Prepared for Pison Housing Company and Presented by Roland Igbinoba at the Real Estate UNITE 2015 Conference @ Eko Hotel, Lagos

1. DRIVERSFOR REAL ESTATE IN
NIGERIA
Presented @
By: Roland Igbinoba

2. Introduction
• Fourteen years ago, the Economist labeled Africa as the
‘Hopeless Continent’, but in 2013 the Economist published
‘ASPIRING AFRICA’.
• Africa is no longer viewed as a region of long term economic
distress, but now seen as a continent of increasing
opportunities. The Real Estate sector is playing a significant
role and there is an increased number of international
property investors and corporate occupiers due to rapidly
growing economies of Africa
• The need for high quality commercial and residential real
estate will only increase as the economies of Sub-Saharan
Africa grow in importance on the global stage.”
• This document deep dives into the key drivers that accounts
for the recent growth in Africa’s Real Estate with focus on
Nigeria

3. Nigeria - Key indicators for Real Estate
• Income level: Lower middle income
• GDP: US$522.64 billion (2014) GDP growth:
5.4% (2013)
• Population: 178.5 million (2014)
• Inflation: 8.00% (Dec 2014)
• Political stability: -2.08 (2013)
• Corruption Perception Index: 27 (2014)

4. Unveiling the Drivers
Macroeconomics
Capital
Policies &
Standards
Demographic
Shifts
Big, Smart &
Consistent
DATA Technology
&
Digital
1
3
5
2
4
6

5. Demographic Shifts
• Driven by demographic trends and
urbanization, Africa’s population is rising rapidly at a
time when population growth is slowing in other
global regions. And this will drive the demand for
real estate
• Unprecedented shifts in population will drive
changes in demand for real estate. Africa is
becoming much more populated, creating more
demands for assets; and real estate assets constitute
54% of the world’s wealth.
• UN projections suggest that the population of Africa
will almost quadruple to more than four billion by
2100, with nearly one billion of these people
in Nigeria alone.

6. Demographic Shifts
• According to the World Bank, Nigeria had an
annual estimated average urbanization rate
of 3.75% per year for the period 2010–2015,
with a total of 47% of the country’s
population currently living in urban areas
• Nigeria is projected to be 440 million by
2050, (i.e 3rd most populous country in the
world), hence the recent burgeoning middle-
class urban populations will need far more
housing and the influx of migrants into
Nigeria will drive house appreciation.

7. Macroeconomics
• One of the biggest reasons some bank failed in
recent times was failure in Commercial Real Estate
portfolios. Loan standards spiraled out of control and
banks were unprepared for the crash that followed.
• But (PwC) has projected an increase in real estate’s
contribution to the gross domestic product (GDP) of
Nigeria from $9.16 billion to $13.65 billion in 2016 if
the right environment is created.
• Since the Real Estate market does not operate in a
vacuum, macroeconomics helps to depict the current
status of the market; hence investors can make
informed decisions.
“Broadly speaking, when the economy is sluggish, so is real estate; and vice versa”.

8. Capital
• Private capital will play a critical role in funding the
growing and changing need for real estate and its
supporting infrastructure.
• Also, the Real Estate Investment Trust will help to build
out the real estate investment marketplace and to
provide a reliable way for Nigerians to save over time,
invest for current income and long-term growth.
• In an attempt to balance between different types of
capital sources and investment structures, such as
equity and debt, short-term and long-term, public and
private; Private real estate capital will become an
important partner of Government real estate capital in
order to finance urbanization.

9. Capital
• Capital generation of a citizenry dictates how real estate
thrives in such cities. This implies increase in economic
growth will make real estate to be attractive and provide
new opportunities for discount and luxury retailers .
• Increased allocations of funding to the asset class by local
and foreign investors are also key drivers of projected
growth in this sector.
• According to a recent PWC report, the global investible
real estate universe will expand substantially, leading to a
huge expansion in opportunity, especially in emerging
economies like Nigeria.

10. Big, Smart and Consistent Data
• Democratizing data is transforming real estate
finance; making the commercial real estate industry
more transparent, improving how buildings are
managed and helping potential investors make better
decisions.
• But there is so much dumb data everywhere, dumb
data become SMART when there is integrity,
regulation and accountability; and this helps in
foreclosure and short-sale changes and also boosts
pitches.
• Prospective investors can analyze how sound a
physical structure is and also assess a building's
finance, loans and investment platform with today’s
data availability

11. Policies and Standards
• Good policies, governance and standards are the
most important drivers shaping the global real
estate financial market. The nature of the problem
related to these drivers is quite simple: there is
often too much debt and too little documentation.
• A robust system for data collection would be based
on changes to real estate ownership and lease laws,
such that no asset sale or lease contract would be
valid without notary registration and public
publication of the key data of these activities.
• Continued government reforms have created an
enabling environment for property development
and financing.

12. Policies and Standards
• Policy response framework must be formulated
with the consideration of sustainability principles,
with particular attention to population growth,
urbanization limits and the use of natural
resources.
• Increased political stability in Nigeria and increased
participation in local partnerships will continue to
ease investors’ concerns relating to investing
across Nigeria.
• Collaborating with governments or involving a local
partner in future real estate developments in
Nigeria will become more important to mitigate
the risks.

13. Technology & Digital
• With the upsurge of mobile commerce, Internet
penetration and digital channels, access to real estate
information has increased across Nigeria and the
traditional consumer culture in Nigeria is changing.
• It is expected that online transactions in Nigeria will
exceed US$6 billion by the end of 2014.
• Technology has altered the face of real estate by
creating demand for virtual environments such as
websites or other online services such as online
shopping.
• The advent of Innovative and low-cost building
technologies will also help make housing affordable in
Nigeria