Nigeria has emerged as a promising frontier for real estate investment, attracting the interest of Diaspora investors seeking lucrative opportunities beyond their borders. With the country’s growing economy and burgeoning middle class, the Nigerian real estate market beckons international investors with the promise of good returns in less than two years.
Oluwole Fapohunda, CEO, Seven30 Real Estate Limited, offers a guide on how to invest in the Nigerian market. He explores the nuances of investing in the country from the Diaspora, shedding light on regulatory frameworks, investment opportunities and potential challenges.
Fapohunda says that understanding the regulatory landscape is pivotal for international investors eyeing Nigeria’s real estate market, noting that the Federal Government is implementing reforms to enhance transparency and attract foreign capital. The land tenure system, however, can be complex, with both state and federal regulations influencing property ownership.
According to him, it is advisable for investors to engage legal experts familiar with the intricacies of Nigerian real estate law to ensure a smooth and compliant investment journey.
“Nigeria in the 21st century has many companies that offer services that make real estate products seamless and that is what Seven30 Real Estate offers to Nigerians at home and in Diaspora,” he said.
Currently, Nigeria’s real estate market presents diverse investment opportunities across residential, commercial, and industrial sectors. The opportunities available are enormous. The demand for housing, driven by population growth and urbanization, creates a compelling case for residential developments.
Additionally, the commercial real estate sector is thriving, especially in major cities like Lagos, Ibadan, and Abuja, where a burgeoning business environment fuels demand for office spaces and retail outlets.
According to Africa Facts Zone, “Lagos State has been placed 46th largest economy among 54 countries in Africa with a GDP of $101.08 billion. The state recorded $145.141 billion in 2016. The statement would have been that Lagos would be the eighth largest economy in Africa if it were a country.
“While the potential for substantial returns is evident, international investors must be cognizant of challenges inherent in the Nigerian real estate market. Land tenure disputes, bureaucratic bottlenecks, and infrastructure deficits can pose obstacles to smooth transactions,” Fapohunda says.
He advises that engaging with reputable local partners and conducting thorough due diligence are paramount to mitigate risks, adding that fluctuations in currency exchange rates can impact returns, underscoring the importance of a well-thought-out risk management strategy.
Mitigating risks requires a strategic approach. International investors should leverage local expertise and establish strong networks within the Nigerian real estate community. Engaging reputable real estate agencies, legal advisors, and property management firms can provide valuable insights and operational support. Diversifying investments across different sectors and geographic locations can also serve as a risk mitigation strategy, ensuring a balanced and resilient portfolio.
He stresses that investing in Nigeria’s real estate market from the Diaspora offers a unique opportunity to capitalize on the nation’s economic growth and burgeoning real estate sector. “While challenges exist, strategic planning, meticulous research, and local partnerships can pave the way for successful investments,” he says.
Fapohunda notes that, as Nigeria continues to evolve, international investors stand poised to play a significant role in shaping the future of its real estate landscape, contributing to its development while reaping the rewards of a dynamic and expanding market.