Real Estate Industry Investing in Nigeria is one of the top investment opportunities that attracts both local and foreign investors.
From the commercial city of Lagos to the political capital of Abuja, several companies and individuals undertake real estate deals, while many buy real estate for personal use and as an inheritance for family members.
The real estate business in Nigeria has become a source of employment for young people willing and able to engage in aggressive and results-oriented marketing, this is an important component of the real estate business in the country.
Some factors involved in real estate investment in Nigeria
Relevant laws governing real estate transactions
There are various laws that guide/regulate real estate transactions in Nigeria. Real estate in Nigeria is regulated by federal statutes including the Land Use Act 1978 and the land use laws of several states in the federation.
The Land Use Act 1978 is the main law that was enacted for the purpose of regulating real estate in Nigeria. By the provision of this act, the power to control and administer all lands situated within the geographic area of the state is vested in the Governor of that state for the benefit of the citizens.
The Governor has the responsibility to grant a land ownership right to individuals or corporate entities to possess and use the land for a limited term, and such grant is evidenced by the issuance of a certificate of occupancy or the consent of the Governor. By provision of the Land Use Act, it has become illegal to transfer any interest in land without obtaining the consent of the Governor of the state where the particular land is located.
Real Estate Acquisition
The Real Estate Acquisition begins with the pre-contract state where due diligence is carried out on the land to be acquired. This makes it possible to identify and address issues such as the nature of title, potential pending litigation, the seller’s capacity, the physical condition of the land, the topographic survey, and whether the land is within the government acquisition area. This is a stage in which the service of a real estate lawyer is strongly required for guidance and advice.
Upon completion of the due diligence exercise and the acquisition of an interest in the land, the required documentation is processed. Transactions for the transfer of interest in land for more than three years must be proven in writing and by a duly executed deed between the parties making the transaction.
The stage after the consummation of real estate transactions consists of perfecting the little interest acquired by the buyer of the land, the buyer of the property is responsible for all expenses and taxes necessary for the perfection of the title paid.
Foreign Investment In Nigerian Real Estate
Under Nigerian law, foreigners are prohibited from directly investing in real estate anywhere in the country, this is to limit or control foreign monopolization of land ownership in the country. However, under the provisions of the Alien Land Acquisition Acts, foreigners from federation states may acquire real estate from a Nigerian citizen in Nigeria, but such acquisition is subject to the prior approval of the state governor.
Foreigners can also invest in real estate by acquiring land through a corporate entity incorporated in Nigeria. Therefore, foreigners looking to invest in real estate in Nigeria should ensure that they get prior approval from the state governor.
The real estate sector is one of the major areas of investment that has contributed to the financial economy of Nigeria. However, the Nigerian real estate sector is still experiencing many crises including fraudulent activities by land grabbers, breach of contract by real estate sellers, sale of land purchased by the government, among others, putting all these issues into consideration, real estate buyers and investors. It is recommended to always hire the services of good real estate lawyers to navigate such an investment.