APPRAISAL OF INVESTORS CONFIDENCE IN THE NIGERIA REAL ESTATE SECTOR
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APPRAISAL OF INVESTORS CONFIDENCE IN THE NIGERIA REAL ESTATE SECTOR
Chapter one
Introduction.
1.1 Background of the Study
The Nigerian real estate sector has grown steadily and consistently over the previous four years, becoming one of the largest contributors to the country’s rebased GDP from non-oil sectors, accounting for 8.03% and 11% in 2013 and 2014, respectively (Ikekpeazu, 2004). The market, which is presently valued at around N6.5 trillion, is expected to increase at an average rate of 10% over the next few years.
The major growth drivers in the sector have been attributed to: an increase in foreign investment (particularly from South Africa, MEA, and the United States); increased institutional investment from local companies such as PFAs and Mutual Funds;
a growing population of High Net Worth Individuals; and the Federal Government’s targeted intervention in the housing finance industry.
This, however, implies that many stakeholders and investors are confident in the structure of Nigeria’s real estate sector, despite the country’s shrinking economy (Olotuah, 2000).
Real estate investing is the purchase, ownership, management, rental, and/or sale of real estate for profit. Real estate development is a sub-specialty of real estate investing that focusses on improving real estate properties as part of an investment strategy.
Real estate is a type of asset with restricted liquidity in comparison to other investments; it is also capital intensive (though capital can be obtained through mortgage debt) and heavily reliant on cash flow. If the investor does not fully understand and control these elements, real estate becomes a risky investment.
The fundamental reason of real estate investment failure is that the investor experiences unsustainable negative cash flow for an extended period of time, causing them to resell the property at a loss or declare bankruptcy.
A related technique known as flipping is another reason for failure because the nature of the investment is frequently connected with short-term profit with little effort.
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