The National President of the Real Estate Developers Association of Nigeria, Akintoye Adeoye, talks about the sector’s growth investment trends, housing affordability, regulatory challenges, and foreign investment opportunities in this chat to Princess Etuk

Briefly describe the current state of Nigeria’s real estate industry and the major trends shaping it

The real estate sector in Nigeria is growing and is almost ranking to be the highest contributor to the GDP. The outlook for 2025 is also looking very good, and we hope that the performance in 2025 will actually be better than in 2024.

The investment in infrastructure by the Federal Government is a booster to the sector. And if you look at the current budget, you will see the allocation to infrastructure.

Particularly the Lagos-Calabar Coastal Highway. It’s quite impressive among other road infrastructures that the Federal Government is embarking upon. And also at state levels, many state governments, particularly Lagos State, are also putting so much money into road and rail infrastructures. And for Lagos State, they are even now expanding on the waterways. So, for Lagos, you can see improvements in the use of waterway transportation, rail transportation, and road transportation. And all these put together, we encourage investors to capitalise in the economy. We also realised that recently the Federal Government created a fund to cater for both the demand and supply side of real estate through the Ministry of Finance Incorporated. And this is about N250bn initial capital to kickstart that financing option to grow the sector. Also, the Federal Mortgage Bank, at its own pace, is also doing very well because we have a very, very fantastic managing director at the bank who has a good understanding of the markets and is actually doing very well.

Also, the Family Home Fund is receiving some attention. Their global rating and their market rating are very good. Because of their good rating, they are attracting some foreign funds. Recently they attracted €30m for student accommodation. €30m may not look very big, but you see, when investors begin to have confidence in what you are doing, €30m is a good beginning; it is a good start, and I’m sure that they will get more.

What are the steps taken by REDAN to bridge the housing deficit gap, particularly for low- and middle-income earners?

The major reason for the housing deficit that I can say is that there is no mortgage, no single mortgage, no single-digit mortgage, and no long-term mortgage, apart from what the Federal Mortgage Bank is doing. It is the only bank that gives mortgages between six and nine per cent. And they are also doing tenure of up to 25 years. And as long as we don’t have institutions that give single-digit mortgages at affordable rates, with a good tenure, honestly speaking, affordability will remain an issue.

For many people, the deposit is not even their problem. But the bulk of money that they have to pay is the issue. And as long as that is not addressed, there is no way, practically speaking, to address the issue of housing shortage. The housing shortage is a result of us not having an effective demand for housing. We don’t have people who are ready to buy the houses where they are constructed because they don’t have the capacity.

REDAN will continue to advocate for what we are doing. I appeal to the Federal Government to please let the Federal Mortgage Bank do more for Nigerians because the Federal Mortgage Bank has the templates; they have what it takes to do this business. And you won’t blame the commercial banks because if they are getting money at 25 per cent, you can’t expect them to give loans at a single digit because sourcing the money is not cheap.

So, housing has to be subsidised. It has to be subsidised through the Federal Mortgage Bank. And if we take it up from there, we can grow it, and other players may come in.

How is the industry coping with inflation, high material costs, foreign exchange crises, and other challenges?

The thing is, the rising prices of building materials have affected the industry seriously. Many sites now are abandoned because the developers cannot continue. In fact, there are some developers that collected money for projects; today, they cannot continue those projects because the cost of completion is far above the money received as full payments. And what developers are doing now in some cases is to sell at the carcass level. So, I build a house, and I roof it, and I sell it at that stage, allowing whoever buys it to come in to complete the building. That is one of the survivor methods.

Like, somebody selling a two or three-bedroom facility at Lekki, at Ebute Meta, or somewhere in Abuja, Kaduna, Enugu, or Umahia. You know, all those urban areas. So, those markets attract a lot of people in the diaspora, and they have the money to pay, maybe particularly if you tell them to pay within two or three years.

So, developers are coming into that space to see how to trade within that space, within that market. But the truth is that it’s not very easy with many developers.

Is affordable home ownership driven by government policies or private initiatives?

So, the initiatives that I just mentioned – some of those initiatives are for developers to say, okay, let me sell carcasses to you.

So, when you have the building, you have the roof on it, you have some of that carcass, and some don’t even have windows; they don’t have doors. But at least you have a building, and then you start incremental construction until you complete your building. But is that a solution? That is not a solution except where the developer is the one who is handling the construction.

The pension fund window, where contributors can assess the percentage of their contribution towards their housing, is also part of the palliative, as well as government initiative. The Minister of Finance Incorporated fund is another palliative because that money is coming at 12 per cent. You know, that was what they said; it’s coming at 12 per cent. So, 12 per cent is still very impressive for homeownership.

What are the biggest regulatory challenges facing the build industry, and how is REDAN addressing them?

Titling is getting a title for your construction. That is the biggest challenge because if you don’t have a title, you don’t have building approval, and you don’t have layout approval; any construction being carried out is like illegal construction. That is exactly what it is. So, governments at all levels, you know, have to be intentional about granting titles.

Some states are actually doing well in terms of titling, but most of them have to do better. Titling, building approval, layout approval – those approvals at that level. If you look at how the building materials are changing, pricing is going up, and inflation is going up.

So, I would say that the number one challenge we are experiencing in terms of regulation is titling, building approval, getting your C of O, and obtaining government’s consent; that one is very huge. If that problem is solved, I think we can practically cope with the rest.

How attractive is Nigeria’s real sector to foreign investors?

We have to be transparent in our transactions, and part of the transparency is how we obtain titles. So, for example, you start now. You want to get a title for a building. You cannot say this is how much it’s going to cost you. Whereas there is supposed to be a scale of charges, which, if I’m doing construction, my budget should be able to capture how much I’m going to spend on my building approvals, layout approvals, and my C of O. Because if we are transparent about how much we pay for these, then a foreign investor can have an idea of that aspect of the transaction.

Apart from that, the legal system has to be top-notch. If I’m taking my money to a country, I want to ask about the legal system of that country, whether it is fair, justifiable, and whether I will get justice if I have a problem with my local partners. So, if that is not good enough, foreign investors will not come, even when it’s very, very profitable.

Because they know that if there is a dispute, the system is not transparent enough for them to get justice.

Are there any incentives or funding opportunities REDAN members can take advantage of?

Let me commend the Oyo State government that allocated 500 hectares of land to developers, our members. And they said that we don’t even have to bother about payments now. They told us to allocate this land to your members to start construction, and then you pay gradually. That is a fantastic model. That is a big incentive.

Then, Abia State is doing a similar thing for REDAN members by allocating land to developers to start projects, with a promise to take infrastructure to those sites. So, it made life easy. And also, we are discussing with the Lagos State government to also do the same thing for developers. Where a district can be given to us, probably in Epe, you know, or probably in Ikorodu, where they have large hectares of land, and we can get 100 to 200 hectares of land allocated to developers to do their business.

These are some of the incentives that can encourage development and can bring the prices of houses down. So, the money I’m going to pay to acquire land, I can spend it on the project. And when the project is done, there are two options here. The government can say, for every hectare, I need a certain number of units. So, when the building is completed, I give them houses, which they can also sell at a discount to civil servants. And that is a bonus. To compensate their own employees. So that is part of the palliative we are asking for.

Are Nigerian developers incorporating green building and eco-friendly materials into their projects?

Come June, REDAN, in partnership with the Mortgage Bank Association of Nigeria, will organise the first Nigeria-related ESG conference and exhibition. Because we need to educate our members. We need to drive it down. There are some developers that have adopted smart buildings already. In fact, there is a developer that is supplying solar power to all buildings in his estate. Once you are buying the house from him, you already have a solar-powered energy supply with it. And there are some developers too that have also incorporated eco-friendly strategies in their construction, the way they put the window, the way they position their building to receive light and to receive maximum air. Many developers now are making sure that they have a lot of green in their estates. But we are going to do more because it’s a major REDAN campaign that ESG has to become a frontal issue for us all.

How is REDAN ensuring faster and more transparent processing of land documents and titling?

The only thing we are doing is to continue to advocate and beg them to ensure that our applications are not delayed and that transactions are done transparently. When something is not transparent, you are introducing corruption. And that is exactly what we are experiencing.

So, you want to get an allocation for N2bn, and you are going to spend another N2bn to go through the process. How do you explain that to a foreign investor? That this land that I’m buying from the government, we are going to pay N2bn first, then pay N2bn for PR. So, a foreign investor will not listen to you. He will just think you want to swindle him. Because he has never heard of something like that, and he cannot understand that you have to pay money for that purpose.

What opportunities exist for collaboration between the private sector and the government in solving Nigeria’s housing crisis?

Public-private partnership is not a new thing. We have been doing it for years. The Federal Housing Authority is doing extremely well in engaging developers in public-private partnership projects with government at different levels like Oyo, Abia, and Lagos State, which are doing very well in the area of public-private partnership with developers. And many other states are also doing that.

However, one important aspect of public-private partnerships is that all parties must be committed to their obligations. Parties should be committed to their obligations. Governments should be committed to their obligations. Developers should be committed to their obligations. Many PPP projects are a great success, while some didn’t do well or are not doing well. But it’s also a very good way to go. And we are already doing that.

How do you see Nigeria’s real sector evolving?

In the next five years, even though we don’t have that accurate projection, I’m sure that it’s just going to be getting better. We are going to be having more big players.

So, when you look at what is happening in the upmarket, and you look at what developers are doing there, you will see that the future is very bright. And at the low market, come to Mowe, go to Ikorodu, and see the creative designs that developers are creating. You will now begin to see that the future of the industry is huge.

And look at the penetration. Already now we have a housing estate in Ijebu-Ode; we have one in Shagamu; we have housing estates in almost all the states in the country. It can only get better and it will continue to get better because land is not increasing. It is the population that is growing. So, there will always be pressure on land. And the pressure on land means that more interest will be created. And the future is good for the industry.

And the government also is getting serious by the day. Where we were with Lagos State last year is not where we are today. The government is improving on the real estate business outlook. So, the outlook is getting better.