Limiting Risks in Real Estate investment: Indicators to Consider When Investing in real estate
Over the past two decades, the real estate industry in Africa, particularly in Nigeria, has experienced significant growth, with numerous real estate companies emerging across major cities. This sector has consistently been the most reliable option for investors due to its lucrative nature and vast investment opportunities, including land banking, construction, buying and selling of land and houses, and mortgage facilities.
When investing in real estate in Africa, Nigeria offers abundant opportunities for both local and foreign buyers. However, navigating the Nigerian real estate market can be challenging, especially for investors unfamiliar with the country’s legal, economic, and cultural dynamics. The recent surge in real estate companies has made it even more daunting for investors to identify reputable companies.
Public opinion suggests that approximately 90% of court cases in Nigeria are related to land issues, making it difficult for investors to pinpoint law-abiding real estate companies. This article proposes essential ideas to consider when selecting a real estate company to invest in.
To begin with, the security of an investor’s funds is paramount. Investors should ensure they are investing in a duly registered company with authentic regulatory agencies, such as the Real Estate Developers Association of Nigeria (REDAN). In Rivers State, for instance, investors should verify registration with the Greater Port Harcourt City Development Authority and the Rivers State Estate Developers Association (REDA).
Investors must familiarize themselves with local regulations, zonal laws, and tax implications to ensure compliance. This knowledge will help mitigate land scam risks, a phenomenon gaining traction in the Nigerian real estate landscape. Exercising caution, verifying property documents, conducting inspections, engaging professionals, and avoiding payments without proper documentation and approvals are crucial considerations.
Research is another vital aspect of real estate investment risk management. Investors should conduct thorough research on a company’s credibility, location, and property value before making any payments. This research should encompass the neighborhood’s infrastructure, proximity to essential amenities, security, and potential for future development.
Understanding the role of government in the Nigerian real estate industry is also essential. The Land Use Act empowers state governors to approve all land transactions, making their approval crucial for legal binding. Investors should comprehend these roles, including transaction approval, ratification, and title giving.
Familiarizing oneself with the legal framework and regulations governing the Nigerian real estate market is vital. Investors should understand specific laws, land documents, and ensure compliance to guarantee legally binding purchases.
When evaluating a company’s credibility, investors should consider factors such as testimonials, historical Return on Investment (ROI), and manageable debt. Capital City Development Ltd. (CCDL), for instance, has a proven track record of delivering services.
In conclusion, investing in real estate in Nigeria can be a lucrative and lifetime investment opportunity if due diligence is exercised. By conducting thorough research, understanding the legal framework, and engaging with credible companies, investors can maximize their investment potential while limiting risks in the real estate industry.
Mrs. Nkwawi Kalu
(Executive Director of CCDL Group)