Challenges of International Real Estate Investment in an Emerging Economy: The Nigerian Experience

Abstract

Many real estate investors are increasingly looking to invest internationally for reasons of portfolio diversification and the search for higher risk adjusted returns than can be achieved in their domestic markets and in doing that, the emerging economies provide them with great opportunities. These opportunities are seldomly out- weighed by numerous challenges. This paper therefore evaluates the challenges of international real estate investment in an emerging economies, especially NigeriaWith the great improvement in the political situation of Nigeria, coupled with the large size of the country and thus economies, which resulted to sustained Foreign Direct Investment (FDI) and Gross Domestic Product (GDP) growth, and performance of other economic indicators, Nigeria is in right direction towards realizing the dream of being one of the major emerging market. These attracted international investors as stated by the foreign direct of investment (FDI) of $723.49 Million in 2015. Despite this strong economic growth and potential opportunities even within the real estate markets, international real estate investors faces such challenges like: property market transparency risk, political risk, structural risk, banking risk, currency risk, ownership structure risk.

Keywords: Challenges; International real estate; Investors; Real estate investment; Real estate market; Emerging economies