Lack of data, information deny Nigerian property market access to $6trn inflow
For reasons bothering on lack of data, relevant market information and dearth of professional skills, the Nigerian property market is said to be losing its share of an annual $6 trillion global fund inflow into the African property market.
Market analysts explain that billions of dollars that flow into the continent’s market on daily basis have been eluding Nigeria for long due to the aforementioned reasons and others, including high interest rate, poor negotiation skill, lack of transparency and un-priced risks.
In an interview with BusinessDay on the sideline of a FIABCI International Real Estate Consultant (FIREC) programme hosted by FIABCI Nigeria chapter in Lagos recently, Bill Endsley, Principal at World Citizen Consulting, Chicago, pointed out that an average American investor, for instance, desires to have the necessary information before making any investment decision.
“There are billions of global funds flowing into the property market at the moment, but not much is coming into Nigerian market; investors are unwilling to come to put their money here,” noted Endsley, pointing out that investors wanted market transparency or what he called ‘clean window’.
“Investors would prefer to invest where there is transparency and the risk is priced; there must be market analysis showing what the market wants and how long it will take to recoup an investment; most times this information is not available in Nigeria,” he noted.
Endsley stressed that even though risks are always there for any investor, those risks have to be priced so that an investor that is coming will understand what exactly the risks are, noting, however, that it was difficult now to price the risks in the Nigerian property market because of “unclean window”.
“We need to clean the window so that investors can see the risks,” he advised, adding that lack of data in the market meant the market should be looking at the property laws, the qualification of the professionals and the role of the banking sector in property transaction.
Thomas Cardman, director of operations and finance at Michael Consults, affirmed in his presentation that investors were always looking out for market analysis and the quality of the story behind the numbers before making decisions for real estate investment.
Cardman added that investors also considered return on investment characteristics and cost approach before deciding to invest in a particular property.
Endsley affirmed that there were opportunities in the Nigerian property market and now was the prime time to invest in the market because, as he put it, ‘the country is trying to move away from the commodity-oil economy to a new industry and property is the foundation of everything.”
This explains the need to train Nigerian professionals on international norms for real estate investing and standards so that they can attract more foreign direct real estate investors. According to Endsly, the professionals have to be brought to the level of world class consultants so that they can move Nigeria away from oil economy to the world of investment in property
“We need to push ahead otherwise the whole of us in the entire building industry will be far behind,” Adeniji Adele, President, FIABCI Nigeria chapter, agreed, adding, “we need to begin to gain insightful knowledge and share same.
“That is the essence of this programme. It is about gaining insightful knowledge and keying into international principles and practice; we believe in the continuous education of our members and also in sharing knowledge. We also need to connect with other professionals in the outside world.”
He explained that the business world has become global and the real estate market has been internationalized, saying this has resulted in the need for professionals to transact business with investors from diverse cultures and backgrounds making it imperative for professionals to figure out how to deal with these cultural differences in their negotiations.