CHALLENGES ASSOCIATED WITH REAL ESTATE INVESTMENT IN ENUGU NIGERIA


CHALLENGES ASSOCIATED WITH REAL ESTATE INVESTMENT IN ENUGU NIGERIA

CHAPTER ONE

1.0     INTRODUCTION  

Proper financing is all-important to successful property investment and development. Various forms of finance on varying terms from diverse investing agencies are available to the property market. The principal field where various forms of investment finance are employed is that of development where every loan has to be specially tailored for an individual scheme and the particular stages within the scheme.

Since property development in particular involves huge capital expenditure, finance is therefore an essential input, the nature of which is to provide capital to enable the enterprise operate commercially. The cost and availability of finance for real estate development can influence the viability of such a project.

Inspite of the importance of development finance in property development, there is dearth of information on the amount of funding that takes place, by whom, or the method used. Though this is not unexpected given the general characteristics of development funding: there is no central agency or institution to co-ordinate the business of property funding.

          In the hierarchy of man’s needs, housing has been ranked second and as a result of this; housing provision has become a paramount conerstone of the policies of various governments both at federal and state levels since independence in Nigeria. The consequences of the rapid rate of urbanisation are most visible in the rapid deterioration of urban housing resulting in urban housing poverty especially as there is no proportionate increase in the number of housing stocks.

The house occupies a very unique position in the life of all human beings and stands out as one of the basic necessities of human beings after food as there is the innate desire of every man to own a decent house. It is the most single noncommercial investment or consumer of income.

For most working Nigerians, the earning capacity is generally low and makes it practically impossible for the average Nigerian to save towards owning a house. In addition, the dwindling economic fortunes in Nigeria which dims the capacity of individuals to own a house.

The economic boom periods of the 1970s also contributed to the housing problems in Nigeria.

During this period, there was surplus capital, the economic climate then was favourable for the development of real estate and the prospect of gain was over blown and so were the rate of development. The oil boom brought in an era of urban development, which was beyond all expectation and thus led to a massive surge in property development. Financial houses readily obliged developers’ loans, as they perceived minimum risks.

However, with the crash in oil prices in the early 1980s, the economy was thrown into crises and recession thus set in which badly affected the real estate sector. Since real estate investment and development requires huge capital outlay, there is always the need for real estate investors and developer to source for fund. This capital is usually higher than the equity capital of such an invertor and the only way out of this predicament is to source for found through other means apart from his personal savings.

Which other sources of finance apart from equity capital are available to the real estate investors? What problems are being encountered in getting funds through these various sources?

1.1   BACKGROUND TO THE STUDY

Real estate has continued to play a significant role in man’s evolution. It is not a coincidence that food, shelter and clothing believed to be the three essentials that sustain mankind, also have some linkage to land. Food grows out of land while shelter is affixed to it, and man’s clothing is made largely from what grows out of land. Indeed, whether in ancient times or today’s modern system, land constitutes a significant index for man’s wealth, and as economic activities have assumed more sophistication over time, land has continued to play a central role in their development (Lewis , 1994). There is hardly any business venture that does not require to be supported by some form of real estate: from the small business that requires real estate as offices from where its business can be organized, to the major venture that needs it for its factory.

Consequently, through some very robust and well thought out land policies comprehensively address challenges that are encounter in the real estate sector. This is not exactly the situation here in Nigeria and the result is that there is a myriad of problems in the real estate sector (Adewale, 2000). In the course of this study, the researcher will provide an overview of real estate investments in Nigeria and its associated challenges.

Real estate investment is intrinsically connected to the economic development and well being of any nation, thereby necessitating some intervention by prudent governments. Such interventions vary in degrees, depending on the nation. In Nigeria, individual could rarely lay claim to any part of it as owner and therefore could not alienate it without the consent of the head.

Proper financing is all-important to successful property/real estate investment and development. Various forms of finance on varying terms from diverse investing agencies are available to the property/real estate market. The principal field where various forms of investment finance are employed is that of development where every loan has to be specially tailored for an individual scheme and the particular stages within the scheme. Since real estate and property development, in particular, involves huge capital expenditure, finance is, therefore, an essential input, the nature of which is to provide capital to enable the enterprise to operate commercially (Ratcliff, 1999). The cost and availability of finance for real estate development can influence the viability of such a project. It is necessary to examine the nature of real estate investment in Nigeria with a view of finding solutions to the associated challenges.

1.2   STATEMENT OF THE PROBLEM

In recent times, research on real estate investment has been on the front burner as it is the major source of housing for men. In the hierarchy of man’s needs, housing has been ranked second and as a result of this; housing provision has become a paramount cornerstone of the policies of various governments both at federal and state levels since independence in Nigeria. The consequences of the rapid rate of urbanization are most visible in the rapid deterioration of urban housing resulting in urban housing poverty especially as there is no proportionate increase in the number of housing stocks.

During the period of the economic boom in the 1970s in Nigeria, there was surplus capital, the economic climate then was favorable for the development of the real estate, and the prospect of gain was over blown and so was the rate of development. Due to the recent drop in the prices of crude oil world wide and corruption, government has not been able to invest in real estate. Overpopulation and urbanization has led to massive increase in property development.

Financial houses readily obliged developers’ loans, as they perceived minimum risks.

Since real estate development requires a huge capital outlay, there is always the need for real estate developers to source funds. However, this study will examine the scope of real estate in Nigeria and its associated challenges with a view of making useful suggestions on the way forward for real estate in Nigeria.

1.3   OBJECTIVES OF THE STUDY

The following are the objectives of this study:

1.  To provide an overview of real estate investment in Nigeria.

2.  To examine the challenges associated with real estate investment in Nigeria.

3.  To identify the way forward for real estate in Nigeria.

1.4   RESEARCH QUESTIONS

1.  What is the level of real estate investment in Nigeria?

2.  What are the challenges associated with real estate investment in Nigeria?

3.  What is the way forward for real estate in Nigeria?

1.5   HYPOTHESIS

HO: Real estate investment has no challenges in Nigeria.

HA: Real estate investment has several challenges in Nigeria.

1.6   SIGNIFICANCE OF THE STUDY

The following are the significance of this study:

1.  The findings from this study will educate the general public on the benefit of real estate investment and its associated challenges which will form the basis for guidance in decision making.

2.  This research will also serve as a resource base to other scholars and researchers interested in carrying out further research in this field subsequently, if applied will go to an extent to provide new explanation to the topic.

1.7   SCOPE/LIMITATIONS OF THE STUDY

This study on real estate investment and its associated challenges in Nigeria will cover the extent of real estate investment in Nigeria looking at the factors that has facilitated or hindered it. It will also cover the challenges associated with real estate investment in Nigeria.

LIMITATION OF STUDY

Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature, or information and in the process of data collection (internet, questionnaire, and interview).

Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted to the research work.

1.8   DEFINITION OF TERMS

Investment: an investment is a monetary asset purchased with the idea that the asset will provide income in the future or appreciate and be sold at a higher price.

Real estate: property consisting of land or buildings.

REFERENCES

Adewale, J.R. 2000: Real Estate Investment Analysis. Lexington Books.

Lewis, M.G. (1994): When Real Estate Becomes Big Business: Mergers, Acquisitions, and Joint Ventures. Cahners Publishing.

Ratcliff, R.U. (1999): Real Estate Analysis. McGraw Hill, New York.

 

.

CHALLENGES ASSOCIATED WITH REAL ESTATE INVESTMENT IN ENUGU NIGERIA



TYPE IN YOUR TOPIC AND CLICK SEARCH.






RESEARCHWAP.NET

Researchwap.net is an online repository for free project topics and research materials, articles and custom writing of research works. We’re an online resource centre that provides a vast database for students to access numerous research project topics and materials. Researchwap.net guides and assist Postgraduate, Undergraduate and Final Year Students with well researched and quality project topics, topic ideas, research guides and project materials. We’re reliable and trustworthy, and we really understand what is called “time factor”, that is why we’ve simplified the process so that students can get their research projects ready on time. Our platform provides more educational services, such as hiring a writer, research analysis, and software for computer science research and we also seriously adhere to a timely delivery.

TESTIMONIES FROM OUR CLIENTS


Please feel free to carefully review some written and captured responses from our satisfied clients.

  • "Exceptionally outstanding. Highly recommend for all who wish to have effective and excellent project defence. Easily Accessable, Affordable, Effective and effective."

    Debby Henry George, Massachusetts Institute of Technology (MIT), Cambridge, USA.
  • "I saw this website on facebook page and I did not even bother since I was in a hurry to complete my project. But I am totally amazed that when I visited the website and saw the topic I was looking for and I decided to give a try and now I have received it within an hour after ordering the material. Am grateful guys!"

    Hilary Yusuf, United States International University Africa, Nairobi, Kenya.
  • "Researchwap.net is a website I recommend to all student and researchers within and outside the country. The web owners are doing great job and I appreciate them for that. Once again, thank you very much "researchwap.net" and God bless you and your business! ."

    Debby Henry George, Massachusetts Institute of Technology (MIT), Cambridge, USA.
  • "Great User Experience, Nice flows and Superb functionalities.The app is indeed a great tech innovation for greasing the wheels of final year, research and other pedagogical related project works. A trial would definitely convince you."

    Lamilare Valentine, Kwame Nkrumah University, Kumasi, Ghana.
  • "I love what you guys are doing, your material guided me well through my research. Thank you for helping me achieve academic success."

    Sampson, University of Nigeria, Nsukka.
  • "researchwap.com is God-sent! I got good grades in my seminar and project with the help of your service, thank you soooooo much."

    Cynthia, Akwa Ibom State University .
  • "Sorry, it was in my spam folder all along, I should have looked it up properly first. Please keep up the good work, your team is quite commited. Am grateful...I will certainly refer my friends too."

    Elizabeth, Obafemi Awolowo University
  • "Am happy the defense went well, thanks to your articles. I may not be able to express how grateful I am for all your assistance, but on my honour, I owe you guys a good number of referrals. Thank you once again."

    Ali Olanrewaju, Lagos State University.
  • "My Dear Researchwap, initially I never believed one can actually do honest business transactions with Nigerians online until i stumbled into your website. You have broken a new legacy of record as far as am concerned. Keep up the good work!"

    Willie Ekereobong, University of Port Harcourt.
  • "WOW, SO IT'S TRUE??!! I can't believe I got this quality work for just 3k...I thought it was scam ooo. I wouldn't mind if it goes for over 5k, its worth it. Thank you!"

    Theressa, Igbinedion University.
  • "I did not see my project topic on your website so I decided to call your customer care number, the attention I got was epic! I got help from the beginning to the end of my project in just 3 days, they even taught me how to defend my project and I got a 'B' at the end. Thank you so much researchwap.com, infact, I owe my graduating well today to you guys...."

    Joseph, Abia state Polytechnic.
  • "My friend told me about ResearchWap website, I doubted her until I saw her receive her full project in less than 15 miniutes, I tried mine too and got it same, right now, am telling everyone in my school about researchwap.com, no one has to suffer any more writing their project. Thank you for making life easy for me and my fellow students... Keep up the good work"

    Christiana, Landmark University .
  • "I wish I knew you guys when I wrote my first degree project, it took so much time and effort then. Now, with just a click of a button, I got my complete project in less than 15 minutes. You guys are too amazing!."

    Musa, Federal University of Technology Minna
  • "I was scared at first when I saw your website but I decided to risk my last 3k and surprisingly I got my complete project in my email box instantly. This is so nice!!!."

    Ali Obafemi, Ibrahim Badamasi Babangida University, Niger State.
  • To contribute to our success story, send us a feedback or please kindly call 2348037664978.
    Then your comment and contact will be published here also with your consent.

    Thank you for choosing researchwap.com.