Mutual Real Estate Funds: A Veritable Window of Investment in the Nigerian Stock Market

Abstract

Investors are hard hit by the crash in the capital market in Nigeria and a few who still have investible funds are constantly at cross roads in selecting profitable investment outlets. A good number of investors are rushing out of investment in shares and stocks into real estate investment. But here again, investment is haphazardly done.  Little coordination, cooperation or collaboration is adopted. Investors are not adequately patronizing the Real Estate Investment (REIT) Fund through which professional and expert advice in addition to benefits of large scale operation could be harnessed.  The fundamental question  here is can REIT funds offer any hope given that the global melt down has not effectively started to solidify? This paper critically examines the issues involved in investing in mutual funds in Nigeria and tries to determine the extent to which this investment window can effectively mobilize savings for investment in critical real sectors of the economy especially the real estate. Using secondary data collected from the CBN Statistics Bulletin and opinion survey of stock brokers, mortgage bankers and investors in Nigeria, the paper establishes that there is a strong positive correlation between the level of savings in the economy and investment in real estate and that in fact savings drive real estate investment in Nigeria. It further argues that most investors in Nigeria are not even aware of nor consider unit trusts as reliable and profitable real estate investment in spite of the huge potential of this financial intermediate’s role as a veritable vehicle for capital mobilization in this critical segment of the Nigerian economy. There should be an increase effort on individual and corporate saving in order to boost investment opportunities and there should be need to encourage Mutual Funds through the unit trust scheme to enhance real estate investment.