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This study is on the perception of real estate investors on the lending requirements of financial institutions. Most capital intensive investment requires some financial backing from financial institutions. Real estate investors however shy away from bank lending due to the requirement of financial institutions for money lending. This study covers some selected real estate investment firms in Abuja. A descriptive survey method was employed for the study. Questionnaires were used to gather information from the respondents. Data received was analysed using simple frequency and percentages.

The study revealed that, real estate investors now seek for alternative finance sources since banks’ lending requirements are usually too much for them. It was suggested that banks should encourage investors by making their lending requirements easy to meet up.





An investment in real estate development requires a huge sum of money, most at times exceeding six (6) figures as such only a hand full of individuals could venture into this form of investment.

This financial insufficiency naturally turns investors to financial institution for possible credit advancement. Mbanefo (2002) observed that the importance of banks in our economy lies in their monopoly of the resources to provide loans for industrial and commercial developments. The provision of this loan however, carries the risk of default in repayment hence the need to take adequate, reliable and appropriate security for the purpose of insulating default risk associated with credit transactions in banks. According to CBN (1995) out of every N1.00 loan granted by Nigerian Banks only 57 kobo were capable of being realized representing 57%. Lending which may be on short, medium or long-term basis is one of the services that commercial banks do render to their customers. In other words, banks do grant loans and advances to individuals, business organizations as well as government in order to enable them embark on investment and development activities as a mean of aiding their growth in particular or contributing toward the economic development of a country in general. Commercial banks are the most important savings, mobilization and financial resource allocation institutions.

Consequently, these roles make them an important phenomenon in economic growth and development. In performing this role, it must be realized that banks have the potential, scope and prospects for mobilizing financial resources and allocating them to productive investments. Therefore, no matter the sources of the generation of income or the economic Policies of the country, commercial banks would be interested in giving out loans and advances to their numerous customers bearing in mind, the three principles guiding their operations which are, profitability, liquidity and solvency. However, commercial banks decisions to lend out loans are influenced by a lot of factors such as the prevailing interest rate, the volume of deposits, the level of their domestic and foreign investment, banks liquidity ratio, prestige and public recognition to mention a few.

Chodechai(2004) while investigating factors that affect interest rates, degree of lending volume and collateral setting in the loan decision of banks, says: “Banks have to be careful with their pricing decisions as regards to lending as banks cannot charge loan rates that are too low because the revenue from the interest income will not be enough to cover the cost of deposits, general expenses and the loss of revenue from some borrowers that do not pay. Moreover, charging too high loan rates may also create an adverse selection situation and moral hazard problems for the borrowers.”

Therefore it is not an easy task for real estate investors’ to secure loan from either commercial bank or mortgage institution to finance their development, according to Agbola(1986) the procurement of necessary finance is sine-qua-non to the acquisition of adequate housing and the most probable source open to investor is through mortgage financing.

This research work is set to appraise the perception of real estate investors’ on the lending requirement of commercial banks and mortgage institutions in Abuja metropolis.



Abuja is the capital city of Nigeria. It is located in the Centre of Nigeria, within the Federal Capital Territory (FCT). Abuja is a planned city, and was built mainly in the 1980s. It officially became Nigeria’s capital on 12 December 1991, replacing Lagos, which is still the country’s most populous city. At the 2006 census, the city of Abuja had a population of 776,298, making it one of the top ten most populous cities in Nigeria. However, Abuja has witnessed a huge influx of people into the city which has led to the emergence of satellite towns such as Karu Urban Area, Suleja Urban Area, Gwagwalada, Lugbe, Kuje and smaller settlements to which the planned city is sprawling towards, the unofficial metropolitan area of Abuja is well over three million.

According to Dermographia, the population Abuja’s Urban Area as at 2012 is 2,245,000  making it the fourth largest urban area in Nigeria only surpassed by Lagos, Kano and Ibadan while PortHarcourt’s urban area which is projected to be almost 2,000,000 is the fifth most populous urban area in Nigeria.



Abuja is located in the Centre of Nigeria and has a land area of 8,000 square Kilometers. It is bounded on the north by Kaduna state, on the west by Niger state, on the east and south-east by Nasarawa state and on the south-west by Kogi state. It falls within latitude 7 45′ and 7 39′.

One beautiful feature about Abuja which it derives from its central location is that it shares the savannah grass with the north. And the overall effect of this is that Abuja has rich soil for Agriculture and enjoys an equable climate that is neither too hot nor too cold all year round.

The FCT experiences two weather conditions in the year. These are the rainy season which begins around March and runs through October, the dry season (usually characterized by bright sunshine) which begins from October and ends in March.

Within these periods, there is a brief period of harmattan occasioned by the north east trade wind, with a resultant dusty haze and intense coldness and dryness. Nevertheless, the high altitude and undulating terrain of the FCT act as a modulating influence which makes the weather always clement.


The present Suleja was formally known as Abuja, a sparsely populated town with a population of about 500,000 people; it was completely rural with little or no infrastructure until the enactment of Decree No. 6 of 1976.

Before the 1976 Decree, a committee (‘The Aguda Panel’)was commissioned to go round the country in search of a suitable location for the New Federal Capital with two major points of reference; a region that is sparsely populated and that is centrally located. And the region now known as Abuja met these requirements and hence became the recommended location for the New Federal Capital.

The acceptance of the recommendation of the committee, led to the enactment of Decree No. 6, of 1976, the Federal Capital Territory Act, and this became the blueprint for the re-location of the new Federal Capital from Lagos to Abuja. The town originally known as Abuja was later renamed Suleja, while the name “Abuja” was reserved for the capital-to-be. In order to realize the objective of developing Abuja, the new Capital City, into a masterpiece on the African continent, the Federal Government established the Federal Capital Development Authority (FCDA) as the sole agency vested with the responsibility of planning, designing and developing the city.


Administratively, the Federal Capital is structured into six area council namely, Abuja municipal, kuje, kwali, bwari, Abaji and gwagwalada. Each of the area council is administered as a local government under the general supervision of the FCT minister. The infrastructural planning and development of Abuja is handled by Federal Capital Development Authority (FCDA) with among others control the various development and maintenance units from 1992, when the federal government officially moved to Abuja from Lagos. The development has been so rapid and had to increase its manpower to meet the demand of housing, offices and infrastructural development required in the civil services workforce. During the precolonial period, the various ethnic groups in the area which now forms the FCT were administered as autonomous kingdom in their various locations. Such kingdom had some diverse interethnic, political and economic relations. Such external influences as slave trade, the jihad and colonial administration changed the pattern and structure of this indigenous administration. With the coming of the colonial administration, administrative heads were created for the various units. Under this set up, commonly referred to as the Native Authority (NA) system, emirates were established with emirs and chiefs as heads of the various administration units that were designated as emirates. These units were later broken into districts, Headed by districts heads.


Abuja has a GDP of $ 5.01billion and GDP per capital of $ 3,649 of the 2007 (estimate), it has one of the highest standards of living as compared to other cities in Nigeria. However, today the federal capital city economy is a public sector driven dominated economy which is driven by government patronage and the federal capital territory has attract serious business ranging from international firms to individual service provider.





Abuja is located just north of the confluence of Niger and Benue rivers. It is bordered by the state of Niger to the west and north, Kaduna to the northeast, Nassarawa to the east and south and Kogi to the southwest. Lying between latitude 8.25 and 9.20 north of the equator and longitude 6.25 and 7.35 east of Greenwich meridian, Abuja is geographically located in the Centre of the country. It is situated within the savannah region with moderate climatic condition.


The huge capital that is been require to kick start most real estate development and the high interest rate which is being use by commercial banks as lending criteria tends to leave most real estate investors’ flat footed.

Chodechai(2004) asserted that “banks’ lending decisions are also influenced by the past relationship with the borrowers”. Past relationship according to him can help banks to obtain more private information, leading to a more accurate understanding of the borrower’s business and financial situation. Load demanded by financial institution in recent times is another major source of constraints in real estate development where the rate of inflation has a direct impact on interest rate.

However, with respect to this research work, they are various challenges which are been faced by both parties involve, that is the financial institutions involve in real estate financing and the real estate investors, as the real estate investors depends on the financial institution for funds and most of them find it difficult to meet the requirement which is use by this financial institutions.



With regards to this research work which would appraise the perceptions of real estate investors towards the lending requirements use by commercial banks and mortgage institutions, this research would

  1. Analyze particularly the several lending requirements used by financial institutions and determine how they affect real estate investors.
  2. To assess the impact of bank lending requirements on lending decisions of real estate investors.
  3. To assess the relationship between bank lending requirements and real estate development in Nigeria.

Hypotheses one

Ho: There is no relationship between bank lending requirement and real estate development in Nigeria.

Hi: There is a relationship between bank lending requirement and real estate development in Nigeria.

Hypotheses Two

Ho: Lending requirement does not affect real estate investors’ decision

Hi: Lending requirement does not affect real estate investors’ decision



This study will be of importance to both the financial institutions which are involve in real estate financing and real estate investors’ since it analyses the lending requirement use by commercial banks and mortgage institution.

This study will also help real estate investors’ in ascertaining the most appropriate option to source for fund in financing their real estate investment as well as the financial institution in monitoring their lending activities


The scope of this work would be within the purview of Abuja metropolis and    it would focus on the real estate investors’ within the following areas; Garki District, Wuse District and Central Area. This areas where selected due to the high concentration of commercial activities and the location banks within this areas. The researcher encountered some constraints, which limited the scope of the study. These constraints include but are not limited to the following.

  1. a) availability of research material: The research material available to the researcher is insufficient, thereby limiting the study
  2. b) time: The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.



LENDING: The action of allowing a person or organization the use of a sum of money under an agreement to pay it back later.

REQUIREMENT: A requirement is a quality or qualification that you must have in order to be allowed to do something or to be suitable for something

FINANCIAL INSTITUTIONS: A financial institution (FI) is a company engaged in the business of dealing with financial and monetary transactions such as deposits, loans, investments, and currency exchange

REAL ESTATE INVESTORS: A real estate entrepreneur or a real estate investor to a lesser extent is someone who actively or passively invests in real estate. An active investor may buy a property, make repairs and/or improvements to the property, and sell it later for a profit.






This research work is organized in five chapters, for easy understanding, as follows

Chapter one is concerned with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study. Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature. Chapter three deals on the research design and methodology adopted in the study. Chapter four concentrate on the data collection and analysis and presentation of finding.  Chapter five gives summary, conclusion, and recommendations made of the study







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