building types, exterior colors, or the number of vehicles allowed. These are sometimes called ‘restrictive covenants’ and are often enforced by homeowner associations (HOAs), which also institute rules to maintain property values and community standards. These regulations can cover various aspects, such as landscaping, exterior design, pet ownership, and parking.”
In Lagos, the Lagos State Real Estate Regulatory Authority (LASRERA) oversees and regulates the real estate sector. As the primary governing body for real estate in the state, LASRERA ensures compliance with relevant laws and regulations. It plays a critical role in supervising property development and transactions, addressing any issues that arise within the sector.
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