2 months ago
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A significant amount of the county’s wealth is tied up in unused and abandoned property as Nigerians continue to struggle with housing shortages, JOSEPHINE OGUNDEJI writes.
Nigeria has significant untapped business potential in its abandoned and underutilised property. These dormant assets are estimated to be worth over $900bn, according to PricewaterhouseCoopers Nigeria.
The international consultancy firm stated in a report, titled ‘Nigeria Economic Outlook: Seven trends that will shape the Nigerian economy in 2024’, that the country had as much as $900bn worth of dead capital locked up in residential real estate and agricultural land.
It noted that the dead capital in the country included the Federal Government’s abandoned property estimated at N230bn.
According to the report, Nigeria’s housing deficit is estimated at 28 million units, while the population is expected to reach 223.8 million this year.
Despite the huge housing deficit, it noted that demand for housing remained depressed due to high rental and construction costs and declining disposable incomes.
It read in part, “PwC estimates that Nigeria holds as much as $900bn worth of dead capital locked up in residential real estate and agricultural land, including the Federal Government’s abandoned properties estimated at N230bn.”
Dead capital refers to assets or property that cannot be easily converted into productive use, often due to legal or institutional barriers.
In Nigeria, many property has undocumented or informal land titles, making it difficult for owners to prove their ownership and fully utilise the value of their assets.
This lack of proper documentation hinders access to credit and investment opportunities in the real estate market.
Additionally, bureaucratic procedures, corruption, and inefficient legal frameworks contribute to the existence of dead capital in the country’s real estate sector.
These factors make it challenging for property owners to navigate the system and unlock the full economic potential of their assets.
The Principal Partner at Ubosi Eleh & Co., Chudi Ubosi, in his company’s quarterly real estate market briefing, cited a 2022 report by the Nigeria Institute of Quantity Surveyors, which stated that Nigeria had over 56,000 abandoned projects owned by states and Federal Government.
Ubosi said those projects were scattered across the country’s six geopolitical zones with South South having 11,000; South East, 15,000; South West, 10,000; North West, 7,000; North Central, 7,000; North East, 5,000 while Abuja, the federal capital territory, has 2,000 abandoned projects.
“Nigeria has over 300 real estate properties worldwide, many of which are abandoned and underutilised; thousands of kilometres of road projects at various stages of construction have all been abandoned nationwide,” he said.
According to Ubosi, who spoke on ‘Reinvigorating Nigeria’s Economic Potential with Dead Capital’, Nigeria’s land size of 923,000 square kilometres, less than 10 per cent is titled, which places it ahead of just Mozambique and Zambia, where only three per cent of land is titled.
A 2024 report by Digital Experience Technology Limited titled, “Reviving Nigeria’s Hidden Assets: Strategic Framework for the Rehabilitation of Abandoned Buildings”, noted that as of 2023, Nigeria was estimated to have over 100,000 abandoned buildings, concentrated heavily in urban centres like Lagos, Abuja, and Port Harcourt.
It added, “Lagos heads this list with approximately 25,000 abandoned structures, while Abuja and Port Harcourt have around 10,000 and 5,000, respectively.
“The real estate sector in Nigeria suffers from these inefficiencies, symbolising broader systemic issues ranging from financial mismanagement to stalled political and legal frameworks.
“The economic repercussions are profound. In urban areas plagued with abandoned structures, property devaluation can reach 20–30 per cent. Crime rates in such areas often spike, leading to reduced economic activity and trust within communities. Continually, these areas find it challenging to attract new investments or residents, resulting in a vicious cycle of urban deterioration and economic stagnation.”
The report noted that the redevelopment of abandoned properties into functional spaces, whether for residential, commercial, or mixed-use purposes, could drive significant economic growth.
It posited, “Repurposing abandoned buildings into affordable housing units could help alleviate the acute housing shortage in Nigerian cities.”
Recently, the Building Collapse Prevention Guild, Ikoyi-Obalende Chapter, called on President Bola Tinubu to intervene in the deteriorating state of some national monuments and Federal Government property within the Ikoyi area of Lagos State.
The group noted that the neglected Federal Government buildings in the area had become hotspots for criminal activities, exacerbating concerns about safety and security.
According to the guild, among these Federal Government structures that have been abandoned are the Federal Secretariat Complex, Ikoyi Towers, among others.
“Notable among these abandoned Federal Government buildings is the multi-storey Federal Secretariat Complex, Ikoyi, an expired symbol of national pride in its prime.
“Also, we have the Ikoyi Towers (an equally Federal Government property, comprising three blocks of 12 floors labelled A, B, and C behind the abandoned Federal Secretariat). These multi-billion public investments should not be allowed to go to waste, especially at a time when the affordable housing sector is in crisis.”
Challenges
The Chief Executive Officer of Digital Experience Technology Limited, Samuelson Egelege, said reviving the nation’s abandoned buildings presented significant challenges, primarily due to legal disputes, funding constraints, and regulatory inefficiencies.
He added, “Continuous litigation over property ownership and land use has stalled redevelopment efforts, while limited access to credit and underdeveloped financial markets restrict capital investment. Furthermore, slow and opaque regulatory processes impede project approvals, exacerbated by economic volatility, which undermines investor confidence and complicates project feasibility.
“Addressing environmental and societal challenges is crucial for successful rehabilitation projects. Sustainability must be prioritised by using eco-friendly building materials and minimising carbon footprints.
“Community engagement is essential to mitigate resistance due to cultural concerns or potential displacements. Involving local stakeholders in the planning process can ensure that developments align with both environmental goals and community needs.”
According to Egelege, to overcome these obstacles, a multi-faceted approach is needed.
“Public-private partnerships can attract investment through incentives like tax reliefs and government-backed guarantees. Legal reforms should streamline property dispute resolutions and clarify property rights.
“Innovative financing solutions, such as Real Estate Investment Trusts and crowdfunding, can diversify financial support. Additionally, adopting modern technologies, like building information modelling and artificial intelligence in construction, can improve efficiency, reduce costs, and enhance sustainability,” he expounded.
Meanwhile, Ubosi noted that there were still factors making it tough for valuers and other professionals to estimate the exact value or worth of dead capital in Nigeria.
He said, “These are lack of clear property rights, informal land ownership, unregistered and un-surveyed land, disputed boundaries, absence of a formal market and the Land Use Act, which vests land in state and federal governments who see land more as a revenue head than a factor of production.
“Some of the policies and programmes made to harness the country’s assets, include the establishment of the Ministry of Finance Incorporated, which is expected to domicile all the nation’s assets, create an asset register and, in the long run, deal with each asset profitably.
“Nigeria needs a collaborative approach involving governments, communities, and stakeholders at all levels to implement reforms that will unlock deal capital.”
Government intervention
In November 2023, the Minister of Housing and Urban Development, Ahmed Danghiwa, said the Ministry of Housing was working to establish a National Land Commission.
He said this at the conference of directors of lands in the federal and state ministries, departments, and agencies, themed “Improving Land Based Revenue of the Federating Units in Nigeria through Efficient and Effective Land Administration”, in Lagos.
He noted, “Currently, we have a situation where the Land Use Act was enacted in 1978, but there was no complementary institution set up alongside it to provide the necessary framework, guidelines, and regulations for operationalising it. We are working to establish a National Land Commission that would fix this gap and chart a new way forward for effective land administration in the country.
“This will improve land titling and boost Nigeria’s ranking on the World Bank Ease of Doing Business, where we currently rank 186th out of 190 countries on the World Bank Ease of Doing Business index in terms of ease of registering properties.
According to the minister, experience shows that a nation can never develop if it does not conduct land reform.
He decried the current state of land administration in the country, adding that the same issues that were there decades ago were still plaguing the industry.
He noted that the second related reform that was also initiated was the nationwide adoption of the Model Mortgage Foreclosure Law.
Also, in October 2023, the Federal Government revealed its plans to unlock over $300bn (earlier estimate) ‘dead’ capital in the housing sector through a series of reforms and collaborations with stakeholders.
The government described the move as part of efforts to enhance investment and finance opportunities for sustainable real estate projects and address the country’s housing deficit.
The announcement was made by the Minister of Housing and Urban Development, Ahmed Dangiwa, during the Capacity Development Conference for Developers in Abuja.
Revitalising abandoned properties holds the promise of injecting billions of dollars into Nigeria’s economy.
Solution
The 2024 report by Digital Experience Technology Limited disclosed that around N18tn ($24 bn) was needed to revamp dead capital in the country.
It stated, “The financial effort required to refurbish these abandoned structures is immense, estimated at around N18tn ($24bn). Costs envelop structural repairs, legal resolutions, and requisite modernisation.
“However, returns on these investments are promising, possibly enhancing GDP by $200bn annually due to increased real estate value, heightened business activities, and job opportunities
“Costs envelop structural repairs, legal resolutions, and requisite modernisation. However, returns on these investments are promising, possibly enhancing GDP by $200bn annually due to increased real estate value, heightened business activities, and job opportunities.”
The report stated that structural repairs constituted 40 per cent of the budget, indicating a substantial investment in maintaining the building’s integrity.
It added, “Legal resolutions, accounting for 30 per cent, highlight the significant financial burden associated with addressing legal and regulatory issues. Similarly, modernisation also represents 30 per cent of the costs.
“Projected revenue increases include a 35 per cent rise from business activities, a 25 per cent leap in property values, and further gains from enhanced employment. Over the long term, property tax revenues may grow by about 20 per cent, allowing municipalities to broaden public infrastructure and services significantly.”
The report spotlights four iconic abandoned buildings in Nigeria, showcasing their vast potential for revitalisation.
It read in part, “Nigeria’s top abandoned buildings, including the NITEL Building and Independence Building in Lagos, the Federal Secretariat Complex in Abuja, and the Cocoa House in Ibadan, represent significant untapped potential.
“Despite requiring substantial investments for rehabilitation, these structures could collectively generate approximately N150bn ($200m) in annual revenue and create thousands of jobs.
“Revitalising these buildings would not only restore their historic and economic significance but also contribute to the broader economic development of their respective regions.”
Similarly, the Technical Secretary of the Nigerian Society of Engineers, Victoria Island Branch, Babatunji Adegoke, said by reviving those abandoned structures, the country could prevent catastrophic collapses, reduce hazards, and unlock opportunities for growth and development.
He posited, “Reviving abandoned residential buildings can significantly contribute to addressing the housing shortage, providing much-needed accommodation for numerous individuals and families.
“Moreover, repurposing abandoned buildings can stimulate employment in the construction sector.”
Pundits are urging the government to implement policies that can unlock the potential of dormant capital to stimulate economic growth.
