Establishing A Property Development: Residential and Commercial Real Estate Projects in Nigeria

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Office Address: 5, Ishola Bello Close, Iyalla Off Street, Alausa, Ikeja, Lagos, Nigeria

Introduction

The real estate business in Nigeria presents itself with diverse opportunities. And being a Country with large land mass, it has opened itself up to various Country- and indeed foreign players to dance to the opportunities it speaks of as a thriving sector.

The real estate business in Nigeria has been in existence for as long as one can remember. Our forefathers have been practicing it and we are still practicing it today, even though with a little difference.

Many people are practicing it without knowing it. If you are a landlord with tenants in your house or if you have ever sold land to people, you have done real estate business.

The moment you decide to go into it full-time or part-time, you will become a real estate businessman or woman.

The real estate business in Nigeria is not for the faint-hearted because it involves a lot of risks, research, mentorship, and dedication, but if you are willing to pay the price you will smile in the end.

This post will explain to you the types of real estate, careers in real estate, types of real estate businesses you can venture into, and how you can start a real estate business in Nigeria.

What Real Estate Business Means

Real estate business is the profession of buying, selling, or renting real estate i.e. land, buildings, or housing.

In a plain language, a real estate business is any business transaction that involves land, infrastructure, and natural resources existing on the land. The land could be used for residential, commercial, special, or industrial purposes.

Definition Of Real Estate

Real estate is a form of real property. It differs from personal property, which is not permanently attached to the land, such as vehicles, boats, jewelry, furniture, and farm equipment.

Real estate is defined as the land and any permanent structures, like a home, or improvements attached to the land, whether natural or man-made.

In other words, Real estate is real property that consists of land and improvements, which include buildings, fixtures, roads, structures, and utility systems. Property rights give a title of ownership to the land, improvements, and natural resources such as minerals, plants, animals, water, etc.

Moreover, Real estate consists of land with everything that’s on it, which could be building, fences, water, or trees.

Types Of Real Estate

Real estate is generally categorized into five, and they are follows;

Land

The land is the earth’s surface that is underdeveloped with every natural resource on it. Natural resources like water and trees. Real estate developers buy lands and then develop them to increase their value.

Special Purpose Real Estate

Special purpose real estate is properties that are used by the public like cemeteries, hospitals, oilwells, amusement parks, worship places, and government facilities.

Industrial Real Estate

Industrial real estate are properties used for industrial purposes, such as factories, warehouses, dormitories, construction, logistics, transportation, etc.

Commercial Real Estate

Commercial real estate consists of properties that are developed for commercial purposes that are used for hosting business transactions. Hotels, office buildings, shopping malls, and provision stores are examples of commercial real estate.

Residential Real Estate

These are properties that are used for residential purposes. They consist of buildings where people live in. Some examples are Bungalows, residential estates, single-family homes, apartments, and other residential arrangements.

Background Knowledge About of The Real Estate Industry in Nigeria for Easy Navigation

For you to have an understanding of how the real estate business in Nigeria works you need to know about some subsections of the industry.

It is generally categorized into sales and marketing, development, brokerage, property management, lending, and professional services.

Development

This involves purchasing land and then improving it by raising structures or building on it. Real estate development increases the value of the land.

When a developer has finished building, he or she will then sell or rent it to people, by so doing profit is being made.

Property Management

This is the managerial category of real estate business in Nigeria. Managerial firms take care of managerial duties like building maintenance, repairs, painting, collecting of rents, and managing tenants.

Sales and marketing

There are sales and marketing firms that market and sell real estate units to buyers for a commission. They market the units to buyers with their resources and sales agents.

Professional Services

This category involves professionals that are involved in the real estate industry to make it function optimally. Examples of professional careers in the industry are analysts and lawyers as mentioned above.

Real estate lending

The real estate business in Nigeria has lenders that Real estate business person leverage to facilitate the smooth running of their activities. Examples of lenders are Government, Banks, and Credit unions.

Brokerage

This involves having a team of sales agents that help to facilitate the transaction between buyers and sellers. The firm that makes this possible is called Brokerage.

Types Of Careers in Real Estate Business in Nigeria

It is common to think that the real estate business is limited to developers, salespersons, and brokers. In the real sense, many other people have to be involved for the real estate business to be complete, that is what you will read about next.

Appraiser – someone who analyses and evaluates properties to determine their value.

Analyst- someone that takes the financial analysis of properties

Developer – someone that buys land and improves its value by building infrastructures to increase its value before selling it.

Landlord- Someone that gives his or her house out for people to rent for an agreed amount that is to be paid monthly or annually.

House agent – Someone that helps landlords to find tenants for a commission.

A broker – is a real estate agent that has the qualification and licenses to hiring real estate agents to work under and can even start a brokerage firm.

Real estate Attorney – A lawyer that specializes in Real estate. They take care of all matters that relate to the Real Estate business in Nigeria.

Home Inspector – Someone who inspects houses to make sure everything is in check for a buyer or a seller.

Agent- Also known as a salesperson or realtor is an individual licensed to help people rent, buy or sell properties. They are middlemen and are entitled to a percentage commission or a flat fee for every successful transaction.

Building Inspector – Someone that inspects buildings to make sure everything is in check for the buyer or seller.

How To Start a Real Estate Business in Nigeria

Every business has different approach to establishing them because of their peculiarities. It is therefore important to talk about the in this blog post. The step-to-step guide are as follows;

Identify the real estate business or career

The first step you need to take is to decide on the career or real estate business in Nigeria you want to start with. Remember, some of the important ones have been discussed in this post.

Start by identifying the one that you can do and then start working towards becoming it.

You will need mentors to show you the ropes so you don’t repeat the mistakes they made. Taking this path will make your journey easy. There is a popular saying that says “you see better when you stand on the shoulders of people that have gone ahead of you”.

Create a business plan

A business plan will help to see the end of your business from the beginning. It will make you see things better.

It is important to write down a business plan because it will help you to identify challenges that could come your way while operating your business, which will help you identify how to solve them.

A typical business plan is made up of an executive summary, product, and services, market analysis, marketing strategy, financial planning, and budget.

If you cannot draft one yourself, you can contract it to others to help you, after which you will go through it to understand and verify if it will give you the desired result. But note that business plans can be adjusted with time as the business grows.

Register your business

The importance of registering your business with the Corporate Affairs Commission (CAC) to start any business in Nigeria cannot be overemphasized.

When you register your business, you can easily create a business brand because they will make sure no one has registered any business in Nigeria with the name you want to use for your business.

You will also be certified by Government which will give you the confidence to do your business anywhere you want to without fear.

Start with what you have

You must not have everything set to start your real estate business in Nigeria, you can start with the little you can gather from your savings, friends, and probably lenders.

When you start, you will be able to scale the business to a higher level because you would have grown in the business. By that time, you will know the best lenders and best practices to carry out.

Create a real estate business website

Your real estate business in Nigeria will need an online presence since a large percentage of people in Nigeria are active online, and one of the best ways to do that is by creating a website.

There are important things you or your web designer will need to be able to design a real estate business, they are hosting, domain, and Content management system (CMS).

Web hosting is the space given to you on the internet to host your website. There are companies that sell hosting to people to create a website.

A domain is the name or identity of your website on the internet. This name distinguishes your website from other people’s websites.

CMS is the software that enables you to manage your content on the internet. The popular CMS in the world that is used to design websites is WordPress.

Laws, Regulations, Compliance, License Obstinance and Regulatory Body for Establishing a Property Development for Both Residential and Commercial Real Estate Projects in Nigeria

Though most businesses in the real estate sector in Nigeria start out adopting to the agency model, this article would unravel in details the regulatory landscape governing the operation of real estate business in Nigeria, taking into cognizance all the diverse business models adopted by real estate companies- such as construction and property development, property management and short let businesses, estate survey and valuation businesses, real estate agency business, and so on.

1. Requirements for registering a real estate company with the Corporate Affairs Commission (CAC) in Nigeria.

The type of service a real estate company plans to provide dictates the required share capital and governance standards. Typically, for a private real estate firm offering fundamental real estate services like land sales and flipping, there isn’t a specific minimum share capital stipulated for registration in Nigeria, unless there is foreign involvement. In cases of foreign participation, the minimum share capital is set at N100,000,000 (One Hundred Million Naira).

Below are the requirements for registering a real estate company with the Corporate Affairs Commission (CAC) in Nigeria.

The promoters/applicants will submit two potential company names to the CAC for name search, screening, and approval. Once the name is approved, they can proceed with registering the real estate firm under the approved name.

Proposed Registered Address, Email Address and Phone Number of the Company;

Details of the Shareholders, Director(s) and Company Secretary to include their Names, Contact/Home Address, Email address, Phone number, Date of Birth, Occupation, a copy of National Identity Slip/ Card showing the National Identity Number (“NIN”), and electronic signatures.

Objects of the Company: the services the company intends to offer.

Licenses and approvals a real estate company should acquire to operate in Nigeria

Below are licenses and approvals required for the smooth operation of a real estate company in Nigeria:

Tax Registration with Federal Inland Revenue Service (“FIRS”)

Tax registration is mandatory for all companies doing business in Nigeria. In practice, upon incorporation with CAC, a Tax Identification Number (TIN) is assigned to a company. Nonetheless, a company is required to register with FIRS for tax purposes.

Registration with Special Control Unit Against Money Laundering (“SCUML”)

The Special Control Unit Against Money Laundering (SCUML) is an Economic and Financial Crimes Commission (EFCC) unit tasked with supervising, monitoring, and regulating Designated Non-Financial Institutions (DNFI) in terms of anti-money laundering compliance.

A real estate company is DNFI in Nigeria and therefore must register with SCUML before commencing operations and report suspicious and other high-volume transactions to the SCUML in accordance with the law.

The following documents are required for registration:

Incorporation documents

Tax Identification Number

BVN, Bank Name and Account Number

Real Estate Developers Association of Nigeria (REDAN) Membership certificate

Registration with Real Estate Developers Association of Nigeria (REDAN)

REDAN serves as the central body for the organized private sector, both public and private, involved in housing development in Nigeria. It acts as the primary contact for government agencies, private entities, international partners, and investors seeking involvement in Nigeria’s housing development sector.

The requirements for registration are as follows:

Duly completed application form

Written application on company letterhead paper

CAC incorporation documents

Audited accounts

Company Profile including organization structure showing the positions of directors, key personnel, their qualifications and functions.

Project brochures

Bank reference/Letter of introduction

Bank cheque for registration and subscription fees.

Tax Clearance Certificate

Evidence of National Housing Fund contribution (in compliance with the National Housing Fund Act and National Housing Policy)

Photo Identification of Major Shareholders and Directors

Execution of REDAN Membership Code of Conduct form

The applicable costs for REDAN registration of a real estate company are as follows:

Application fee —N10,000

Registration fee —N100,000

Development fee —N140,000

Annual Subscription —N100,000

Registration with Lagos State Real Estate Regulatory Agency (LASRERA)

The Lagos State Estate Agency Regulatory Law, Cap L28, Laws of Lagos State, 2015 (“Law”) established the LASRERA. This Agency is saddled with the responsibility of regulating real estate businesses in Nigeria through the issuance of permits, registration and monitoring of the affairs of all real estate transactions and practitioners in Lagos State. One of the LASRERA’s core missions is to protect the public from fraudulent and unscrupulous practices in the real estate sector and ensure public safety through effective monitoring of the quality of real estate development projects.

The requirements for registration are as follows:

Duly completed application form

CAC Incorporation documents

Means of Identification of directors of the company

Operational Office Address

Evidence of payment of fees

The processing cost for a LASRERA license depends on the category of your business, such as whether you are a property developer or agency.

Registration with Nigerian Institution of Estate Surveyors and Valuers (NIESV)

Where the business of the real estate company will involve survey and valuation services, then the company must register with the Nigerian Institution of Estate Surveyors and Valuers (NIESV). The NIESV is a non-profit, voluntary, professional organization that caters for the interest of professionals involved in land transactions.

The requirements for registration are as follows:

Duly completed registration form

Evidence of payment of processing fee

Letter of resignation and letter of acceptance from previous employer

Certificate of compliance from Estate Surveyors and Valuers Registration Board of Nigeria

Certificate of business registration from Corporate Affairs Commission to read “real estate surveying & valuation only”

Up to date payment of NIESV dues and pledges

Two recent passport photographs of the directors of the company

Certificate of professional indemnity — minimum of N1 million cover

Evidence of client dedicated account

Evidence of account opening with the business name

Recent phone numbers of directors of the company

Licenses and approvals a real estate agency should acquire to operate in Nigeria

In addition to registering with bodies like SCUML and LASRERA (under its agency framework for Lagos-based businesses), a real estate agency firm must also register with the Association of Estate Agents if its main focus is on agency work within the real estate industry.

This Association is affiliated with the Nigerian Institution of Estate Surveyors and Valuers. It was founded with the intention of regulating the activity of estate agencies in Nigeria.

The requirements for registration are as follows:

Incorporation documents

Application for membership on the company’s letter head

One passport photograph of each of the Directors

Candidates/Directors are expected to partake in Mandatory Compulsory Professional Development (MCPD) Courses within one month of submitting application. Refresher Courses are also organized every year to renew Membership

The timeframe for processing these licensing requirements for a real estate company or agency in Nigeria

In Nigeria, incorporation of a company can be completed in 24 hours.

The estimated timeline for the post-incorporation registrations of a Real Estate Company is 6–8 weeks.

Major Key Players in The Real Estate Industry in Nigeria

Sujimoto Group

Delta Mega Trend Nigeria Limited

Hall 7 Real Estate

Besitz Group

Fortreal Rei Ltd

Nuel Osilama Global Investment Limited

Sogreat Systems Technology

Seven30 Real Estate Ltd

Dukiya Investments Ltd

Land Republic

First Generation Mortgage Bank (FGMB)

Fesadeb Communications Ltd.

Copen Group

RevolutionPlus Properties

Cove Real Estate and Construction Nigeria

Nigeria Mortgage Refinance Company (NMRC) PLC

Adron Homes & Properties Limited

Landmark Corporate Realty Limited

Pennek Nigeria Limited

Enugu State Housing Development Corporation (ESHDC)

MKH Investment Limited

Carrillion Consultants Limited

Henry Montego Homes and Industries Limited

Dynamic Mayor Edge Nigeria Limited (DME-Estates)

UPDC Plc

Dupine Properties

PWAN PLUS BUSINESS CONCERNS LTD

Reftop Homes Ltd

Petik Limited

Primrose Development Company

Deep Spring Facilities

Prime Water View Limited

Jide Taiwo and Co

Landwey Investment Limited

Integax Jubilation Homes

Chigo Properties

Chozen Global Investment Ltd

Cicero Areli

Cincinnati Homes Limited

Alphard Limited

Amaze Glamour Bead

Ap Global Homes and Investments Ltd

Aravody Limited

Armstrong Shelter Limited

Ashien Douglas & Co.

Bara Space Solutions

Bargello Resources Limited

Cappa & D’Alberto Plc

Property Max Results Ltd.

Ayeye & Co.

List Of Prolific Property Developers in Lagos and Nigeria

Brains and hammers

Aircom Nigeria limited

Mixta Nigeria limited

Brookstone property

Redbrick homes international limited

Uacn property development company

First investment development company

Buildcon global services limited

The haven homes

Revolutionplus property

Misa limited

Megamound investment limited

Career Opportunities in Real Estate Business in Nigeria

Become a real estate agent

This is the simplest way to enter into the real estate industry without having capital, you need to just have an understanding of sales. You can’t be a great salesperson if you don’t love selling.

It doesn’t require you to go to a formal school of marketing. For starters, you need to like working with people, because you will have to interact with a lot of people in your career as a salesperson.

When you sell to a buyer you are entitled to a certain commission, the more you sell the more money you have.

Become a real estate developer

Real estate developers are people that take land or property and develop it to increase its value before renting or selling it.

They have eyes that see beyond what is being seen physically with the eyes. A developer can see a skyscraper where people are seeing a garbage dump. They will then convert the garbage into a skyscraper.

To be a developer you have to be a risk-taker because it takes risks to take the bold step of investing without assurance and hoping for a great return.

Developers need to have a large capital to carry out their business successfully. You need to leverage the lenders to achieve your goal.

Real estate moguls like Donald Trump and Robert Kiyosaki have become masters in the real estate industry. You can become better by reading materials created by them.

Become a landlord

Landlords build houses and rent them to tenants to pay them monthly or annually. For Landlords to be rich they need to expand their reach by owning more houses for rent.

You can start by owning just one house and end up owning estates. You just to keep be consistent in learning and applying.

Buy and flip lands and properties

Some people earn a living by buying properties when the value is low and selling them when the value goes up.

You need to have a good understanding of the market to earn from this process if not you will lose money.

Manage properties

Real estate managers take care of real estate properties like estates and shopping malls.

You don’t have to own or buy properties to become a manager, you just need to have repair and maintenance tools with the right staff and strategy.

Real estate professional careers

The needed services of professionals in the real estate industry have created room for professionals to join the real estate business in Nigeria.

If you are a lawyer, account, or any other professional whose services are needed in real estate, you can narrow it down to real estate so you can create a brand in that niche.

Combine the real estate business ideas in Nigeria

You can combine more than one real estate business idea and be successful. That is to say, you can be a landlord and also a developer at the same time.

After mastering one area of real estate, you can venture into another field and increase your reach, which also means increasing your wealth.

Conclusion

Property and House development can be very lucrative, but also capital intensive. This has encouraged the use of joint ventures (JV) as a means of bridging the funding gap. The most popular JV model you find in Nigeria is where a Land owner teams up with a property developer. They combine resources and share proceeds upon completion of the development.

This model has helped loads of land owners to achieve their housing goals while house developers have been able to maximize their resources.

Land constitutes a significant index for man’s wealth, and as economic activities have assumed more sophistication overtime, land has continued to play a central role in their development.

Property development is a process of land acquisition with the aim and purpose of constructing buildings and other structures for accommodation whether for residential, commercial and industrial uses. The issue of housing has been acclaimed worldwide to be man’s second most essential basic need after food. Land has continued to play and is still playing a significant role in man’s evolution. It is not a coincidence that food, shelter and clothing which are three essentials that sustain mankind, also have some linkage to land.

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Tel: (+234) 802 320 0801, (+234) 807 576 5799

Email: info@mocaccountants.com

Office Address: 5, Ishola Bello Close, Iyalla Off Street, Alausa, Ikeja, Lagos, Nigeria

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