If you want to dive into how to make successful real estate investments in Nigeria - it goes without saying that you have to look at some successful real estate companies and developers in Nigeria.
The likes of these companies and developers are such as; Mixta Africa Landwey, Rendeavour, Uacn which has the subsidiary as Updc, Cosgrove, First World Communities, Brains and Hammers etc
After which you need to Choose The Right Real Estate Investment Strategy
Broadly speaking they are four (4) major Real Estate investment strategies:
i.) Rentals:
Rentals are one of the oldest, safest, and most steady source of income from Real Estate.
In Rentals, you buy a property to put on the market for monthly or yearly rental. It has a lot of upsides like; regular cash flow, asset appreciation, collateral for loans, and property can be sold afterward for a profit.
The downside is that just like in many numerous Lekki phase 1 and Banana island apartments, you may experience non-subscription of your apartment for long periods.
ii.) Flipping of land and Houses:
Also referred to as land/property banking - you purchase a property to sell in the quickest time possible for profit.
A company that works well with this strategy is Gracias Global in Lagos..They have prime properties all around Lagos in Sangotedo, Eleko, Ibadan and some of these properties, with strategic locations like in Eleko junction.
They have the gracias morganite and peridot heights, off lekki epe expressway Lagos.
Gracias’ major Real Estate investment strategy is buying and reselling land whilst providing infrastructure around the residential and commercial development.
They can see as much as over 100% ROI because they actually buy this land for cheap from Omonile, by doing ’sponsorships deals‘.
iii.) Property Development
Property development involves purchasing land, erecting various house types, developing infrastructure, and selling to the buyer either at carcass (lintel level), fully finished, with fittings, plumbings, and so on, or fully finished and furnished.
But property development is capital intensive and it requires alot to position for success.
They seem to have realized their competitive advantage and stuck with flipping properties; selling land in only prime areas in Lagos and Ibadan.
There is another less talked about Real Estate Investment strategy: Real Estate Investment Trusts (REITS).
iv.) REITS:
Simply put, a REIT is a trust that pools fund from individual investors, acquires, operates and/or manages income-generating real estate.
There are different types of REITS like Equity REITS, and Mortgage REITS. These REITS, listed in the Nigerian Stock Exchange distributes the income derived from their owned properties and investments as dividends to subscribers.
REITs are traded on the Nigerian Stock Exchange (NGX) just like stocks; you can buy or sell REITs through stockbrokers.
There are currently only 3 registered REITS recognized by the Securities and Exchange Commission namely; Union Homes, Skye Shelters and UPDC, a subsidiary of UACN.
Nigeria by 2019 had the market cap of REITS at NGN32-72bn, compared with South Africa which has a total market cap of over $31.42 billion of 31 REITS.
For even better context the combined market capitalization of the three REITs in Nigeria is US$131 Million while in the United States, the combined market capitalization of REITs is around US$898.41billion.
REITS have been very challenging to implement in Nigeria, and even a major REIT - UPDC, a subsidiary of UACN posted a loss last year.
So you can see that whatever strategy from the above you choose namely;
i.) Rentals ii.)Flipping Houses/Land iii.)Property development iv.) REITs,
You have to position for success because it isn’t a walk in the park.
But How do you choose the right Real Estate Investment Strategy in Nigeria? How do you implement your strategy successfully?
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