By Jude Njoku

The Nigerian real estate market will experience exponential growth through the inflow of  capital from both local and offshore investors if the Real Estate Investment Trust, REIT structure is encouraged to thrive. This view was canvassed by stakeholders at a recent round table put together by Stanbic IBTC Capital, in partnership with Actis and Resilient Africa.

Stakeholders who participated in the one-day forum which had “Catalysing the Growth of REITs in Nigeria” as the main theme, were drawn  the Securities & Exchange Commission, SEC, Federal Inland Revenue Service,  FIRS, Nigerian Stock Exchange,  and Nigerian Pensions Commission,  PENCOM .

Delivering the lead paper, a lecturer at the Cambridge University in Britain, Professor Andrew Baum,  stated that “Africa is underweight in asset value of real estate relative to other geographies, thus making it an attractive prospect for investible funds in real estate.

According to him, the gross asset value of real estate in Africa is only one percent of the world’s total value despite the fact that the continent controls 15 percent of world population.  While reviewing the global performance of REITs, Prof. Baum noted that domestic and foreign investors are more attracted to markets with properly structured REITs sectors and encouraged Nigeria to develop this asset class to harness the investment opportunity.

Mr. Craig Hallowes of Rock Castle Global Real Estate, a firm that manages funds invested in real estate assets and REITs across various jurisdictions, presented the performance comparison of REIT structures in five developing countries. Drawing from his experience of spearheading the development of REITs in South Africa,  Andrew Brooking of Java Capital, highlighted the need for appropriate regulatory changes to truly harness the benefits of this asset class. He also showed how REITs have positively impacted the market.

The CEO designate of Stanbic IBTC Capital, Ms Yewande Sadiku reinforced the ongoing drive from Stanbic IBTC and Standard Bank Group to engage stakeholders at different levels to develop a viable REIT market. She further stated that “the roundtable is a step in Stanbic IBTC Capital’s overall strategy to facilitate the establishment of an efficient and viable REIT product in Nigeria.

In his own presentation, the Head, Real Estate Finance (West Africa) Stanbic IBTC, Mr. Niyi Adeleye  pointed out that a well structured and sustainable rental cash-flow is the most important driver of the value and quality of REITs and other real estate investments as opposed to the over-weighted attention on project construction cost, property appearance and perceived building quality.