Real estate investment trusts reach N40bn market capitalisation on NSE

24 May 2017
Financial Nigeria


Oscar Onyema said Nigeria has one of the biggest markets for REITs in Africa.

Oscar Onyema, Chief Executive Office, Nigerian Stock Exchange

The Chief Executive Officer of the Nigerian Stock Exchange, Oscar Onyema, has said the value of real estate investment trusts (REITs) on the Nigerian capital market has reached N40 billion.

Speaking during the maiden edition of the REIT Conference in Lagos on Tuesday, Onyema also said Nigeria has one of the biggest markets for REITs on the African continent.

“Whilst the Nigerian market may not be as developed as other emerging markets such as Mexico, South Africa and Singapore, this asset class has definitely come to stay,” Onyema said. “Today we have about N40 billion in REITs market cap listed on the NSE and a total of N96 billion in the Construction/ Real Estate sector of our equity market.”

REITs are securities that pools investors’ funds to invest in real estate either through property ownership/management or mortgages. They are traded on stock exchanges just like shares and typically offer high-dividend yields, according to Investopedia.

Onyema said the African REITs market is currently valued at $29 billion, with the securities available in four countries: Nigeria, Ghana, South Africa and Kenya.

“There are only 32 REITs in Africa with South Africa being the largest REIT market, having 27 REITs, and Nigeria second with three REITs listed,” Onyema said. “In 2015, an estimated $265 million worth of transactions were concluded in Kenya, Nigeria and Ghana, a big improvement to the $65 million seen in all three markets during 2012. This indicates an increasing market as a larger number of investors are beginning to take increased interest and participation in the Real Estate Investment sector.”

In his keynote address, Abimbola Ogunbanjo, the First Vice President of the National Council of the NSE, said the Nigerian REITs market is largely underdeveloped due to lack of clarity on diverse regulatory issues which are required to stimulate greater market confidence, transparency and foreign capital inflows.
“The major challenges facing the REITs industry in Nigeria include restrictive legislation, poor knowledge and understanding of the industry in addition to prolonged bottlenecks created by the Land Use Act of 1978. Nigeria’s Land Use Act is embedded in the Constitution of our country,” Ogunbanjo said. “Thus, any attempt to rectify its inadequacies requires a constitutional amendment which of itself is a major challenge.”

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