As the Nigeria’s housing shortfall rumbles on, the impact of Real Estate Investment Trusts as alternative home finance naturally designed to reduce the 17million-housing deficit in the country have left much to be desired overtime, with little or no significant impact.
Investigation shows that as at 2018, Returns on Investment , in Nigerian REITs was below what comes back to investors in this instrument in other economies. Despite its large-size market, return on investment in REITs in Nigeria is 7 percent as against 15 per cent in South Africa and 9 per cent in Kenya.
Expounding on the issue, a director at the multinational professional services network of firms, PricewaterhouseCoopers, PwC, Mrs. Bola Adigun, explained that lack of investor’s familiarity with REITs and real estate as an asset class has limited the growth of the sector. The director disclosed that investor’s sentiments on Nigerian REITs are currently negative mainly due to the general poor performance of the market.
According to her, there exists a gap in the determination of returns from individual assets held by REITs. This she revealed means that investors are not able to tell the exact yields of underlying assets owned by a REIT and this is mainly caused by lack of a clear framework on determination of returns as well as valuation standards.