As concern continues to mount over the dearth of long-term funds for investment in the Nigerian real estate market, stakeholders are considering the growth and development of an investment instrument that could harness the opportunities that the market offers.
Actis, an international private equity firm, Stanbic IBTC Capital and Resilient Africa at a forum for key industry stakeholders and regulators, including SEC, FIRS, NSE and PENCOM in Lagos, highlighted the potential of Real Estate Investment Trusts (REITs) in increasing investment in Nigerian real estate market.
Investment analysts are of the view that the market will experience exponential growth through the inflow of much needed capital from both local and offshore investors if a well structured REIT market is encouraged to thrive.
Speaking at the forum with the theme, ‘Catalysing the Growth of REITs in Nigeria,’ Andrew Baum, a Cambridge University professor and thought leader on global real estate investments, said “Africa is underweight in asset value of real estate relative to other continents, making it an attractive prospect for investible funds in real estate.”
Baum said the gross asset value of real estate in Africa was only €113 billion or 1 percent of the world’s total value despite the fact that the continent controlled 15 percent of world population.
Reviewing the global performance of REITs, Baum said domestic and foreign investors were more attracted to markets with properly structured REITs sectors, encouraging Nigeria to develop this asset class to harness the investment opportunity.
Craig Hallowes of Rock Castle Global Real Estate, a firm that manages funds invested in real estate assets and REITs across various jurisdictions, presented performance comparison of REITs structures in five developing countries.
Andrew Brooking of Java Capital, drawing from his experience in spearheading the development of REITs in South Africa, highlighted the need for appropriate regulatory changes, especially modification of tax regulations, to truly harness the benefits of this asset class, also showing how REITs had positively impacted the market.
Stanbic IBTC Capital official revealed ongoing drive from Stanbic IBTC and Standard Bank Group to continue to engage stakeholders at different levels to develop a viable REITs market, noting that the forum was a step in Stanbic IBTC Capital’s overall strategy to facilitate the establishment of an efficient and viable REIT product in Nigeria.
CHUKA UROKO
