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Revamping Nigeria’s Real Estate Sector Through the Dubai Model
The real estate industry has emerged as a lucrative avenue for generating revenue worldwide. Many countries have leveraged their land and property assets to stimulate economic growth and broaden their revenue sources. For instance, in 2019, the real estate sector bolstered the United States GDP by $3.5 trillion, representing 17.5% of its overall economic output. Similarly, the United Kingdom’s property market yielded £68.1 billion in revenue in 2018, highlighting the substantial financial impact of the sector.
Nigeria’s real estate sector holds significant promise, given the increasing urbanization, unchecked population growth, and housing demands. Nonetheless, it grapples with obstacles such as unclear or defective land titles, steep costs of available real estate, bureaucratic hurdles, unnecessary infrastructure deficiencies, and a lack of transparency and efficiency, not solely within the government but also among transaction participants. Extensive reforms encompassing policy, legal, regulatory, and financial frameworks are imperative to instill greater organization, standardization, developmental impact, and financial rewards within the market.
Dubai stands out as a pertinent model. In just two decades, it evolved into a leading global real estate hub by strategically leveraging its geographical advantages, implementing business-friendly policies, developing top-of-the-line infrastructure, and deliberately fostering an environment conducive to investors, supported by unwavering government backing and promotion of the real estate sector.
This piece delves into the legal structure and tactics that underpin Dubai’s prosperity and elucidates how Nigeria can adapt these lessons to unlock its own real estate potential.
KEY FEATURES OF DUBAI’S EXCEPTIONAL REAL ESTATE LEGAL SYSTEM
The United Arab Emirates (UAE), particularly Dubai, has developed a remarkable real estate legal system that has contributed to its success as a global real estate investment destination. The emirate’s real estate laws and regulations are designed to attract foreign investment, protect investors’ rights, and ensure transparency in the market. Here are some key aspects of the emirate’s real estate legal system that make it outstanding:
**Freehold ownership for foreigners**
In 2002, Dubai introduced a law allowing foreign ownership of property in designated areas, making it one of the first Gulf countries to do so. This has attracted significant foreign investment in the real estate sector.
**Real Estate Regulatory Agency (RERA)**
Established in 2007, RERA is responsible for regulating and overseeing the real estate sector in Dubai. It aims to protect the rights of all parties involved in real estate transactions and promote transparency in the market.
**Escrow accounts**
Dubai’s real estate laws mandate the use of escrow accounts for off-plan property sales. This ensures that developers cannot misuse investors’ funds and that the money is only released when construction milestones are met.
**Strata law**
Dubai’s Strata Title Law, introduced in 2007, provides a clear legal framework for the ownership and management of common areas in multi-unit developments, such as apartments and condominiums.
**Real estate registry**
The Dubai Land Department maintains a comprehensive real estate registry that records all property transactions, ensuring clarity of ownership and reducing the risk of fraud.
**Dispute resolution**
The Dubai Land Department has a dedicated Rental Disputes Center, which provides a streamlined process for resolving disputes between landlords and tenants. The Dubai International Financial Centre (DIFC) Courts and the Dubai International Arbitration Centre (DIAC) offer specialized dispute resolution services for real estate cases.
**Investment protection**
The UAE has signed bilateral investment treaties with numerous countries, providing additional protection for foreign investors in the real estate sector.
**Tax advantages**
The UAE does not impose income, capital gains, or property taxes on individuals, making it an attractive destination for real estate investment.
**Long-term visas**
In 2019, the UAE introduced long-term visas (up to 10 years) for investors, entrepreneurs, and professionals, which are tied to property ownership. This has further incentivized real estate investment in the country.
CHALLENGES
The Dubai real estate polices has been successfully implemented because the government and people of the country have collaborated to enable effectiveness leading to the tremendous progress and profit. The challenges with reforms working in Nigeria are numerous because of a lack of practical adherence to the rule of law. We are hopeful that government will implement favorable policies that uplift the sector, and also hopeful that corruption will not erode the gains derived from such policies.
RECOMMENDATIONS FOR NIGERIA
Nigeria can replicate components of the Dubai framework to reform and unlock the immense potential of its realty ecosystem. Features of the Dubai model that can be adopted include:
Institutional Reforms
**Establish a federal real estate regulator**
Create an independent overseer (like RERA in Dubai) that will work with States to establish and enforce standards, provide title guarantees, resolve disputes, coordinate state agencies, and streamline the convoluted approval processes. Boost buyer trust and developer compliance.
**Set up Infrastructure Development Fund**
Lack of power/energy, access roads, drainage, and water infrastructure increases costs and delays projects. Set up an integrated fund with public seed financing and private partnerships to fund infrastructure development on a user-fee/demand basis, or give economic or material incentives to private developers who can, and have the capacity to build these infrastructures.
**Incentivize Free Trade & Business Zones**
Provide tax holidays, single-window clearance, and customs duty relaxation for developers to establish Dubai-like self-contained townships integrated with offices, malls, and homes. Attract FDI into these zones to enable world-class development and catalyze wider market maturity.
Legal/Regulatory Overhaul
**Real Estate Regulatory Bill**
Draft comprehensive legislation covering consumer rights, standard project approval protocols, model buyer-seller agreements, dispute resolution mechanisms, and real estate transaction procedures to start with.
**Title Regularization and Digitalization**
Simplify and formally recognize existing land title mechanisms via a National Titling Bill. Set timelines for land agencies to fully digitize and integrate title records across states for transparency and efficiency.
Financial Reforms
**Promote Public-Private Partnerships**
Mobilize pension funds, insurance companies, and foreign investment into real estate by amending guidelines to increase asset allocation. Develop fail-safe risk mitigation tools.
**Housing Development Fund**
Set up an integrated mortgage liquidity facility to offer attractive long-term home finance rates and incentives. Provide specific incentives for developing low-cost housing projects across urban and semi-urban centers through private and public partnerships.
CONCLUSION
Implementing the aforementioned policy adjustments and regulatory reforms has the potential to greatly enhance standards, boost participation, and attract capital into Nigeria’s real estate sector within the next 3-5 years. The Dubai case serves as a reminder that forward-thinking leadership and business-friendly regulations can have a transformative impact on the market. The essential elements required to mirror this success story domestically are promising and achievable in our setting.
The Lagos State Government has said it would soon arrange a meeting with developers/owners of distressed buildings on how best to address the redesign and remodelling of such structures by November.
This was disclosed recently by the Commissioner for Physical Planning and Urban Development, Oluyinka Olumide, at a function in Alahusa, Lagos.
Olumide said the prevalence of distressed buildings in different parts of the state was worrisome and needed the urgent attention of all stakeholders.
He said, “The Ministry of Physical Planning and Urban Development as mandated by the Lagos State Urban and Regional Planning and Development Law, 2019, as amended, was willing to extend its responsibility for approving the remodelling of existing buildings to provide technical assistance to developers and owners of distressed buildings, especially on the design and remodelling of such buildings.
The Federal Government has instructed the contractors responsible for the 107km Enugu-Onitsha road dualization to expedite the project.
This directive was given by the Minister of Works, Senator David Umahi, during a meeting with MTN, the Enugu State Government, and the contractors, RCC Ltd and Nigercat Ltd, on Friday.
According to a statement released on Friday, the minister said he is disappointed over the slow pace of work on the project, he said, “Let me express my disappointment over the slow pace of work on that project. It is one of the worst roads in this country.
“Everywhere we have diversion; diverting from the one that RCC and Nigercat had completed, the contractors are not kind enough to even put stone based on the diversion points.”
He added, “So, by the reason of the launching of our Operation Free our Roads, it is now a violation of the policy on the side of the controllers and directors of the Federal Ministry of Works where we have vehicles falling on any project that is ongoing or where there are potholes on our roads.”
He also blamed the sufferings of road users on the lack of commitment and insensitivity of the contractors.
“The public must know that the President’s intention is not for them to suffer while trying to fix the roads, and it is their right to insist that contractors should fix the roads that they are engaged on,” he said.
The Minister commended the Enugu state government for their resolve to fund the construction of a 20 KM section of the road and expressed hope that MTN would execute the second phase of the project.
He noted, “Why the Enugu State government is intervening is because of the slow pace of work by the contractors and because of funding issues. The essence of tax credit is for funds to be made available. And so, I don’t see RCC going to keep their promise to finish this project in 6 months.
“My advice to MTN is to look for another contractor within that axis if they want to get the job done. Division of labour is even the best. While they are doing the road, and if Nigercat is doing a good job, you can give them greater scope to do if you want to finish that job.”
He warned contractors that the Federal Government would not accept phased handovers of projects and has phased out Variation of Price in contract administration.
The Ekiti State government has intervened to resolve a longstanding land dispute between the Elepe of Epe-Ekiti, Oba Ayodele Adesoye, and the Atolagbe family. The government cautioned against the misuse of modernization as an excuse to disregard traditional customs.
In line with the community’s traditions, the government has ordered the release of resources, including palm trees at Oko Oba Farmland, to Oba Adesoye for his administration. This decision ensures the continued adherence to age-old practices.
Ekiti State Deputy Governor, Chief (Mrs) Monisade Afuye, announced the resolution in Ado-Ekiti. The decision was made after considering the Elepe’s claim to Oko Oba Farmland based on historical evidence.
Mrs. Afuye acknowledged the Elepe’s right to be the custodian of Oko Oba Farmland, citing longstanding traditions that support his claim. The decision reflects the importance of respecting historical practices and ensuring their preservation.
The deputy governor, however, told the monarch in clear terms that other princes and princesses from all the three ruling houses should be allowed to farm on the land without payment of royalty.
Mrs Afuye appealed to the community to comply with the government’s position to restore unity, peace and orderliness to the beleaguered community.
Oba Adesoye expressed gratitude for the government’s decision and pledged to foster peace and unity between the throne and the community, aiming to accelerate Epe’s development.
Representing the Atolagbe family, Dr. Yemi Agbeleoba acknowledged their willingness to cede Oko Oba Farmland to the monarch. However, he emphasized the need for all three ruling houses to participate for a lasting and traditional solution.
Agbeleoba expressed appreciation for the government’s directive, believing it will contribute to resolving the long-standing conflict.
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