Real estate finance in Nigeria: sources and its effect on property development review

Abstract

Next to food, shelter is one of the three essential human needs and the second most significant survival of human. It is the most complex of the three essential man’s needs since majority of human activities are accommodates by shelter. Housing demand is associated with increasing rate of urbanization in most cities of the world including Nigeria, which has become a common feature of contemporary societies. This study seeks to review the source of finance and issues related to financing the property development in Nigeria. To achieved the above aim, the objectives were drowned as; To identify the source of finance for property development in Nigeria. To explore the problem associated with property development in the study area. The study adopted a secondary source of data collection as methodology, where various journals/articles were reviewed. Real estate development finance sources can either be internal or external. When the fund was generated internally in the form of estate income is known as internal source, while the mortgage source can be categorized as external. Real estate development in Nigeria has been faced a variety of difficulties. These issues can be two-faced both the commercial banks as well as real estate developers which make it difficult in funding real estate. These problems make real estate lending risky, as it is vulnerable to capital loss and projected interest income, and therefore not attractive to commercial banks, thus restricting the development of the real estate. The FMBN (Federal Mortgage Bank) should focus solely to the wholesale functions as its designated to, and operate in the secondary mortgage sector through providing PMIs, housing finance, and construction companies/associations in the country with mortgage banking services. This would be achieved by acquiring mortgage loan blocks already issued via the main housing finance firm/mortgage institution at the primary sector.