Affordable Housing Ambidexterity of Real Estate Investment Trusts: SWOT Analysis for N-REITs

Oluchi Adeline Diala ,Nonso Izuchukwu Ewurum ,Chicheta F Nissi

doi:10.7176/ejbm/13-12-02

Oluchi Adeline Diala , Nonso Izuchukwu Ewurum + Show 1 more

Open Access

https://doi.org/10.7176/ejbm/13-12-02

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Abstract

Symmetric movements of real estate investment trust (REIT) capitalization and affordable housing deficit in Nigeria fuelled the motivation of the study on analyzing the implications of an affordable housing ambidexterity of REITs in Nigeria (N-REITs). The focus on REITs was informed by the unsustainable growth in the deficit statistics of affordable housing in Nigeria which implies a think-outside-the-box search for financing panacea. Indeed, there seems a paucity of empirical and practical evidence of such ambidextrous diversification for N-REITs, so the study was aimed at conducting a strength, weakness, opportunity and threat (SWOT) analysis of affordable housing ambidexterity of N-REITs. Survey research method was employed on a sample frame of housing delivery stakeholders. Sample size of 369 was determined using Freund and Williams formula, while the research instrument was a self-administered e-questionnaire. Data was obtained from primary sources, and further subjected to descriptive analysis. The study found that professional investment management competency was the most dominant strength, 10% investable income was the most significant weakness, significant room for rise in market share was the most significant opportunity, while effect of systematic risk on sustainability planning was the most significant threat to N-REIT ambidexterity towards affordable housing investment in Nigeria. The study concluded that the professional investment management quality of REITs, in comparison with non-listed direct real estate companies would envisage a robust and sustainable contribution to increase in affordable housing stock in the country. It was recommended that management of N-REITs should leverage on their professional investment management strengths to explore blue ocean strategies for an ambidextrous attitude that enhances the growth and sustainability of affordable housing units, in addition to the employment of risk analysis, management and mitigation strategies to limit the effect of volatilities from macroeconomic risks. Keywords: Housing affordability, Housing deficit, Housing financing, REITs, REIT ambidexterity, SWOT analysis. DOI: 10.7176/EJBM/13-12-02 Publication date: June 30 th 2021

Highlights

The urban housing deficit surge in Sub-Saharan Africa remains uncontrolled in recent years with over 56 million-shortfall, out of which Nigeria alone has over 17 million
Since inception in 2008, N-real estate investment trust (REIT) have been characterized by relatively convincing market capitalization and performance
From the findings of the SWOT analysis, the study concluded that the professional investment management quality of REITs, in comparison with non-listed direct real estate companies would envisage a robust and sustainable contribution to increase in affordable housing stock in the country

Summary

Introduction

The urban housing deficit surge in Sub-Saharan Africa remains uncontrolled in recent years with over 56 million-shortfall, out of which Nigeria alone has over 17 million. Of the 56 million, Yinglun (2019) assert that an estimated 45 million units, representing 90%, is in the affordable housing bracket This is corroborated by 2015 and 2020 reports from World Bank housing delivery analysis in the region which present grim statistics that over 40,000 persons migrate from rural to urban areas daily in the continent, culminating in over 4.5 million new informal residents annually. Onyekwelu et al (2020) lend credence to this assertion with the argument that “rental affordability issues have forced a significant proportion of urban settlers in lower middle-income countries into contiguous settlements” These anomalies have been juxtaposed with a myriad of housing policy and finance challenges across the continent. When such housing finance impediments are juxtaposed with mean property and title registration costs which stand at over 8% of property value (World Bank, 2015), it can be agreed that some form of housing investment dilation is required

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