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Thursday, February 1, 2018

Sample Business Plan for Real Estate Property Development Ventures in Nigeria

Real estate property development in Nigeria has been around for decades and continues to attract huge foreign investments. It is one of the safest and most profitable investments available to serious investors looking for long term or medium term returns and there are additional incentives available such as; capital gains from real estate acquisitions and direct profits coming from sale and rent of real estate properties.  

Nigeria has a vast market for real estate property development – both Commercial and residential real estate opportunities exist in major towns and cities in Nigeria where the large urban population is in urgent need of qualitative housing. The quality of housing in Nigeria in relation to the amount its costs is exhurbitant because in comparison to developed countries Nigerians pay more per unit square meter for high quality housing than their counterparts in more developed countries. In comparison to most African countries Nigeria still pays more for even low quality accommodation which goes to show that real estate value in Nigeria is high owing to her huge population and fast rate of urbanization.

Let’s take a cue from a Place like Banana Island which is the exclusive preserve of the rich in Nigeria for instance would not even compare with many middle class estates in South Africa yet people pay as much as $150,000 per annum for so called luxury flats. Lekki district in Lagos Nigeria also attracts one of Africa’s highest rent costs for the middle class going at about 30,000 naira per square meter per annum which for a 3 bedroom flat would amount to roughly 2.4 million naira. The poor areas like Ajegunle were a “face-me, I face-you” single room apartment with shared toilet and kitchen starts from 30,000 naira per year show clearly that real estate investments  

  •       Nigerians from all works of life desire decent and affordable accommodation regardless of their income group but affordable housing remains out of their reach.
  •       Most Nigerians in the urban centers live in slums and other inhabitable surroundings for which they pay relatively more for than in other 3rd world countries

Opportunities for Investors in Nigeria’s Real Estate Market
There are many opportunities for investors to take advantage of in Nigeria’s vast real estate market. These cut across economic class, occupation, age, marital status and educational levels. For instance, recent university graduates in search of accommodation would typically settle for small flats (self-contained) whereas married couples with children may opt for 2 or 3 bedroom flats.

  • Nigeria has a huge urban population of workers employed in the formal which creates the right environment for property development
  • Government is unable to adequately meet the housing needs of Nigerians but has made strong commitments in the past towards this
  •   Property values in Nigeria historically go up by over 200% every 10 years
  •   Nigerians residing in towns and cities pay more for housing than most other Africans
  •   Huge population explosion has always been associated with Nigeria’s urban centers
  •   Investors are constantly pursuing new opportunities for investments which puts pressure on government to develop infrastructure
  • Over the last 10 years, there has been increased funding towards infrastructural development in many towns and cities which has seen real estate values doubling, tripling and quadrupling depending on the area

Types of Investment Opportunities in Nigeria’s Real Estate Market
If you are an investor looking to exploit the Nigerian real estate market here are some areas you should be looking into;

Residential Real Estate
This investment area should look towards providing housing access to the mass population but unfortunately this can only be for those who can afford it.
  • Blocks of residential Flats
  • Mini residential Estates
  • Luxury Apartment buildings
  • Single housing units (Duplex and bungalow whether detached or standalone)
  • High rise luxury buildings
  • Middle income serviced apartments
  • Sites and Services
Commercial Real Estate
  • Sky scrappers
  • Office buildings
  • Car parks
  • Event centers
  • Luxury Serviced Apartments
  • Theme Parks
  • Resorts and Hotels
Some Challenges of Real Estate Development in Nigeria
  • Presence and activities of touts and land speculators
  • Difficulty in accessing long term financing for home ownership
  • High cost of building materials
  • Activities of quack building professionals
  • Real estate management is almost an all comers affair with fraudsters parading themselves as genuine agents
  • Infrastructural decay and poor social amenities common in many towns and cities
  • Discrepancies and uncertainty about responsible authorizing agencies for land allocations in some states in Nigeria
  • Land use Act which presents hurdles for various kinds of real estate development
Startup Summary for a small scale Property Development Project in Nigeria
This startup summary is merely an estimate and for this particular example is assumed to be targeting low income residential apartment building in a major urban town or city.
  • Investment Outlay – 50,000,000
  • Office Furniture – 150,000
  • Adverts and Printing – 150,000
  • 2 years Salaries – 14,400,000
  • Office decorations and renovations – 300,000
  • 2 years rent – 1,200,000
  • Other expenses – 1,200,000
  • Total – 67,400,000
Paul Onwueme is a professional Business Plan writer since February 2014, has achieved respectable results with his business plan writing service with several of his clients securing funding and leaving positive feedback about his writing service. You can connect with him via phone: 0803 206 4106 or email: paulonwueme@gmail.com