Real Estate Investment Capitalization Issues in Emerging Markets: Reflection on Capital Market Instruments

Abstract

In spite of the potentials of the capital market, one wonders why the Nigerian real estate developer has not resorted to the use of capital market instruments for real estate financing. In light of the potentials of these instruments in real estate development financing, the study examines the issues bordering on real estate development financing using capital market instruments. Specifically, the study was guided by the following objectives: to ascertain the challenges associated with the funding of real estate development using capital market instruments in the study area, and to determine the prospects of capital market instruments in funding real estate development in the study area. The study area was the south-eastern geopolitical zone of Nigeria. A quantitative approach was chosen for this study. The population of the study was 245 comprising real estate investors\developers, Estate Surveying and Valuation firms, Primary and Federal Mortgage Bank of Nigeria, Nigeria Stock and Exchange Commission, selected Academia of Estate profession in south East, Nigeria. The primary data collected through the questionnaire were analyzed and presented using charts, Binomial test of proportion and Z-approximation test. The study found seven (7) significant challenges associated with the capital market financing of real estate development in the study area; while six (6) significant prospects of capital market funding of real estate development in the study area were found. The study recommended that policies that will impact positively on the real estate development sector of the Nigerian economy as it concerns funding should be pursued with all the seriousness it deserves; and good regulatory environment should be provide with adequate safeguard to enable investors tap into the potentials of the capital market in financing real estate development.