Challenges of Raising Real Estate Finance in Nigeria

Abstract

The best project ideas in the world will come to naught and remain mere wishful thinking unless there is capital in place to finance the project. Real estate finance is considered as the totality of funds required to carry out all operations and activities in the development of real estate and real estate investment. Funding of real estate is a major challenge to developers and investors particularly in developing economies. The fact that real estate requires a huge capital outlay to create or acquire makes its financing more challenging. This paper investigates the challenges in the context, availability and sources of fund, government policy and investment vehicles as they affect real estate funding in Nigeria. The approach adopted for this study is secondary data analysis, review of policies, and literature. Findings from this paper indicate that the major challenges of real estate financing include low capacity of mortgage and commercial banks, high interest rate on mortgage loan, difficulty in approving and obtaining mortgage loan, underutilization of the capital market and difficulty in obtaining property title. The chapter recommends repositioning of the capital market, increasing capacity of lending institutions, easing the process of property registration and creating awareness through wide publicity of funding opportunities.