How Real Estate Investment Trust Broaden Investor Opportunities in Nigeria

Real Estate Investment Trusts (REITs) are investments that provide certainty and regularity of income to investors in the capital market. Mr. Hakeem Ogunniran the Founder/CEO of Eximia Realty Company Limited disclosed this in a discussion on "REITs as Investment Tools for Nigeria's Capital Market Development".

The former Managing Director/Chief Executive Officer of UACN Property Development Company (UPDC) said that REITs remain an appropriately regulated vehicle for people to invest in the real estate sector.

According to him globally there are presently over 145m investors in the REITs market which is valued at US$3.5trn in assets, with the United States of America (USA) as the leading market.

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Speaking further Ogunniran said REITs as an asset class provided wider benefits to investors with the ability to increase market liquidity.

He believed that there were immense opportunities to unlock its value in the capital market, considerable the reforms that create more avenues for investments in the asset class.

Ogunniran cited the example of the Nigerian pension fund which is currently worth N12.3trn and how an investment of just 5% of the fund's value in REITs could support the deepening of the capital market.

Despite the reforms in the Finance Act 2020 concerning REITs, there remain salient issues concerning grey areas that need to be addressed to increase its value as an investment tool.

The Real Estate expert said that REITs legislations need to be anchored on sustainability, effective regulation, and the adoption of technology to thrive in the market and the economy.

In his recent book "The Law and Practice of Real Estate Investment Trusts with Highlights of African REIT Models" which was launched recently he stressed that it was an assessment of markets like South Africa, Nigeria, Kenya, and Rwanda.

He lauded the demutualization of the Nigeria Stock Exchange (NSE) which has a Real Estate Company, Realco as a subsidiary, and tasked the new firm to work towards floating a REIT in the future.