CHALLENGES ASSOCIATED WITH REAL ESTATE INVESTMENT IN ENUGU NIGERIA
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CHALLENGES ASSOCIATED WITH REAL ESTATE INVESTMENT IN ENUGU NIGERIA
CHAPITRE ONE
1.0 INTRODUCTION
Proper finance is critical for successful real estate investment and development. The property market has access to various sources of capital on various terms from various investing agencies.
The primary arena in which diverse kinds of investment finance are used is development, where each loan must be properly designed for an individual scheme and the specific stages within the scheme.
Because property development, in particular, necessitates significant capital outlay, financing is a vital element, the purpose of which is to provide funds to enable the firm to run commercially. The cost and availability of financing for real estate development can have an impact on the project’s viability.
Despite the importance of development financing in property development, there is a lack of information on the amount of money that occurs, who is responsible for it, and the method employed.
Though, given the overall characteristics of development funding, this is not surprising: there is no central organisation or institution to coordinate the business of property funding.
Housing has been rated second in the hierarchy of man’s necessities, and as a result, housing provision has become a cornerstone of many governments’ programmes at both the federal and state levels in Nigeria since independence.
The implications of rapid urbanisation are most obvious in the rapid deterioration of urban housing, resulting in urban housing poverty, especially given the lack of a commensurate increase in housing supplies.
As there is a natural desire in every man to own a decent house, the house occupies a highly distinctive position in the life of all human beings and stands out as one of the essential necessities of human beings after food. It is the most common noncommercial investment or income consumer.
Most working Nigerians’ earning ability is often poor, making it nearly hard for the average Nigerian to save for home ownership. Furthermore, Nigeria’s falling economic fortunes reduce people’s ability to own a home.
The 1970s economic boom times also contributed to Nigeria’s housing woes.
During this time, there was surplus capital, the economic climate was suitable for real estate development, and the prospect of profit was exaggerated, as was the rate of development.
The oil boom ushered in an age of unprecedented urban expansion, resulting in a significant increase in property construction. Financial institutions readily approved developer loans because they saw no danger.
However, with the collapse of oil prices in the early 1980s, the economy was pushed into crisis, and a recession ensued, negatively impacting the real estate sector. Because real estate investment and development entail significant capital outlay,
there is always a need for real estate investors and developers to find funding. This capital is frequently greater than the invertor’s equity capital, and the only way out of this position is to find funds through sources other than his personal resources.
Apart from equity capital, what other types of finance are accessible to real estate investors? What are the difficulties in obtaining funding from these numerous sources?
1.1 BACKGROUND OF THE STUDY
Real estate has continued to play an important part in the evolution of man. It is no coincidence that food, housing, and clothing, which are said to be the three basics that maintain humanity, all have some connection to land. Food grows from the soil while shelter is built on it, and man’s clothing is mostly fashioned from what grows from the land.
Indeed, whether in ancient times or in today’s modern system, land is a significant indicator of man’s wealth, and as economic activities have become more sophisticated over time, land has continued to play an important role in their development (Lewis, 1994).
There is almost no business venture that does not require some type of real estate to be supported: from the tiny firm that requires real estate as offices from where its business can be organised to the large venture that requires it for its factory.
As a result, some very strong and well-thought-out land policies thoroughly handle difficulties in the real estate sector. This is not the case in Nigeria, and as a result, there are numerous issues in the real estate market (Adewale, 2000).
The researcher will present an outline of real estate investments in Nigeria and the accompanying problems during the course of this study.
Real estate investment is inextricably linked to a country’s economic prosperity and well-being, demanding some intervention by wise governments. The severity of such interventions varies by country. Individuals could rarely lay claim to any part of it as owner in Nigeria, and so could not alienate it without the agreement of the head.
Proper finance is critical for successful real estate investment and development. The property/real estate market has access to various sources of capital on various conditions from various investing firms.
The primary arena in which diverse kinds of investment finance are used is development, where each loan must be properly designed for an individual scheme and the specific stages within the scheme.
Finance is a vital element since real estate and property development, in particular, require large capital expenditures. Its nature is to give funds to enable the firm to run economically (Ratcliff, 1999).
The cost and availability of financing for real estate development can have an impact on the project’s viability. It is vital to investigate the nature of real estate investment in Nigeria in order to identify solutions to the connected problems.
1.2 STATEMENT OF THE PROBLEM
In recent years, research on real estate investment has been prioritised because it is the primary provider of housing for humans. Housing has been considered second in the hierarchy of man’s necessities, and as a result,
housing provision has become a critical cornerstone of many governments’ programmes at both the federal and state levels in Nigeria since independence.
The repercussions of rapid urbanisation are most obvious in the rapid deterioration of urban housing, which results in urban housing poverty, especially because there has been no commensurate rise in the quantity of housing stocks.
During the 1970s economic boom in Nigeria, there was surplus capital, the economic climate was favourable for the growth of real estate, and the possibility of profit was exaggerated, as was the rate of development.
Because of the recent reduction in crude oil prices worldwide and corruption, the government has been unable to invest in real estate. Property development has skyrocketed as a result of overpopulation and urbanisation.
Financial institutions readily approved developer loans because they saw no danger.
Because real estate development necessitates a large capital outlay, real estate developers must always seek funding. However, the scope of real estate in Nigeria and its accompanying difficulties will be examined in this study in order to make valuable recommendations on the way forward for real estate in Nigeria.
1.3 OBJECTIVES OF THE STUDY
The following are the study’s objectives:
1. To present an overview of Nigerian real estate investment.
2. To investigate the difficulties connected with real estate investing in Nigeria.
3. To determine the future of real estate in Nigeria.
1.4 RESEARCH QUESTIONS
1. How much real estate investment is there in Nigeria?
2. What are the obstacles to real estate investment in Nigeria?
3. What is the future of real estate in Nigeria?
HYPOTHESIS 1.5
HO: There are no obstacles to real estate investment in Nigeria.
In Nigeria, real estate investment faces a number of problems.
1.6 SIGNIFICANCE OF THE STUDY
The following are the study’s implications:
1. The study’s findings will educate the general public on the benefits of real estate investment and the obstacles that come with it, and will serve as the foundation for decision-making.
2. This research will also serve as a resource base for other academics and researchers interested in conducting additional research in this sector in the future, and if implemented, will go so far as to provide new explanations for the topic.
1.7 SCOPE AND LIMITATIONS OF THE STUDY
This research on real estate investment and its associated issues in Nigeria will look at the extent of real estate investment in Nigeria and the variables that have aided or hampered it. It will also discuss the issues of real estate investment in Nigeria.
STUDY LIMITATIONS
Financial constraint- A lack of funds tends to restrict the researcher’s efficiency in locating relevant materials, literature, or information, as well as in the data collection procedure (internet, questionnaire, and interview).
Time constraint- The researcher will conduct this investigation alongside other academic activities. As a result, the amount of time spent on research will be reduced.
1.8 DEFINITION OF TERMS
An investment is a monetary asset purchased with the expectation that it would give future income or appreciate and be sold at a better price.
Real estate is defined as land or buildings.
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