Although 2021 looks promising for the real estate and housing sector in Nigeria, there are still some challenges facing the sector. From slow economic growth, decline in the commercial, retail, and residential segments, which negatively impacted the sector’s contribution to GDP and returns on investment, to lack of clarity and transparency in the regulatory environment, coupled with the extremely poor infrastructure to support real estate development. Not left out of the equation is the challenges of expensive, cumbersome and long titling and registration processes remain and investors had this also to contend with.
Land Registration Bureaucratic Process
The monotonous process of land registration in Nigeria is at the top of the list. The registration process can last as long as 6 months to 2 years, taking an average of 12 procedures, and costing about 20.8% of the value of the property.
The Omo-onile scourge
The problems attached to buying lands that supposedly belong to lineages and age-long families popularly refered to as ‘omo-onile’ in the western part of Nigeria has become something bthat calls for urgent attention. When dealing with these people that has now come to be tagged ‘miscreants’ you pay undocumented fees here and there from survey fees, legal fees, agency fees, omonile signing fees, to foundation fees, roofing fees, drainage etc. At the end of the day, you will be forced to build a fence to ward off criminals and trespassers from stealing your land. Any form of complacency or negligence would only lead to criminals reselling your land. You would have to put up with annoying agents throughout the Inspection and negotiating experience.
Taxation is a whole other challenge. Real estate investors are subjected to multiple taxations, the taxes and levies include development levy, income tax, building plan approval levy, property tax, land use tax, and in some cases real estate investors are expected to pay renovation tax whenever they want to renovate their properties.
Devaluation of Naira
The recent devaluation of naira is a huge obstacle for the development of Nigeria’s real estate sector. Mainly because the Nigerian construction industry is heavily dependent on the importation of the raw materials and equipment they use for construction from foreign countries. However, a devalued naira increases the cost of purchasing these raw materials and equipment.
Bribery and Corruption
There have been various instances where developers who have not satisfied preconditions or who simply do not qualify for the allocation of land are granted allocation, while those who are qualified are denied. More often than none, some staff of regulatory bodies prefer to take bribes rather than ensure that developers obtain the necessary permits and conform to statutory construction standards.