Table of Contents

Cover pagei
Dedication....ii
Declaration..iii
Approval.................................................................................................iv
Acknowledgement...v
Abstract...vi

Table of Contents........................................................................................................................................1
CHAPTER ONE.............................................................................................................................................3
INTRODUCTION...........................................................................................................................................3
BACKGROUND OF THE STUDY.................................................................................................................3
STATEMENT OF THE PROBLEM................................................................................................................4
RESEARCH QUESTIONS............................................................................................................................6
PURPOSE OF THE STUDY.............................................................................................................................6
AIM..........................................................................................................................................................6
OBJECTIVES.............................................................................................................................................6
SCOPE OF STUDY.....................................................................................................................................7
SIGNIFICANCE OF THE STUDY.................................................................................................................7
CHAPTER TWO............................................................................................................................................9
REVIEW OF LITERATURE..............................................................................................................................9
INTRODUCTION.......................................................................................................................................9
REAL ESTATE DEVELOPMENT IN NIGERIA.............................................................................................10
NATIONAL HOUSING POLICY.................................................................................................................12
NIGERIA NATIONAL HOUSING FUND DECREE NO. 3 OF 1992...............................................................13
HOUSING FINANCE SYSTEM IN NIGERIA...............................................................................................14
SOURCES OF HOUSING FINANCE IN NIGERIA.......................................................................................15
The Informal Sector...........................................................................................................................16
The Formal Sector.............................................................................................................................16
Non-Specialized Housing Funding Institutions.................................................................................17
Specialized Housing Funding Institution...........................................................................................19
REAL ESTATE INVESTMENT TRUST.........................................................................................................21
REITs AS A SOURCE OF FINANCE...........................................................................................................24
CHAPTER THREE........................................................................................................................................26

1
RESEARCH METHODOLOGY......................................................................................................................26
INTRODUCTION.....................................................................................................................................26
RESEARCH DESIGN................................................................................................................................26
RESEARCH/STUDY AREA..........................................................................................................27
POPULATION OF THE STUDY.................................................................................................................27
SAMPLE AND SAMPLING TECHNIQUES.................................................................................................28
SAMPLING DESIGN............................................................................................................................28
SAMPLING PROCEDURE....................................................................................................................29
DETERMINATION OF SAMPLING SIZE...............................................................................................29
SOURCES OF DATA.................................................................................................................................30
PRIMARY SOURCE.............................................................................................................................31
SECONDARY DATA SOURCE...............................................................................................................31
METHODS OF DATA PRESENTATION AND ANALYSIS.............................................................................31
DATA MEASUREMENT TECHNIQUES.....................................................................................................31
TECHNIQUES FOR DATA ANALYSIS........................................................................................................32
QUESTIONNAIRE DESIGN AND DESCRIPTION.......................................................................................32
CHAPTER FOUR.........................................................................................................................................34
PRESENTATION AND ANALYSIS OF DATA...................................................................................................34
INTRODUCTION.....................................................................................................................................34
DATA ANALYSIS AND PRESENTATION....................................................................................................34
DEMOGRAPHIC CHARACTERISTICS OF RESPONDENTS.........................................................................34
RESPONDENTS CHARACTERISTICS....................................................................................................34
KNOWLEDGE AND AWARENESS OF REITs.............................................................................................35
ESTABLISHMENT OF FUNCTIONAL REITs IN THE COUNTRY..................................................................41
VIEWS ON CURRENT SOURCES OF FINANCE.........................................................................................46
CHAPTER FIVE...........................................................................................................................................48
CONCLUSIONS AND RECOMMENDATION.................................................................................................48
Summary...............................................................................................................................................48
Summary of Findings............................................................................................................................48
CONCLUSIONS...............................................................................................................................49
RECOMMENDATIONS............................................................................................................................50
SUGGESTION FOR FURTHER STUDIES...................................................................................................51
REFERENCES..............................................................................................................................................52

2
CHAPTER ONE

INTRODUCTION
BACKGROUND OF THE STUDY
Housing finance by its very nature is a capitally intensive venture which if

financed through personal financial resources will require slow and tedious accumulation

of savings. However, since housing provides benefits over many years, long-term credit

financing is a more logical option as it will spread the repayment burden. This requires

the availability of long-term funding and for which must be institutional in capacity, and

will give way to the mechanism that will allow a convenient and effective linkage

between the savers/investors and the consumers of such funds.

Without an effective finance system, no housing policy can be effectively

implemented. A financing framework which facilitates financial intermediation for

housing finance consists of institutions, their relationship and the processes involved.

However, the emphasis in this review will be on relevant institutions and their activities.

Indeed the framework must effectively reconcile the affordability limitation of

households with viability requirement of financial institutions.

In Nigeria, housing is typically financed through a number of institutional sources:

Budgetary appropriations, Commercial/Merchant Banks, Insurance Companies, State

Housing Corporations and the Federal Mortgage Bank of Nigeria (FMBN): and now the

newly established Mortgage Institutions. All these constitute the formal institutions.

Informal institutions such as thrift and credit societies, and money lenders who have

3
contributed and are still contributing substantially to the finance of housing construction

also persists.

The impact of these informal institutions however cannot be properly quantified

because they are largely uncoordinated, scattered and varied in scope and operational

depth.

In view of the above explanations therefore, efforts shall be made in this

dissertation to conduct a comparative analysis of Real Estate Investment Trust as an

effective source of housing finance, then aiming at the advantages and disadvantages in

real estate financing practice; a concrete improved thinking is posed. Furthermore, based

on the features of financing demand in different phases of real estate development,

financing procedure and methods are thoroughly analyzed to demonstrate in detail how to

draw out a rational financing plan with the integrated application of Real Estate

Investment Trust.

STATEMENT OF THE PROBLEM

The problem of estate development has become an everyday discussion in all

quarters of the public and private services of the developing countries of Africa. Indeed,

whether in ancient times or todays modern system, land has a significant role for mans

wealth, and as economic activities have assumed more sophistication over time, land has

continued to play a central role in their development. There is hardly any business

venture that does not require to be supported by some form of real estate: from the small

4
business that requires real estate as offices from where its business can be organized to

the major venture that needs it for its factory. There are many constraints facing real

estate development investment in Nigeria ranging from shortage of finance, institutional

factors such as the effect of the Land use Decree and Rent control Edicts, shortage and

high cost of building materials, manpower and management problems. The most serious

problem affecting the real estate investment market in Nigeria is scarcity of development

funds.

Housing since Nigerias independence has been highlighted as major priority.

Unfortunately, for over 53 years her independence, a vibrant mortgage market is yet to be

developed. Individual houses continue to be provided through problematic traditional

method of buying land and building over some years, which could be an entire life time.

In many cases such buildings are left uncompleted or individuals have to exhaust their

entire life savings in order to build a home. It has also been revealed that one of the major

challenges facing housing financing system in Nigeria is the mismatch which currently

exists between sources and application of fund in the sector (Ojo, 2009). The Central Bank

of Nigeria (CBN) has further observed that the amount of investible funds available to the

existing primary mortgage institutions was a mere N36.7 billion, and only N22 billion or

60% of this amount stand a reasonable chance of being channeled for mortgage loans

origination. Furthermore, the supply of credit by the Federal Mortgage Bank of Nigeria

(FMBN) was grossly inadequate to meet the growing demand. Overall, there is evidence

of declining activities in housing finance generally (Sanusi, 2003).

5
RESEARCH QUESTIONS
(a) What is the extent of awareness of REITS concept among housing finance

stakeholders?
(b) To what extent do stakeholders consider REITS appropriate as a housing

finance tool?
(c) What are the strategies that promote establishment functional REITS in

Nigeria?
(d) Is the REITS appropriate and effective?

PURPOSE OF THE STUDY

AIM
The main aim of this dissertation is to examine the appropriateness of real estate

investment trust as a source of estate development finance with a view to identify

potentiality in improving housing finance

OBJECTIVES
In order to meet the above stated aim, the objectives of this study shall be

(a) To assess the level of awareness of REITS among housing finance

stakeholders in the study area

(b) To identify the problems and prospects associated with the current sources

estate development finance.

6
 (c) To assess the respondents opinions on the strategies necessary for

establishment of functional REITS in the country.

(d) To assess the appropriateness of REITS as housing finance tool in Nigeria

SCOPE OF STUDY
This is limited to the study of housing finance in where any inference made is

about Nigeria with the focus on both the Real Estate Investment Trust (REITS) and other

sources of estate development finance in Nigeria.

This dissertation focuses on available housing finance in Nigeria and the need for

re-engineering the system. It does not consider operations of finance nor does it consider

management of such fund. Lastly, this work studies and suggests approaches for

improving housing finance in Nigeria.

SIGNIFICANCE OF THE STUDY

A study of this nature will be beneficial to a wide range of stakeholders in Nigeria.

Recommendations made in this dissertation will enable the government in taking a

serious look at the current Housing policy in Nigeria, its effectiveness, alternative

strategy and alternative sources and the need for re-engineering.

Also, corporate bodies and developers can use the information derived herein to

further their work on development strategy.

7
 Furthermore, this study is expected to give rise to further studies which will

enhance knowledge in areas of housing development and the estate management

profession as a whole.

8
CHAPTER TWO
REVIEW OF LITERATURE
INTRODUCTION
The problem of housing has become an everyday discussion in all quarters of the public and

private services of the developing countries of Africa. It has become increasingly glaring that

most of the urban population live in dehumanizing housing environment while those that have

access to average housing do so at abnormal cost. According to Onibokun (1985) and Ebie

(2003), rent in major cities of Nigeria is about 60% of an average workers disposable income.

This is far higher than the 20-30% recommended by United Nations. Ekweme (1979), Iyagba et

al (1998) explained that the rate of demand for new houses was in part predicated on the rate of

formation of new houses and in part on the rate of replacement of old housing stock. The

Association of Housing Corporations of Nigeria estimated on the basis of the 2006 population

census that at least 200,000 dwelling units should be provided annually throughout the federation

and that government authorities should produce at least 10,000 housing units annually, now that

the population is increasing drastically according to the 2006 census (National population

commission, 2009), this problem is continuously increasing. This is a very big challenge to the

government and building industries.

Despite Federal Government access to factors of housing production, the country could at

best expect 4.2% of the annual requirement from her. Substantial contribution is expected from

other public and private sectors. It should be acknowledged that private sector developers

account for 83% of urban housing (Federal Office of Statistics, Lagos 2002). Unfortunately, the

private sector is saddled with numerous problems which make supply always fall far short of

demand. Of these, the most limiting is Finance.

9
 In a tight money market, housing is the first area to suffer, since neither the builder nor the

consumer can readily obtain finance for housing. Actually, many builders have difficulty

obtaining capital for their projects even in normal conditions. The problem of difficulty in

obtaining capital for housing construction are examined more closely in this paper.

According to Onabule (1996) 245 Primary Mortgage Institutions were established under the

National Housing Policy (NHP) between1991-1996. Unfortunately, only 54 were approved,

mainly in South West part of the country and Abuja. In 2010 there were 89 Primary Mortgage

Institutions in the country when the CBN asked them to recapitalize to 5 billion.

National Housing Fund collected about 4 billion naira from the Mandatory Saving Scheme.

Out of N300 million loan approved by Federal Mortgage Bank of Nigeria (FMBN), only

N100million was advanced. The problem in this case is not availability of fund but stringent

measures to prevent default. Hence, the housing problems persist Abiodun (1999).

REAL ESTATE DEVELOPMENT IN NIGERIA

Real estate refers to land above and below the earths surface, plus all things permanently

attached to it, whether natural [example, trees and minerals] or artificial [example, houses and

roads] (Galaty, Allaway, & Kyle, 2000). On the other hand, real property (or realty) is a more

encompassing term that refers to the interests, benefits and rights that are automatically

included in the ownership of land and real estate (Galaty, Allaway, & Kyle, 2000).

At its most simple, real estate development can be likened to any other industrial production

process that involves the combination of various inputs in order to achieve an output or product.

In the case of real estate development, the product is a change of land use and/or a new or altered

10
building in a process that combines land, labour, materials and finance (Wilkinson and Reed,

2008).

Real estate has continued to play a significant role in mans evolution. It is not a coincidence

that food, shelter and clothing believed to be the three essentials that sustain mankind, also have

some linkage to land. Food grows out of land while shelter is affixed to it, and mans clothing is

made largely from what grows out of land.

It is also one of the best indicators of a persons standard of living and of his place in the

society. Housing, both in units or multiple forms is a significant component of the physical form

and structure of a community, while the human and family contents of the house is part of the

very spirit of life and prosperity of the society (Olayiwola, Adeleye, & Ogunshakin, 2005) .

(Olayiwola, Adeleye, & Ogunshakin, 2005) believes the Nigerian housing question is

primarily that of a crisis situation, manifesting and expressing itself in quantitative and

qualitative forms. Lack of comfort and rudimentary infrastructure, congestion, unhygienic

conditions, high densities and absence of organization make for ghastly experiences shared by

the vast majority of the urban population. The spatial product of this problem is not only in the

rapid emergence and deployment of slums and squatters of various typologies but in the

proliferation of these settlements in the metropolitan suburb.

In Nigeria, most people live in poor quality housing and in unsanitary environments. This

problem of inadequate housing has been compounded by the rapid rates of urbanization and

economic growth. Housing difficulties is more serious for the low income groups where

problems have been complicated by rapid growth, inflated real estate values, speculative activity,

influx of poor immigrants, and lack of planning. One can also site the increasingly significant

shifts in the form and design of housing from the rooming form to flat and single family house

11
forms as a factor responsible for acute shortage of housing for the low income groups

(Olayiwola, Adeleye, & Ogunshakin, 2005).

Nigeria has a population of 154 million people, the largest in Africa, and the second largest

economy on the continent. The urban population has increased from 10% in 1952 to 48% in 2009

(UN Statistics Division, World Statistics Pocketbook, 2010). There are about 10.7 million houses

in Nigeria (FMBN, 2007). Regardless of the policies, institutions and regulations which the

Nigerian government has put in place since independence in 1960, there is still a dearth of

housing, especially for the low-income segment. The housing backlog is estimated at 14 million

units and it will require 49 trillion ($326 billion) to bridge the housing deficit of 14 million

units based on an estimated average cost of 3.5 million ($23,333) per housing unit (FMBN

statistical sheets, 2005).

In 2010, it was reported that eighty-five percent of the urban population lives in rented

accommodation, spending more than 40% of their income on rent. Of these, 90% are self-built

and this is mainly due to lack of mortgage financing, and less than 5% have formal title

registration (N. Kokularupan, 2010).

NATIONAL HOUSING POLICY

As explained by (BABALAKIN & CO, 2004) The Federal Government of Nigeria in

1991 launched the National Housing Policy to serve as a palliative measure to ensuring better

housing for Nigerians. This is spelt out in its goal, objectives, strategies, institutional framework,

land and settlement development policy and other developmental instrument imbedded in the

policy.

12
 The goal of the National Housing Policy is to ensure that all Nigerians own or have access to

decent housing, and accommodation at affordable cost by the year 2000. In order to achieve this

goal, the government was to pursue the following policy objectives.

i. Encourage and promote active participation in housing delivery in all tiers of

government.
ii. Strengthen institutions within the system to render their operations more responsive to

demand.
iii. Emphasize housing investment which satisfy basic needs.
iv. Encourage greater participation by private sector in housing development.

The language of National Housing Policy approach embraces the private sector as the chief

means to address the severe shortages and costs of shelter. It also calls for the government to

become an enabler, promoter and facilitator conducive to individual and cooperative housing

efforts, rather than a direct implementer of housing policy as it has attempted to be in the past.

NIGERIA NATIONAL HOUSING FUND DECREE NO. 3 OF 1992

(BABALAKIN & CO, 2004) explicated The National Housing Fund Decree as an

instrument formulated to give leverage to housing delivery in Nigeria. It was set basically as a

legal re-affirmation of vital aspects of the National Housing Policy with the primary purpose of

supporting it to achieve its ultimate goal of ensuring that all Nigerian own or have access to

decent housing accommodation at affordable cost by year 2000. The concept is to ensure

continuous flow of long term fund for housing development and to provide affordable loan for

income housing.

Section 2 of the National Housing Fund Decree specifically stipulate the following as its

objectives:
i. To facilitate the mobilization of funds for provision of houses for Nigerians at affordable

prices.

13
 ii. To ensure the constant supply of loans to Nigerians for the purpose of building,

purchasing and improvement of residential houses.

iii. To provide incentives for the capital market to invest in property development.
iv. To encourage the development of specific programmes that would ensure effective

financing of housing development in particular for low income workers.

v. To provide proper policy control over the allocation of resources and funds between the

housing sector and other sections of the Nigeria economy; and

vi. To provide long term loan to mortgage institutions for on lending to contributors to the

fund.

In order to achieve these objectives, some demands were made of certain sectors of the

economy to make one form of contribution or the other to the fund. Section 5(2) of the decree

states that all registered insurance companies shall invest a minimum of 20 percent of their

non-life funds and 40 percent of their life fund in real estate development, and at least one half

(50 percent, that is 10 percent of their non- life funds and 20 percent of life) of such investment

must be channeled through The Federal Mortgage Bank of Nigeria at an interest rate that does

not exceed 4 percent annum

HOUSING FINANCE SYSTEM IN NIGERIA

The problem of housing has become an everyday discussion in all quarters of the public and

private services of the developing countries of Africa. It has become increasingly glaring that

most of the urban population live in dehumanizing housing environment while those that have

access to average housing do so at abnormal cost.

According to (Oduwaye and Adebamowo, 2009) Finance in housing delivery is very

important because of the huge financial requirement for housing production. Many researches

14
have been done along this line which include that of Fasakin (1998) who suggested the need to

strengthen the cooperative housing system in Nigeria. Onibokun (1985) and Ebie (2003) stated

that rent in major cities in Nigeria is about 60% of an average workers disposable income. This is

very much higher than the 20-30% recommendation of the United Nations. Omole (2001)

highlighted the fact that financial institutions should be more accessible to the people. It is on the

basis of the importance of housing finance that government most often finds ways to improve

existing housing and housing policies.

The influence of the financial sector is hardly felt in the building industry in Nigeria. To put

it succinctly, housing finance through this sector has been negligible. Lemo (2007) observed that

till the year 2007, from the inception of housing finance system in the country, only a paltry sum

of about Seventy billion naira (N 70b) which is approximately US$ 58.3m, have so far been

injected to the system. This only accounts for less than 0.5% of the Gross Domestic Product

(GDP). The unsatisfactory performance of the housing finance system and institutions is linked

with the twin problems of accessibility occasioned by underdevelopment of land tenure system

coupled with inability of financial systems in providing low cost finance that meets the need of

low and medium income group (Mailafia 2007).

SOURCES OF HOUSING FINANCE IN NIGERIA

Prior to the colonial period, many methods of housing finance were adopted in different parts of

the country. Amongst these are Esusu and Ajo, Age grade association, Village development

scheme, and Town unions of people living outside their place of birth. Others are Mens

revolving loan association, Loans from traditional moneylenders, Social club contributions, Aaro

or Owe where members contribute in kind by providing labour on members site until the circle

is completed. All of these methods were successful in the provision of finance for housing and its

delivery in the traditional setting. But with the complexity in economic activities, these methods

15
faded away and are to be replaced by modern methods (Oduwaye, Oduwaye, & Adebamowo,

2008).

The present structure of housing finance in Nigeria can be classified into the following.

Informal sector (Esusu i.e. Traditional Co-operative System, Credit Co-operatives and family

savings); Formal Sector (Non-specialized Institutions and Specialized Housing Finance

Institutions). Others (Communities, Associations and Non-Governmental Associations).

The Informal Sector

The informal sector of housing funding in Nigeria are traditional Esusu credit co-

operatives, family sources and individual savings. This sector is usually local and informal in

organization based on trust, love and friendship. The operation of this sector is difficult to

quantify as they operate on transfer of cash and kind. These include donations of land, building

materials, cash assistance or sometimes any of these could be in form of loan. (Oduwaye,

Oduwaye, & Adebamowo, 2009).

Informal housing is most prevalent as more than 80% of the population lives in

settlements that are unplanned with poor living conditions. In the rural areas, people live mostly

in mud buildings and thatch roofs (Housing National Technical Working Group Report, July

2009).

The Formal Sector

The formal sector, which constitutes about 15% of the housing market, is insufficient to

meet demand. Where supply exists, this is targeted at high-income earners, while houses

categorized as low income are mainly outside the reach of low-income earners. As a result, rents

and house prices are high. This sector is predominantly a sellers market where rents are paid on

16
average two years in advance. The cheapest apartments for sale in the suburbs of Lagos cost

about N2 million N3 million ($13,000 $20,000), on the outskirts of Lagos around N5 million

($33,333), while in Lagos itself the figure is closer to N10 million ($66,666) (EFInA and

FinMark Trust, August 2010).

The operation of the formal sector can be classified into Non-specialized Housing

Funding Institutions and the Specialized Housing Funding Institutions

Non-Specialized Housing Funding Institutions

This sector include the Employees Housing Schemes, Commercial, Merchant Banks and

Insurance Companies.

The Employees Housing Scheme and National Housing Fund

The need to encourage employers of labour to use part of their profit to provide housing

for their workers led to the promulgation of the 1979 Employees Housing Scheme (Special

Provision) Decree. The decree requires among others, large employers of labour specifically

those who either have not less than 500 persons in their employment in any state of the

federation or may be designated as such by the Federal Commissioner (now minister) with the

approval by the Federal Executive Council to establish a housing scheme for their employee. The

decree further states that not less than three quarters of the total accommodation made available

in every such scheme shall be for employees who are not executive or senior staff. This is

perhaps one of the major housing policy instruments aimed at facilitating the participation of

corporate bodies in housing delivery. It has achieved very little. This is partly due to the weak

machinery for monitoring which is in a division in the Ministry of Labour (Agbola, 1995). The

National Housing Fund (NHF) Decree was promulgated in 1992 aimed at increasing the

17
financial pool that could be used for housing. Nigerians earning from N3000 per annum and

above are expected to contribute 2.5% of their income into NHF.

ii. Commercial and Merchant banks

Prior to the National Housing Fund Decree, commercial and merchant banks always held

a very significant proportion of the mortgage assets within the formal lending sector (Onabule,

1990). Within a combined total assets of about N86, 660 million as at December 1989, the

commercial and merchant banks held a wider asset base than any other institutional group within

the financial sector during this period. Their combined loans and advances portfolio totaled

N27.7 million. About 13% were for real estate. (CBN Economic and Financial Review, 1990).

Though with the high interest rate in the financial market, commercial and merchant banks are

now reluctant to finance housing projects except where the houses are to be placed in the market

for outright purchase, though this is not good enough for the low income earners. The banks are

operating with short-term deposits whereas housing finance can only strive in a long term

funding environment.

iii. Insurance Companies

Prior to the promulgation of the National Housing Fund Decree, insurance companies

were obliged to invest not less than 25% of their life funds in real estate. This was not

satisfactorily complied with by these companies because there fund can achieve better

investment returns.

18
Specialized Housing Funding Institution
Specialized housing funding institutions in Nigeria include the following: The Federal

Mortgage Bank of Nigeria, Primary Mortgage Institutions, Housing Corporations and Urban

Development Bank.

i. The Federal Mortgage Bank of Nigeria

The Federal Mortgage Bank of Nigeria (FMBN) was established in 1977, with the

inheritance of the assets and liabilities of the Nigerian Building Society (NBS), which was

dissolve, in the same year. The FMBN was created essentially to serve as a wholesale and apex

housing finance institution in Nigeria under Decree 7 of 1977. Other institutions created with the

responsibilities to serve as housing finance were created through Decree 53 of 1989. They

include the Primary Mortgage Institutions such as Building Societies, Housing Associations and

Credit Unions. Among the major responsibilities of the FMBN are: the provision of long-term

credit facilities to mortgage institutions in the country; encouragement and promotion of

development of mortgage institutions at state and national levels, supervision and control of the

activities of mortgage institutions, mobilization of savings particularly through the National

Housing Fund, promotion of investment in the manufacturing of building materials and

promotion of research on construction and mortgage finance (Oduwaye, Oduwaye, &

Adebamowo, 2009).

ii. Primary Mortgage Institutions

19
 One of the major achievements of the National Housing Policy is its institutional reform

which resulted in the establishment of a two-tier formal housing finance system following the

promulgation of the Mortgage Institution Decree no. 53 of 1989. Under this arrangement the

FMBN was restricted as the countries apex mortgage institution with a supervisory role over a

network of PMI. The PMIs are to serve as secondary housing finance institutions. Under the

arrangement the FMBN ceases operation as retail housing finance institution. This role is to be

performed by the PMIs. The role of FMBN henceforth remains as the apex and regulatory body.

To perform these functions the FMBN was re-organized into three divisions as follows:

The National Housing Fund Division charged with the responsibility for the arrangement

of the National Housing Fund.

The Regulatory and Inspectorate Division charged with responsibility of monitoring and

regulating housing finance sector operations

Corporate Service Division to provide administrative, accounting and management

information services to the core divisions (Oduwaye, Oduwaye, & Adebamowo, 2009).

iii. Housing Corporation

The first Housing Corporation in Nigeria was the Western Nigeria Housing Corporation

established in 1959 after which other State Housing Corporations including the Federal Housing

Authority were modeled. They are all established to make available to Nigerians long term

credits for housing development. Having realized this shortcoming in their operations many state

governments have established property finance agencies, such as Lagos Building and Investment

Company (LBIC) to serve the Lagos State Development and Property Corporation (LSDPC) and

Ogun State Property Investment Corporation (OPIC) to service the Ogun State Housing

Corporation. Virtually all states of the federation have this type of configuration established to

20
promote smooth funding of the housing sector, with operations more favorable to government

housing development. (Oduwaye, Oduwaye, & Adebamowo, 2009).

iv. Urban Development

The Urban Development Bank of Nigerian (UDBN) Plc, was established by Decree No 51 of

1992 to foster the rapid development of urban infrastructure throughout the federation through

the provision of finance and banking services (Zubairu, 1997). It is in the context of

infrastructure that the issue of housing finance became part of the bank responsibilities. UDBN

cannot be regarded as a bank like any of the regular commercial and merchant banks but a

development institution with banking functions (Oduwaye, Oduwaye, & Adebamowo, 2009).

v. Others

Other institutions such as community or local associations, non-governmental organizations

are also involved directly and indirectly in housing delivery process in Nigeria.

REAL ESTATE INVESTMENT TRUST

A lot of definitions have been given to REITs in literatures and past studies but most of them

have similar keywords. REITs is an entity that invests primarily in real estate and qualifies for

special tax treatment, providing a conduit for earnings to be taxed at the investor level and not at

the entity level (EPRA, 2012). Oreagba (2010) defines REITs as a company that owns, and

operates income producing real estate, whose shares are publicly traded in a way similar to any

other stock. REITs is a company that owns and manages investment grade and income

producing real estate properties such as office buildings, residential buildings, shopping malls,

tourism related facilities, healthcare facilities, industrial facilities and infrastructures (FMI,

2010). Corgel et al. (1995) defined REITs as investment tool to create flow of funds from

21
investors to the real estate and property sector of the country (Ong et al., 2011). REITs is a

security that sells like a stock on the major exchanges (stock exchange market), and invest in a

real estate directly, either through properties or mortgages. REITs typically or basically offers

investors high yield, receive special tax consideration and presents a highly liquid method of

investing in real estate. Individuals can invest in REITs either by purchasing their shares directly

in an open exchange or by investing in a mutual fund that specializes in real estate. Common to

all definitions of REITs from various literatures are the following features:

i. A registered company, association, trust or corporation.

ii. Investment in income yielding real estate properties, and or real estate mortgage.

iii. Generate revenue from real estate properties.

iv. Distribution of revenue before tax to investors in form of dividend.

Many REITs are publicly traded on the stock exchange, some others are not. The publicly

traded REITs are referred to as Listed REITs while the non-traded ones are referred to as

Unlisted REITs.

The operations of Real Estate Investment Trusts (REITs) are tailored towards investing in

income generating real estate assets, most especially commercial properties office and retail

properties. In general, the performance of REITs are mainly determined by the different types of

investment the companies make, which is basically divided into Equity REITs, Mortgage REITs

and hybrid REITs (which invest in both equity and mortgage debts) (Grupe and DiRocco, 1999).

An article by (Roinn Airgeadois Department of Finance, 2013) explained the following as

benefits of REITs

Benefits for Investors

22
 A format that is a globally recognized standard, and which is attractive to large scale

institutional investors worldwide.

Providing a lower-risk property investment model:
Diversification of investment into a pool of properties.
Debt limits within the REITs reduce exposure to negative equity risk.
Allowing liquidity for investors without impairing security for tenants investors can sell

shares in a listed REITs at any time, without the costs and delays involved in selling

investment properties.
REITs are income producing investments they are required to distribute the majority of

profits each year, and so generate a regular income stream for investors.
The limits on borrowings also protect the income stream to investors, by ensuring that

income is not wholly allocated to debt repayments.

Additional Benefits for Small Investors

The entry cost for a REITs investment is the price of a single share. Small investors can

therefore participate in the property market without mortgage borrowings or property

transfer costs.
Small investors can gain access to returns from high-quality investment-grade property

assets, which have previously been the preserve of very large investors only.
As REITs are designed to produce regular income returns to shareholders, they may give

a new alternative investment option for retirement savings.

REITs AS A SOURCE OF FINANCE

Investment in the REITs shall be by way of subscription to or purchase of shares of stock of the

REITs. No shares of stock of the REITs shall be offered for subscription or sale except in

accordance with a REITs plan and other requirements and restrictions as may be presented by the

Commission. REITs are a pool of properties and mortgages bundled together and offered as a

security in the form of unit investment trusts. Each unit in a REITs represents a proportionate

23
fraction of ownership in each of the underlying properties (Investopedia, 2014). Basically REITs

is an entity that buys, develops, manages and sells real estate assets and also lend to mortgage. It

also allows participants to invest in a professionally managed portfolio of real estate properties.

It can be open ended or close ended real estate investment trust. REIT as a closed ended vehicle,

can be quoted as an exchange traded fund to provide liquidity and secondary market window for

investors. It can also be an Open ended vehicle come under memorandum listing of the exchange

(Adetunbi, 2006).

REITs is a contemporary investment vehicle that enjoys tax exemption on the income

distributed to its shareholders (90%) and expected to invest not less than 75% of its fund in Real

Estate Assets to enjoy the tax exemption (Investopedia, 2014).

Allowable Investments ~ A REITs may only invest in:

i. Real estate, whether freehold or leasehold. The Commission in issuing such authority

shall consider, among others, satisfactory proof that the valuation of assets is fair and

reasonable. An investment in real estate may be by way of direct ownership or a

shareholding in an unlisted special purpose vehicle constituted to hold/own real estate;

ii. Real estate-related assets, wherever the issuers, assets, or securities are incorporated,

located, issued, or traded;

iii. Managed funds, debt securities and listed shares issued by local or foreign non~property

corporations;
iv. Government securities issued on behalf of the government or governments of other

countries and securities issued by multilateral agencies;

v. Cash and cash equivalent items; and
vi. Such other similar investment outlets as the Commission may allow.

24
CHAPTER THREE
RESEARCH METHODOLOGY

INTRODUCTION
The preceding chapters of this dissertation have adequately examined the aim of the

research work and relevant literatures have been reviewed.

This chapter explains the research design, source of data used highlighted, the

characteristics of the population of study shall be examined, and instruments of data collection,

procedure of administrating instruments, sampling design, and also the procedure used in

determining the sampling size shall be shown clearly. The chapter shall also describe the

administration of questionnaire and state the tools and techniques used for the analysis of

retrieved data.

RESEARCH DESIGN
This is a study on the appropriateness of real estate investment trust as an effective source

of estate development financing in Nigeria, which is a developmental case study. This study is

designed to be a qualitative analysis of the subject matter. The first stage of will involve the

gathering and synthesis of data and information on the countrys development as an emerging

market, and consequently, the indicators of the potential for its real estate markets. Sources will

include white papers and reports by industry professionals, government reports, and use of

questionnaires with private sector participants involved in real estate in the region i.e. investors,

developers, and Estate surveyors and valuers.

25
 Finally an analysis and evaluation will then be made of the opportunities presented by

Real Estate Investment Trust to investors in the real estate sector. The analysis will involve data

gathered from private sector participants as well as their public sector counterparts, through

questionnaires and their proprietary reports.

RESEARCH/STUDY AREA

The study area on which this project dissertation is carried out is Kaduna north local

government area, Nigeria. Hence most of the data presented in this research work was collected

from the study area after productive investigations and findings.

POPULATION OF THE STUDY

A population is made up of all conceivable elements, subjects or observations relating to

a particular phenomenon of interest to the researcher (Asika 1991).

In this dissertation, the population of study is made up of two distinct groups of people.

They are:

i. Real Estate Developers

ii. Estate surveyors and valuers

i. REAL ESTATE DEVELOPERS

They constitute Private Estate Developers and Government Development Agencies in the

study area.

26
ii. ESTATE SURVEYORS AND VALUERS

This constitutes of practicing registered estate surveying firms, which are registered with

Estate Surveyors and Valuers Registration Board of Nigeria (ESVARBON) situated within the

study area.

SAMPLE AND SAMPLING TECHNIQUES

A sample is precisely a part of the population (Asika, 1991). In order to arrive at the

sample for this research, the following steps and procedure were adopted.

SAMPLING DESIGN

Asika (1991) identified three main categories of research design. These are:

1. Survey Research Design

a. Cross Sectional Research Design

b. Longitudinal Research Design

2. Experimental Research Design

a. Experimental with control Research Design

b. Quasi-experimental Research Design

3. ex- Post Facto Research Design

27
 For the purpose of this dissertation, the survey research design was adopted with

particular emphasis on the cross-sectional research design. This is because this research is a one-

time research and will be geared towards collection of data to answer research questions.

SAMPLING PROCEDURE

In arriving at the sampling size, the researcher opted for the probability sampling

procedure and specifically used the following techniques.

a. Stratified random sampling technique

b. Systematic random sampling technique

The stratified random sampling technique was used to put the respondents into groups or

strata while the systematic random sampling technique was used to identify and select the

particular respondents from each group or stratum.

DETERMINATION OF SAMPLING SIZE

In order to determine the sampling size, there is a need to know the total population of

prospective respondents in the study area irrespective of their availability to participate in the

survey. The respondents are grouped into

i. Real Estate Developers

ii. Estate Surveyors and Valuers

28
(a) REAL ESTATE DEVELOPERS

The Federal Mortgage Bank of Nigeria in its official website gave the total number of

Real Estate Developers firms and authorities in Kaduna to be Three (3), which are Abdullahi

Brothers Co. Ltd, Sintax Limited, and Kaduna State Development Corporation (KSDPC) which

is under the Kaduna State Ministry of Finance. Kaduna, Zaria and Kafancan. A total number of

11 respondents were selected in this category.

(b) ESTATE SURVEYORS AND VALUERS

According to the list of registered NIESV firms for the year (2014), there are Thirty two

(32) registered practicing firms in Kaduna state. 52 Estate Surveyors and Valuers were selected

for the purpose of this study

SOURCES OF DATA
Data can be classified either as primary or secondary. This classification is based on the

two possible sources of data (Asika 1991). This research work explored the two sources of data

which are:

i. Primary source

ii. Secondary source

29
 PRIMARY SOURCE
Primary data mainly come from direct observation of an event, manipulation of variables,

contrivance of research situations including performance of experiments and responses to

questionnaires (Asika, 1991).

Information for this dissertation was obtained from observation of the case study and

population of study as well as through the use of questionnaires. The respondents to the

questionnaires include Real Estate Developers and Estate Surveyors and Valuers.

SECONDARY DATA SOURCE

The secondary data used in this dissertation were obtained from textbooks, journals,

encyclopedia, past dissertation, unpublished articles as well as electronic works from the

internet.

METHODS OF DATA PRESENTATION AND ANALYSIS

The data will be analyzed with the aid of descriptive statistical tools like, mean and

percentage analysis using decision rule to make explicit and recommendations. While the result

obtained from the analyzed data will be presented in tables and charts in the subsequent chapter.

DATA MEASUREMENT TECHNIQUES

The data collected from the sources mentioned above were scaled using point Liker scale

which are

1 Level of awareness

30
 Well informed

Informed

Indifferent

Not informed

2 Opinions

Strongly Agreed

Agreed

Indifferent

Disagreed

Strongly Disagreed

TECHNIQUES FOR DATA ANALYSIS

Data obtained from the field were processed using Microsoft Excel and Statistical

Packages for Social Sciences (SPSS). The findings were presented using tables, charts and other

relevant statistical tools.

QUESTIONNAIRE DESIGN AND DESCRIPTION

The questionnaire will be structured in the most appropriate way for it to capture the

relevant information needed to answer questions raised in the study. The questions will be an

assortment of both open/unstructured and close/structured minded questions.

The questionnaire contains sections labeled A, B, C and D. section A sought for the

knowledge and awareness of REITs of the respondents, section B sought for the possible ways

for establishment of functional REITs in the country, section C sought to capture the views of the

31
respondents on the current sources of estate development finance, section D sought for the

potential of REITs as a source of housing finance.

32
CHAPTER FOUR

PRESENTATION AND ANALYSIS OF DATA

INTRODUCTION
This chapter presents and discusses the analysis of the data collected from the

questionnaire survey. Frequency, percentages, mean item scores were used to analyze data

generated. The results obtained from the analyses form the basis upon which conclusions were

drawn for the study.

Out of the 80 copies of research questionnaire distributed, 63 were completed and

returned representing a 78.75% response rate. The returned copies were scrutinized for errors,

omissions, completeness and inconsistencies. All were found to be adequately completed and

were therefore used to carry out the analysis.

DATA ANALYSIS AND PRESENTATION

Data collected from the questionnaire responses were analyzed and presented here in

tables. The presentation is in order of appearance in the questionnaires.

DEMOGRAPHIC CHARACTERISTICS OF RESPONDENTS

Before interpreting the research findings, it is important to consider general

characteristics of the respondents. The responding firms were all from Kaduna metropolis.

Descriptive statistics about the respondent and the responding organization are shown in the

following tables.

RESPONDENTS CHARACTERISTICS
The questionnaire were administered mainly on two sets of respondents

33
- Real Estate Developer

- Estate surveyors and valuers.

Table 4.2.1: Type of Organization

S/N Type of organization Frequency Valid Percent (%)

1 Real Estate Developers 11 17.46%

2 Estate Surveyor & Valuer 52 82.54%

The percentage of Real Estate Developer respondent, as shown in the table 4.2.1 above is

17.46%, while the Estate Surveyor and Valuers constitutes 82.54%. Therefore, the Estate

Surveyor and Valuers are more predominant in this survey work.

KNOWLEDGE AND AWARENESS OF REITs

This section shows the level of knowledge and awareness of Real Estate Investment Trust

(REITs) among the various respondents.

34
 The respondents in the table 4.3.1 below shows their level of knowledge and awareness

of the Real Estate Investment Trust (REITs).

Table 4.3.1

How Would You Rate Your Knowledge Of REITs?

Frequency Percent Valid Percent Cumulative
(%) (%) Percent (%)
Well Informed 5 7.9 7.9 7.9
Informed 13 20.6 20.6 28.5
Indifferent 19 30.2 30.2 58.7
Not Informed 26 41.3 41.3 100.0
Total 63 100.0 100.0

From the results in table 4.3.1 above, it is obvious that the knowledge of REITs among

the respondents is limited, where 41.3% of the respondents are Not Informed and 30.2% are

Indifferent, while only 7.9% are Well Informed and 20.5% are informed.

The table 4.3.2 shows the level of knowledge and awareness of the types/categories of

Real Estate Investment Trust (REITs) among the respondents

Table 4.3.2

How enlightened are you on the types/categories of REITs?

Frequency Percent Valid Percent Cumulative
(%) (%) Percent (%)
Well Informed 3 4.8 4.8 4.8
Informed 9 14.3 14.3 19.0
Indifferent 18 28.6 28.6 47.6
Not Informed 33 52.4 52.4 100.0
Total 63 100.0 100.0

35
 From the results in table 4.3.2 above, only 4.8% are Well Informed and 14.3% are

informed on the types/categories of Real Estate Investment Trust (REITs) where 52.4% of the

respondents are Not Informed and 28.6% are Indifferent.

The table 4.3.3 below shows the level of knowledge and awareness on how a company

qualifies as a Real Estate Investment Trust (REITs) among the respondents

Table 4.3.3

Do you know how company qualifies as a REITs?

Frequency Percent Valid Percent Cumulative
(%) (%) Percent (%)
Well Informed 1 1.6 1.6 1.6
Informed 5 7.9 7.9 9.5
Indifferent 21 33.3 33.3 42.9
Not Informed 36 57.1 57.1 100.0
Total 63 100.0 100.0

From the results in table 4.3.3 above, only 1.6% respondents are Well Informed and 7.9%

are Informed on how a company qualifies as a Real Estate Investment Trust (REITs) where

57.1% of the respondents are Not Informed and 33.3% are Indifferent.

The table 4.3.4 below shows the level of knowledge and awareness of the types of

properties Real Estate Investment Trusts (REITs) own and manage among the respondents

Table 4.3.4

Are you mindful of the type of properties REITs own and manage?

36
 Frequency Percent Valid Percent Cumulative
(%) (%) Percent (%)
Well Informed 11 17.5 17.5 17.5
Informed 18 28.6 28.6 46.0
Indifferent 8 12.7 12.7 58.7
Not Informed 26 41.3 41.3 100.0
Total 63 100.0 100.0

From the results in table 4.3.4 above, 17.5% of the respondents are Well Informed and

28.6% are Informed on the types of properties Real Estate Investment Trusts (REITs) own and

manage, while 41.3% of the respondents are Not Informed and 12.7% are Indifferent.

The table 4.3.5 below shows the level of knowledge and awareness on who manages Real

Estate Investment Trust (REITs) among the respondents

Table 4.3.5

Who manages REITs?

Frequency Percent Valid Percent Cumulative
(%) (%) Percent (%)
Well Informed 6 9.5 9.5 9.5
Informed 18 28.6 28.6 38.1
Indifferent 8 12.7 12.7 50.8
Not Informed 31 49.2 49.2 100.0
Total 63 100.0 100.0

From the results in table 4.3.5 above, 9.5% of the respondents are Well Informed and

28.6% are Informed on who manages Real Estate Investment Trust (REITs), while 49.2% of the

respondents are Not Informed and 12.7% are Indifferent.

The table 4.3.6 below shows the level of knowledge and awareness on who invests in

Real Estate Investment Trust (REITs) among the respondents.

37
Table 4.3.6

Who invests in REITs?

Frequency Percent Valid Percent Cumulative
(%) (%) Percent (%)
Well Informed 9 14.3 14.3 14.3
Informed 17 27.0 27.0 41.3
Indifferent 11 17.5 17.5 58.7
Not Informed 26 41.3 41.3 100.0
Total 63 100.0 100.0

From the results in table 4.3.6 above, 14.3% of the respondents are Well Informed and

27.0% are Informed on who invests in Real Estate Investment Trust (REITs), while 41.3% of the

respondents are Not Informed and 17.5% are Indifferent.

The table 4.3.7 below shows the level of knowledge and awareness on the differences

between Real Estate Investment Trust (REITs) and others sources of estate development finance

among the respondents

Table 4.3.7

How informed are you on the difference of REITs from other sources of
estate development finance?
Frequency Percent Valid Percent Cumulative
(%) (%) Percent (%)
Well Informed 12 19.0 19.0 19.0
Informed 16 25.4 25.4 44.4
Indifferent 3 4.8 4.8 49.2
Not Informed 32 50.8 50.8 100.0
Total 63 100.0 100.0

38
 The results in table 4.3.7 above, shows that 19.0% of the respondents are Well Informed

and 25.4% are Informed on who invests in Real Estate Investment Trust (REITs), while 50.8% of

the respondents are Not Informed and 4.8% are Indifferent.

The table below shows cumulative responses on the level of knowledge and awareness of

the Real Estate Investment Trust (REITs) among the respondents

Table 4.3.8

KNOWLEDGE AND AWARENESS OF REITs Responses Frequencies

Responses

N Percent

Well Informed 47 10.7%

Informed 96 21.8%

Indifferent 88 20.0%

Not Informed 210 47.6%

Total 441 100.0%

39
ESTABLISHMENT OF FUNCTIONAL REITs IN THE COUNTRY
This section shows the respondents opinions on the establishment of a functional Real

Estate Investment Trust (REITs) in Nigeria. There are Thirty Seven (37) valid respondents in this

section, whose responses are used to ascertain their opinions on the statements made in the

section of the questionnaire which complements this section.

The table 4.4.1 below shows the opinions among the respondents on the potential of

REITs to be efficient against the current sources of estate development finance.

Table 4.4.1

REITs has the potential to be efficient against the current sources of estate development
finance
Frequency Percent (%) Valid Percent Cumulative
(%) Percent (%)
Strongly Agree 6 9.5 16.2 16.2
Agree 10 15.9 27.0 43.2
Indifferent 18 28.6 48.6 91.9
Disagree 3 4.8 8.1 100.0
Total 37 58.7 100.0
Missing 26 41.3
Total 63 100.0

In the table 4.4.1 above, 16.2% of the respondents Strongly Agree that REITs has the

potential of REITs to be efficient against the current sources of estate development finance, while

27.0% Agree, 48.6% are Indifferent and 8.1% Disagree.

The table 4.4.2 below shows the opinions among the respondents on the need for

organizational structure, ownership, management, accounting audit, asset insurance etc. for

REITs to be successful and functional.

40
Table 4.4.2

There must be organizational structure, ownership, management,

accounting, audit, asset insurance etc. for REITs to be successful and
functional
Frequency Percent Valid Cumulative
(%) Percent (%) Percent (%)
Strongly Agree 11 17.5 29.7 29.7
Agree 21 33.3 56.8 86.5
Indifferent 5 7.9 13.5 100.0
Total 37 58.7 100.0
Missing 26 41.3
Total 63 100.0

In the table 4.4.2 above, 29.7% of the respondents Strongly Agree that there must be

organizational structure, ownership, management, accounting audit, asset insurance etc. for

REITs to be successful and functional, while 56.8% Agree, and 13.5% are Indifferent.

The table 4.4.3 below shows the opinions of the respondents on REITs must be

operational where its income and assets are derived from real estate sources

Table 4.4.3

REITs must be operational where its income and assets are derived from
real estate sources
Frequency Percent Valid Percent Cumulative
(%) (%) Percent (%)
Strongly Agree 6 9.5 16.2 16.2
Agree 20 31.7 54.1 70.3
Indifferent 9 14.3 24.3 94.6
Disagree 2 3.2 5.4 100.0
Total 37 58.7 100.0
Missing 26 41.3
Total 63 100.0

41
 In the table 4.4.3 above, 16.2% of the respondents Strongly Agree that REITs must be

operational where its income and assets are derived from real estate sources, while 54.1% Agree,

24.3% are Indifferent and 5.4% Disagree.

The table 4.4.4 below shows the opinions among the respondents on compliances like

policies, legal system, regulatory, filing and reporting, corporate governance, etc. are necessary

for the establishment of a functional REITs.

Table 4.4.4

Compliances like policies, legal system, regulatory, filing and reporting, corporate
governance, etc. are necessary for establishment of a functional REITs

Frequency Percent Valid Percent Cumulative

(%) (%) Percent (%)
Strongly Agree 25 39.7 67.6 67.6
Agree 7 11.1 18.9 86.5
Indifferent 5 7.9 13.5 100.0
Total 37 58.7 100.0
Missing 26 41.3
Total 63 100.0

In the table 4.4.4 above, 67.6% of the respondents Strongly Agree compliances like

policies, legal system, regulatory, filing and reporting, corporate governance, etc. are necessary

for the establishment of a functional REITs, while 18.9% Agree, and 13.5% are Indifferent.

The table 4.4.5 below shows the opinions among the respondents on the establishment of

functional REITs will cover the deficit in the current housing finance system in Nigeria.

42
Table 4.4.5

The establishment of a functional REITs will cover the deficit in the current housing
finance system in Nigeria.
Frequency Percent Valid Percent Cumulative
(%) (%) Percent (%)
Strongly Agree 7 11.1 18.9 18.9
Agree 8 12.7 21.6 40.5
Indifferent 12 19.0 32.4 73.0
Disagree 6 9.5 16.2 89.2
Strongly Disagree 4 6.3 10.8 100.0
Total 37 58.7 100.0
Missing 26 41.3
Total 63 100.0

In the table 4.4.5 above, 18.9% of the respondents Strongly Agree that the establishment

of functional REITs will cover the deficit in the current housing finance system in Nigeria, while

21.6% Agree, 32.4% are Indifferent, 16.2% Disagree and 10.8% Strongly Disagree.

The table 4.4.6 below shows the opinions among the respondents on REITs debut will

revolutionize mortgage business and real estate development in Nigeria.

Table 4.4.6

REITs debut will revolutionize mortgage business and real estate development in
Nigeria
Frequency Percent Valid Percent Cumulative
(%) (%) Percent (%)
Strongly Agree 7 11.1 18.9 18.9
Agree 13 20.6 35.1 54.1
Indifferent 10 15.9 27.0 81.1
Disagree 4 6.3 10.8 91.9
Strongly Disagree 3 4.8 8.1 100.0
Total 37 58.7 100.0
Missing 26 41.3
Total 63 100.0

43
 In the table 4.4.6 above, 18.9% of the respondents Strongly Agree that REITs debut will

revolutionize mortgage business and real estate development in Nigeria, while 35.1% Agree,

27.0% are Indifferent, 10.8% Disagree and 8.1% Strongly Disagree.

The table 4.4.7 below shows the opinions among the respondents that REITs will provide

good housing and affordability with capacity for long term provisions.

Table 4.4.7

REITs will provide good housing and affordability with capacity for long term
provisions
Frequency Percent Valid Percent Cumulative
(%) (%) Percent (%)
Strongly Agree 7 11.1 18.9 18.9
Agree 14 22.2 37.8 56.8
Indifferent 9 14.3 24.3 81.1
Disagree 5 7.9 13.5 94.6
Strongly Disagree 2 3.2 5.4 100.0
Total 37 58.7 100.0
Missing 26 41.3
Total 63 100.0

In the table 4.4.7 above, 18.9% of the respondents Strongly Agree that REITs will

provide good housing and affordability with capacity for long term provisions, while 37.8%

Agree, 24.3% are Indifferent, 13.5% Disagree and 5.4% Strongly Disagree.

44
VIEWS ON CURRENT SOURCES OF FINANCE

This section represents the respondents views on the current sources of real estate

development finance.

Table 4.5.1 below shows respondents views on the current dominant source of housing

finance.

Table 4.5.1

In your opinion which source of finance is mainly used for housing finance in
Nigeria?
Frequency Percent Valid Percent Cumulative
(%) (%) Percent (%)
Informal Sector 33 46.0 89.2 89.2
Formal Sector 4 12.7 10.8 100.0
Total 37 58.7 100.0
Missing 26 41.3
Total 63 100.0

Table 4.5.1 shows that 89.2% of the valid respondents believe the Informal Sector to be

the predominant source of finance mainly used for housing finance in Nigeria, while only 10.8%

chose the Formal sector

Table 4.5.2 below shows respondents views if their choice on the current dominant

source of housing finance is sufficient for the provision of housing in Nigeria.

45
Table 4.5.2

Is it sufficient for the provision of housing in Nigeria?

Frequency Percent Valid Percent Cumulative
(%) (%) Percent (%)
Yes 5 7.9 13.5 13.5
No 32 50.8 86.5 100.0
Total 37 58.7 100.0
Missing 26 41.3
Total 63 100.0

Table 4.5.2 above shows that 86.5% respondents believe their choice on the current
dominant source of housing finance is not sufficient for the provision of housing in Nigeria,
while 13.5% believe it is sufficient.

46
CHAPTER FIVE

CONCLUSIONS AND RECOMMENDATION

Summary
This chapter presents the summary of the study as well as the conclusions and
recommendations made from the findings of the study. Suggestions for further
studies were also made.

Summary of Findings
The findings of this study serve as a basis for making the following conclusions
1. There is lesser knowledge and awareness of Real Estate Investment Trust (REITs) in
Nigeria.

2. Potentials of REITs in the longer term to improve the residential investment

property sector, through greater stability and professionalism in private and
social rented housing.

3. REITs can Provide greater security for tenants by encouraging institutional

investors (i.e. REIT companies), focused on long-term holding of rental
properties.

4. REITs as a closed ended vehicle, can be quoted as an exchange traded fund

to provide liquidity and secondary market window for investors.

5. Access to Real Estate: REITs provides a way to invest in real estate without
actively owning a property.

6. Cooperative societies are agreed as a means of housing finance and housing

development in Nigeria.

47
7. A huge number of respondents supported the fact that REITs can play a viable role
in increasing housing delivery and solve the housing social problem in Nigeria.

8. A huge number of respondents supported the fact that REITs debut will
revolutionize mortgage business and real estate development in Nigeria

9. Despite the fact that the Formal sector of housing finance exist in Nigeria, it is clear
that it is not effective.

10. A huge number of respondents believe the current housing finance system in
Nigeria is not sufficient for the provision of private housing.

11. The Formal sector of housing finance, despite its existence and its very important
significance to housing delivery, is not being well appropriated in Nigeria.

12. Corporate bodies as well as individuals have a huge role to play in ensuring an
improved housing delivery system in Nigeria.

13. Without a good, operational and effective finance system, no housing policy can be
successfully implemented.

CONCLUSIONS

Despite the availability of financial institution in Nigeria, there is still a deep

problem plaguing the Housing industry in Nigeria. People are still homeless and
finance for housing development is still very hard to come by. This thesis has
clearly presented the problems as well as prospects for improved housing delivery
in Nigeria, through the implementation of REITs.

48
 It is hoped that findings in this thesis will serve as a viable tool for decision
making in the nearest future.

RECOMMENDATIONS
Housing remains a pressing need in Nigeria with the ever increasing population
due to high birth rate and migration from neighboring countries. Despite this
imminent need, there isnt any working solution to the problem which has
rendered a lot of people homeless and turned children into destitute. The research
however shows that there a things that can still be done despite the fact that lack of
housing have eaten deep into the Nigerian system.

Based on the research therefore, these are my recommendations

i. Housing finance institutions should be given all necessary resources
required for them to be able to give financial advice and assistance to
prospective housing developers
ii. REITs should be implemented as it has the potential to be efficient against the
current sources of estate development finance
iii. More cooperative societies should be empowered to give out short- and
long-term loans for housing development
iv. The National housing policy should be revised and implemented through
the involvement of professionals in the construction industry
v. The government should be held accountable for the ways the National
Housing Fund is being appropriated.
vi. The government should encourage and urge financial institutions to
enlighten individuals and cooperate bodies on the implementation of a good
and viable REITs in Nigeria.

In order to implement the above named recommendations, the following can be

done

49
 i. Public Enlightenment: The general public should be properly enlightened
about the Real Estate Investment Trust
ii. The government should always involve professionals such as the Quantity
surveyors, architects and Estate surveyors in the development of any policy
involving housing and any other development of any kind.
iii. The government should also directly influence the implementation of
REITs in order to directly ensure the continued and improved delivery of
housing in Nigeria

SUGGESTION FOR FURTHER STUDIES

This research has adequately studied the appropriateness of real estate
investment trust as an effective source of estate development financing in Nigeria.
The study was limited in scope as it is focused solely on Kaduna metropolis.
Therefore, for future studies, estate development outside Kaduna can be observed
and studied in order to determine the differences in operation.

50
 REFERENCES

Adebamowo, M. E., Oduwaye, L., and Oduwaye, O. S. Problems mitigating housing finance
through primary mortgage institutions in Lagos. International Business and Management
Journal: 4 (1), 126-134. (2012)

Abiodun A. (1999) Housing finance under National Housing Fund: An appraisal. Paper presented
at the General Meeting of the Nigeria Institute of Town Planning.

Babalakin and Co. Key Constraints to Real Estate Development in Nigeria. (2004), Lagos:
Babalakin and Co. Available at
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