The study of Economics tells us that a socialist system of government which entails a government dominated economy is more organised than the mixed system of government which Nigeria practices. This now speaks more volume in the Nigerian real estate sector.
Nigeria’s real estate market is highly fragmented and gets worse from the premium to the mid-market, down to the low-income housing cadre. The demand for homeownership in the country far outweighs supply, and this has created room for quackery.
With the national housing deficit currently pegged at 17million, it is little wonder that developers are springing up everywhere with all sorts of schemes. Given that there is no real barrier to setting up a development company and no agreed standard for what it takes to be a developer in Nigeria, the market is currently highly fragmented and gets worse as you go from premium to mid-market, then, to low-income housing.
With such a high deficit and no proper guideline for developers, the government is constantly playing catch-up and is not sufficiently staffed to enforce building approvals and standards. So, many people have lost money and even lives as they have been subjected to various schemes from unseasoned and unprofessional developers.
In recent times, reputable construction and development companies have begun to take interest in the middle-income housing market and are helping to set standards for the delivery of housing to this segment.
While this is a positive one, it is expedient to ring out loud that the number one consideration when providing or acquiring real estate is not how cheap it is but its potential as a store of value. If you build a cheap house that collapses within a year or two, you lose value; if the house is no longer tenantable within five years, you lose both income and value. Unfortunately, this is what we have been witnessing in the mid-market.
Therefore, while it’s good that the government gives freedom to private individuals to build, being a mixed economic system, it is also vital for the government to implement some regulation in order to ensure an organised real estate market in Nigeria.