Bureaucratic bottlenecks, corruption and inefficient legal frameworks contribute to the existence of dead capital in Nigeria’s real estate sector.
According to a PricewaterhouseCoopers (PwC) report, the country holds as much as $900billion worth of dead capital locked up in residential real estate and agricultural land without titles.
Dead capital refers to assets or property that cannot be easily converted into productive use, often due to legal or institutional barriers.
Before now, several professional bodies in real estate have called for speedy land titling processes and less cumbersome government consent.
Additionally, bureaucratic procedures, corruption, and inefficient legal frameworks contribute to the existence of dead capital in Nigeria’s real estate sector.
They stated this in a new report titled ‘Nigeria Economic Outlook: Seven trends that will shape the Nigerian economy in 2024.
According to the report, Nigeria’s housing deficit is estimated at 28 million units while the population is expected to reach 223.8 million this year.
It noted that the dead capital in the country included the Federal Government’s abandoned property estimated at N230 billion. This lack of proper documentation hinders access to credit and investment opportunities in the real estate market.
Despite the huge housing deficit, it noted that demand for housing remained depressed due to high rental and construction costs and declining disposable incomes.
“PwC estimates that Nigeria holds as much as $900billion worth of dead capital locked up in residential real estate and agricultural land, including Federal Government’s abandoned properties estimated at N230billion,” the report noted.
In Nigeria, many properties have undocumented or informal land titles, making it difficult for owners to prove their ownership and fully utilise the value of their assets.
Those factors make it challenging for property owners to navigate the system and unlock the full economic potential of their assets.
Last year the Federal Government revealed its plans to unlock over $300 billion ‘dead’ capital in the housing sector through a series of reforms and collaborations with stakeholders.
The government described the move as part of efforts to enhance investment and finance opportunities for sustainable real estate projects and address the country’s housing deficit.
The Minister of Housing and Urban Development, Ahmed Dangiwa, during the Capacity Development Conference for Developers in Abuja recently stated that plans to amend the Land Use Act to streamline land administration, as well as reforms key agencies like the Federal Mortgage Bank of Nigeria (FMBN) and the Federal Housing Authority (FHA) is on the pipeline.
The Minister said: “In alignment with the vision of President Bola Ahmed Tinubu, we are dedicated to creating a conducive environment for increased private sector investment in housing. Our objective is to break all institutional, legal, and bureaucratic barriers that have hindered sector growth.”
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