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‘Goverment has not shown commitment to real estate sector’


Meckson Innocent Okoro

DR. Meckson Innocent Okoro is the National Chairman, Nigerian Institution of Estate Surveyors and Valuers (NIESV), Advocacy Committee and a fellow of the institution. In this interview with CHINEDUM UWAEGBULAM, he x-rayed issues in the sector, including why the real estate sector will remain in comatose, how the South-East can attract private estate developers, need to reform the mortgage industry and why the sector needs a regulatory authority.

The Nigerian real estate sector has been unorganized and fragmented for a long time, and this has historically made foreign investors reluctant to make large-scale investments into it. What reforms will boost the confidence of global investors in the sector?
First of all, if you want to take loan from the bank, you must convince the bank your seriousness and commitment to the project you want support for. Besides, you must put down certain percentage as equity participation. This would make the bank believe that you’re a serious and committed investor.
In the same vein, if the government is not interested in investing in real estate sector, the foreign investors will never put down their money to invest in the sector. This is because the Federal government must surely inject funds in the sector where it has interest. Where this happens, the government will make laws to protect their interest and also promote investor’s interest.

The truth is that since the military era up-till the present civilian regime, no single past or present government at federal, state and local government has made any deliberate effort to invest genuinely in the real estate sector of the Nigeria’s economy. That is why we have very unprogressive land tenure system, where access to land is almost very difficult and government does nothing about it. People can only invest in a particular sector of the economy if the investment climate is good and attractive. Again, where people cannot easily gain access to land, it will be difficult for them to venture into investing in real estate of the Nigeria’s economy.

The scarcity of long-term capital investment in the sector has been a big concern for the developers. With this trend worsening, how do we attract funds to the nation’s housing industry?
Here again, having access to the required capital to invest in real estate in Nigeria is very difficult because the banks and other financial Institutions are aware that the government of Nigeria is not interested in real estate sector, so they hardly lend money to support investors who want to venture into the real estate sector of the economy.


There are no mortgage operations in Nigeria and the Federal Mortgage Bank plus other mortgage banks are not well funded or well motivated to lend money to support real estate investment. Also, there is total absent of mortgage protection laws with respect to foreclosures in the case of bad loan performance.

In order to attract foreign direct investments to support real estate investment in Nigeria, the government and the people must show that we are a serious country. A situation where 90 per cent of the government officials invest in real estate in Dubai, South Africa, United States, United Kingdom and other foreign countries suggest lack of confidence in Nigerian economy. If the government officials find it very difficult to invest in Nigeria real estate sector, why must we expect foreign investors to come and invest in Nigeria? Therefore, Nigerians and indeed the government of Nigeria at all levels must show confidence in the investment of their money in the real estate sector before the foreign investor would join us.

The issue of long-term capital investment available to developers in Nigeria’s real Estate sector is really a big concern to players in the industry. You see funds are highly dynamic in nature and they flow where there is support for their high performance.
Nevertheless, this trend will always continue until there are deliberate actions from the players in the public sector to take actions that would motivate the banks and other financial institutions to support large scale funding in the real estate sector. It is possible and doable but it requires political wills to make this happen. Another way to look at it is where the government takes active part in the provision of certain infrastructural projects like provision of estate roads, water, electricity, and drainage to encourage developers, this in turn will reduce the demand on large scale funding or capital for real estate development and at the same time increase the confidence property developers have in the government.

The real estate market continued its slow pace with the rate of sales for both new and existing properties nose-diving. What are the issues causing the problems in market?
The slow pace of the real estate market for both new and old development is simply as a result of bad economic performance in Nigeria. If you look very well, you would notice that since the last five years, the nation’s economy is facing a very serious challenge. Workers are losing their jobs on daily basis; the government is busy fighting insurgence and other crimes in Nigeria to the detriment of other sectors. This has made the economy to be sleeping till date and there is no hope that the government would revive the economy. As a result, general demands for real estate for various uses have declined because the purchasing power of the Nigerian public has also dropped. Another reason is the fact that government is using the Economic and Financial Crimes Commission (EFCC) to monitor the spending culture of the Nigerian public. This fear of being harassed by the EFCC, which will demand to know the source of capital when people buy real estate also dissuade the investing public. Therefore, this unnecessary intervention by the EFCC has done more harm than good in the real estate sector of the economy.

Some countries have introduced Real Estate Regulatory Authority to address pertinent issues such as project delivery delays, property pricing, quality of construction, and title and other changes. What is your take on this? Do we need this kind of law to protect Nigerian home-buyers? If yes, why?
It is true that other countries of the world have introduced Real Estate Regulatory Authority to address pertinent issues such as project delivery delays, property pricing, quality of construction, easy access to title to land or property and other positive changes. I must emphasize that, the government of Nigeria is not interested in the housing industry. For our government to introduce such high-powered regulatory authority to address the above pertinent issues, the government itself must show commitment in the real estate sector. Take for instance, the issue of collapse buildings that affect the lives of Nigerian public; what has the government done to address the issues? Also talking about regulation and so on, the government can only regulate in the areas it has made commitments. In fact, Nigerian government is not interested in housing the nation’s population and therefore lacks the moral rights to address the anomalies in the real estate sector. If the government decides to be committed and interested in the real estate sector; yes the government has to address the above enumerated issues. We hope in Nigeria that one day, our government will start to show genuine interest in the area of real estate sector. Yes, we truly need the above protective regulations in order to ensure sanity in the industry and also curb the frequent cases of collapse building and bad practices in the real estate sector.

The South East has not had successful mega- real estate projects to draw subscribers and attract foreign direct investments. What are the challenges and how can this be solved?
This is true position as far as real estate investment is concerned. I personally think that the various governors of South East extraction have not done very well in the promotion of real estate investment in all the South East States. I had earlier said that the government has a major role to play in real estate investment sector of the economy. For instance, it is the duty of the governors to create infrastructural facilities such as roads, pipe born water, electricity within and outside the estates as well as accessibility to land at a minimal cost.

Unless the government does this, it will be difficult for individuals in the South East to provide these facilities and attract real estate investors. Another critical factor that would have negatively affected the schemes is the issue of insecurity. Where there is security challenge, real estate investment must suffer. Every governor in the South East is the Chief Security Officer of that state and it is their duty to ensure that lives and properties are protected because where an investor is not sure of his security and that of his investment, he will never put down his finances.

Similarly, kidnapping and all manners of criminalities are very common in the South East and sometimes the governors even promote insecurity in their various states. As you know, the demand for real estate is normally generated by the wealthy individuals and it is the same class of people that are the target of the kidnappers. So many of them settle in Lagos and Abuja with their families. The negative publicity concerning kidnapping affected negatively the involvement of foreign investors and generally real estate investment in the South East. Therefore, if the real estate investment must thrive in the South Eastern part of Nigeria, the entire governor’s must vote huge sum of money to address the issues of infrastructure and security challenges.

How has wetland, land degradation and desertification affected property values in the country?
Wetland, land degradation and desertification are all challenges to property investment and therefore negatively impact on property values. Take for instance the people who live in the riverline areas, they suffer the problem of wetland, it takes huge capital investment to construct roads and other infrastructure and this affect the cost to deliver a housing project. This challenge would make people to run away from investing in that wetland area, therefore demand for land and even houses will fall and where demand is too low, property values will automatically fall to near zero level. The same is applicable to areas where you have desert in the Northern part of the country. Nobody wants to invest in such area and that would also affect the value of the properties in the location. Furthermore, think about where you have land degradation where, erosion and landslides cum soil erosion are prevalent in some areas in Anambra and Imo State, any property in those areas will immediately fall in value.


What is your impression of mortgage system in the country? How can the mortgage finance industry be reformed?
Well, my impression about the mortgage system in Nigeria is very poor, and if you ask me further, I would say that we do not even have any mortgage system in Nigeria. No doubt, there is Federal Mortgage Bank of Nigeria (FMBN) and few other primary mortgage banks. But, the absence of mortgage system in Nigeria suggests the fact that the Federal, State and Local Governments in the country are not interested in the real estate investment in Nigeria because anywhere there is active real estate investment, the mortgage system must be in existence and very active too.

The only time, Federal Government attempted to create an active mortgage system was during the Babangida regime, when there was a deliberate government effort to create active primary mortgage institutions but they have all collapse, except few of them because the operators of the PMIs abused the system by competing against commercial banks and majority of them also failed due to inadequate funding. The only way mortgage system will become active once again is if the Federal government would practically license up to 100 of them and make sure that they are adequately funded and spread within the 36 states of the Federation including Abuja. Then, adequate regulatory policies will be put in place to ensure that each operator is well guided according to the set down rules guiding the practice of mortgage system in the Nigeria which must be limited to housing provisions and funding real estate investment.

FMBN will be used to supervise the activities of the primary mortgage banks like what the Central Bank of Nigeria is doing to commercial banks in the country. In that case, the FMBN will not be allowed to do any lending for real estate development or investment. Let all the people interested in real estate investment including Federal Government go through the Primary mortgage bank just like the government use commercial bank. By so doing, the primary mortgage banks will be active and the mortgage system in the country would be reformed.


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