Look at the picture below carefully and read the sign there. You’ll see one of the ins-and-outs of real estate in Nigeria – and I suspect that similar ones may appear in the rest of Africa:
Yes, you got it right!: “This property is NOT for sale.” Unusual, isn’t it? Not so here, where you can see similar signs here and there. Real estate is one of the sectors to watch in Nigeria:only in Lagos, the housing deficit is of about 3 M units, with a forecast of land scarcity in 20 years. An attractive industry, but one that requires a lot of local knowledge to succeed in it.
- Some land is owned by the government: They acquired it (i.e., expropriated it) from the so called “customary land owners.” The tricky issue is that many times these families still occupy it, and claim that the land is theirs. The end result is that it’s common business practice that you pay twice: both to the government, and to the occupiers.
- Other land is in private hands (the “customary land owners”): Serious real estate developers like First World Communities Ltd do not buy from them. Because there is no central ownership registration system, you can’t be sure who the land belongs to and different people may claim ownership.
- The social conception is that a house belongs to the family: When someone buys a house, the extended family members contribute to it (this speaks to the Africans’ communal mentality I referred to in a previous post). The implication is that if you know how to manage this, you can design your financing options in such a way that you can sell houses to people who would not qualify for a mortgage.
If you combine the lack of information about property titles with the sense of “shared property” that derives from the extended family contributions to finance the acquisition of a house, the end result is the picture above. It just happens that people may be selling a house or a land property they do not own; they may either be falsifying the ownership titles, or they may just be convinced that the property is theirs. It’s not uncommon that two family members are trying to sell a house to different people without letting each other know. And the house may be shown to a potential buyer in the absence of the inhabitants. Thus, you need to make it public if “this property is NOT for sale.”
To the contrary, ownership of government land is properly registered, including who the legal “customary land owners” are. Guaranteeing that only this land is acquired grants a company like First World Communities Ltd a reputation for reliability — something particularly important in this industry, as you probably have figured out. (And by the way, First World Communities Ltd is one of those companies that plans to become Pan-African in the medium term.)
Have you seen a system similar to this one anywhere else?