PwC finds $900bn dead capital trapped in Nigerian real estate 

Onome Amuge

PricewaterhouseCoopers Nigeria (PwC), recently estimated that a staggering $900 billion worth of dead capital is tied up in residential real estate and agricultural land in Nigeria. This includes the federal government’s abandoned property, estimated at N230 billion.

The professional services network, in a new report titled “Nigeria Economic Outlook: Seven Trends That Will Shape the Nigerian Economy in 2024”, also stated that the country’s housing deficit is estimated at 28 million units, while the population is projected to reach 223.8 million in 2024. This highlights the enormous challenge of providing adequate housing for the country’s rapidly growing population.

“Nigeria’s housing deficit is estimated at 28 million units while [the] population [is] expected to reach 223.8 million. Despite [the] huge housing deficit, demand for housing remains depressed due to high rental and construction costs, as well as declining disposable incomes,” the report read in part.

The term “dead capital”, relates to  assets or property that are not being put to their most productive use, often due to legal, regulatory, or institutional barriers. This is considered a common problem in Nigeria, where many properties have undocumented or informal land titles, meaning that the owners cannot prove their ownership and thus cannot access credit or investment opportunities that would allow them to fully utilise the value of their assets. Without proper documentation, these properties remain trapped in a state of dead capital, with the potential benefits of ownership left untapped.

In addition to the lack of proper documentation, bureaucratic procedures, corruption, and inefficient legal frameworks have beed seen to play a role in the existence of dead capital in Nigeria’s real estate sector. Property owners often have to navigate a complex web of regulations and procedures, which can be time-consuming and expensive. In addition, the prevalence of corruption makes it difficult for property owners to obtain the necessary approvals and permits in a fair and transparent manner. As a result, many properties remain underutilised, with their true economic potential untapped.

In its report, PwC observed that the value of construction material exports in the third quarter of 2023 was N22.9 billion, a 7 per cent increase over the previous quarter’s figure of N21.3 billion. This growth is indicative of the rising global demand for construction materials, but PwC noted that Nigeria continues to be a net importer of these materials, rather than a net exporter.

Concerning government reforms aimed at addressing this issue, PwC recalled the federal government’s proposed review of land use Act to streamline land administration and facilitate effective access to land acquisition processes.

In October 2023, the federal government announced plans to unlock over $300 billion, which was estimated to be the value of dead capital in the country’s housing sector, through a series of reforms and collaborations with stakeholders.

The move was described as part of efforts to boost investment and financing opportunities for sustainable real estate projects, and help address the country’s housing deficit.

Ahmed Dangiwa, the minister of housing and urban development, who made the announcement at the Capacity Development Conference for Developers in Abuja, noted that the initiative would involve a coordinated effort from all relevant stakeholders, including the private sector and civil society.

During his speech, the minister outlined a number of specific measures that would be taken to reform the housing sector and unlock dead capital. These include amending the Land Use Act to streamline the process of land acquisition and administration, and reforming key institutions like the Federal Mortgage Bank of Nigeria and the Federal Housing Authority to make them more effective.

The minister also emphasised the government’s commitment to creating an environment that is conducive to increased private sector investment in housing, with the goal of breaking down institutional, legal, and bureaucratic barriers that have hindered sector growth.