By Maduka Nweke
Real estate operators have emphasised that return on investment (ROI) remains the most critical factor driving investor decisions, especially in Nigeria’s volatile economic environment. They noted that without a solid ROI, investments risk becoming unsustainable.
Dr. Ambrose Chinweze, an estate developer based in Anambra State, explained that investors rely heavily on ROI when making commercial property decisions.
“Return on Investment (ROI) is an accounting term and tool used to determine the percentage of invested money returned to an investor after the deduction of the associated costs,” he said. “For the non-accountant, this may sound a bit confusing, but it simply means: the profit from the investment minus the cost of the investment divided by the cost of investment.”
Chinweze stressed that property owners must learn how to identify and secure a strong ROI on their commercial properties.
“Securing a strong ROI takes a smart and proactive real estate investor who can identify opportunities miles away, carry out due diligence even when all seems well, and be a strong risk-taker,” he added. “With the ongoing economic situation in Nigeria, real estate investors are mostly concerned about their capital security.”
He advised potential investors to study the market carefully, learn from experienced property owners and weigh both the advantages and disadvantages before buying into any property for rental or commercial purposes.
Similarly, Mr. David Obodoeze, a facility manager and interior decorator, said one of the most effective ways to boost ROI is to attract quality tenants and secure favorable long-term leases.
“A ‘big time’ tenant or several tenants with long-term leases residing on your property, with agreements favorable to all parties and a possibility of a fixed yearly rental increase, can be the ultimate deal to boost your ROI,” he noted.
Obodoeze advised landlords to adopt rigorous tenant screening processes.
“It is advisable you rent out your property to reputable tenants by carrying out due diligence on prospective tenants so as to ensure they are capable of paying their rent on time and they are not potential problem tenants,” he said. “If you can’t effectively carry out such a task, you can employ the services of a property manager.”
He added that while properties in urban areas like Lagos, Abuja, Port Harcourt, Enugu, and Calabar generally command stronger ROIs, promising opportunities also exist in semi-urban and rural locations if investors understand their markets.
“Promising does not mean the most expensive or cheapest. Promising means a place where people would like to live for a number of reasons,” Obodoeze explained. “However, location is not the only yardstick to achieve a high ROI. It goes hand in hand with the ability to identify and utilize the opportunities available, doing your due diligence and taking risks.”
Both operators concluded that a strong ROI not only sustains investor confidence but also secures wealth for the long term, making real estate one of the most viable paths to financial stability in Nigeria.
Leave a comment