Introduction: Rogue estate developers and brokers in Nigeria are having a “field day” because demand for real estate products is huge, oversight is weak, rule of law is lacking and the payoffs are massive with very little consequence. The ethical professionals in the real estate sector are not dishing out enough products to meet the huge demand of Nigerians. The pathetic situation is having its toll in our housing market as foreign direct investment (FDI) has been dwindling since the second quarter of 2022. While other countries are experiencing an increase in patronage, ours is dwindling.
What the situation is: It is quite unfortunate that the governments have allowed our real estate sector to degenerate into an “uncertainty business” like pool betting and wildlife hunting. A sector in which the people commit the largest chunk of their life savings and which deals with basic needs like food, housing and transportation should not be left unregulated. Most off-plan property developers and “land sellers” are now selling virtual and fake properties in a scheme not different from advanced fee fraud (419). There are failed estates out there that are uncompleted for over twenty years after digging foundation and there are many that have been completed but are without facilities (water, electricity, motorable roads and security).
Those who have suffered most are Diaspora Nigerians with over N3 trillion gone down the drains. According to research findings, most Nigerians would rather prefer to buy completed buildings in an active estate than subscribe to “off-plan schemes”. Government schemes are allegedly not trustworthy either. Some people complained that they paid into a state government account without getting land allocation five years later. The solution to this is government regulations of the activities of estate developers (both public and private) backed by law.
The Estate Surveyors and Valuers Registration Board of Nigeria (ESVARBON) has a list of real estate practitioners (estate agents and real estate investment appraisers) that the members of the public can patronise with maximum trust. ESVARBON is a regulatory body that will delist any member found wanting from its register of practicing estate surveyors and valuers in Nigeria.
The activities of the rogue estate developers and brokers are lucrative because:
- Big regulatory gaps: Developers who coordinate projects and collect huge deposits still operate outside a coherent national licensing framework. Architects, builders, engineers and estate surveyors are regulated, but developers are not. Since not all real estate developers are not members of the professional bodies in Nigeria, it will be proper if the governments in Nigeria can regulate real estate developers or, make sure that they are at least a member of a professional body in the built environment.
That vacuum lets “unscrupulous operators” market non-existent projects, do multiple sales of the same land and abandon developments after collecting deposits. Industry leaders have been calling for a registry and a real regulatory system that says “who can be trusted and under what standards”.
Lagos State even warns people to avoid unregistered agents/developers, and Lagos State Real Estate Regulatory Agency (LASRERA) exists specifically to register genuine property developers and brokers.
- Weak enforcement and economic pressure
Experts blame lack of regulatory oversight, weak enforcement and economic instability for creating “fertile ground” for rogues and fraudsters to exploit desperate investors.
With a huge housing deficit, people are desperate for affordable homes. That desperation makes them easy targets.
Economic and Financial Crimes Commission (EFCC) says luxury estates have also become channels for money laundering, with a case of Independent Corrupt Practices Commission (ICPC) recovering ₦5.3 billion from a property developer in Abuja. Over 15 real estate projects are currently facing civil forfeiture across the country.
- How they operate: Common tricks that keep showing up:
- Fake projects & multiple sales: Rent/sell one flat to hundreds of tenants. One case: 100 intending tenants swindled of ₦500 million over a vacant apartment. In another case 256 people paid for the same house in Lagos.
- No delivery/ breach of contract: Misrepresentation, deceit and non-delivery gets “zero consequences”.
- Cutting corners to undercut legit developers: Unregulated developers ignore density/planning rules and cut corners to reduce quality and make super profit. For example, they build 40 units where only 20 are allowed, so their costs per unit is lower and their profits. Buyers patronise the rogue estate developers and brokers because the market is price-sensitive which distorts competition and hurts ethical companies.
- Using connections: Some of these developers and brokers boast of their supposed “untouchability” due to alleged connections with influential politicians and even relocate families abroad immediately after collecting subscribers’ deposits.
- Social media and foreign vendors: Some rogue estate developers and brokers use social media heavily. Industry leaders suggest that we need approval before advertising real estate online to stop these scammers.
Foreign vendors also come in, advertise in high-class hotels, and sell UK/Dubai/US and Cape Town properties to Nigerians, taking advantage of lack of regulation in Nigeria. These exercises have been found to be fake. The First Group Company, operating as TFG, is alleged to have scammed Nigerians on Dubai properties to the tune of $200 billion.
- The fallout: Estimates suggest over 50 percent of real estate transactions in Nigeria involve some form of fraud. Victims lose life savings, inheritance, or loans — leading to financial distress, stress and loss of trust in real estate transactions.
What is being suggested as solutions: industry leaders and experts say the real estate sector in Nigeria needs stronger regulation. They suggest that the Federal Ministry of Housing and Urban Development should monitor developers and sponsor a law mandating disclosure of timelines, budgets and completion guarantees. All off-plan property sales proceeds should be paid into escrow accounts and not directly to the off-plan developers. They also suggest EFCC crackdown and keeping of beneficial ownership register of houses in Nigeria to unmask true owners. There should be public education to create awareness about the activities of rogue property developers and brokers, dispute resolution centres and a database of property transactions at every quarter. There is general consensus that ethical developers should champion real estate sector reforms because fraud “diminishes public confidence”.
Conclusion: Huge real estate product demand, weak licensing of real estate developers and brokers, poor law compliance and enforcement and cheap products (price-sensitive) buyers give rooms for rogue developers to thrive. Until there is registration of property developers, monitoring, evaluation and prosecution of rogue estate developers, they will keep having a “field day” in Nigeria.
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Olufemi Adedamola Oyedele, MPhil. in Construction Management, managing director/CEO, Fame Oyster & Co. Nigeria, is an expert in real estate investment, a registered estate surveyor and valuer, and an experienced construction project manager. He can be reached on +2348137564200 (text only) or femoyede@gmail.com
