Examination of Pre-Letting and Pre-Sale Options: A Paradigm Shift in Real Estate Development Financing in Nigeria
1Olayiwola, F. E., *2Akeju, M. A. and 3Aluko, B. T..
1Estate Management, LAUTECH, Ogbomoso, Oyo State, Nigeria.
2Estate Management, LAUTECH, Ogbomoso, Oyo State, Nigeria.
3Estate Management, Obafemi Awolowo University, Ile-Ife, Osun State, Nigeria
DOI: 10.36108/laujoces/6202.71.0112
Abstract
Property development is a capital – intensive exercise which requires formal or informal financing. As sources of interest-free finance, pre-letting and pre-sale financing options have been widely employed in practice, however, literature attention has remained little. In the developing countries such as Nigeria, the dearth of literature on the subject matter gesticulates an absence of standard procedures for the financing options in the real estate development practice. Hence, this study filled the gap by investigating the procedures of pre-letting and pre-sale financing options and provided information that would enhance the performance of Property Development Companies (PDCs) in the emerging market. This qualitative study purposively selected a senior staff member of 15 PDCs in Lagos metropolis for an in-depth interview to elicit procedural steps. The voice recordings were transcribed, coded and sorted manually. Content analysis was manually employed due to the relatively manageable size of the data. While 60% of the respondents are male, 40% were female. Also, 13.33% had Ph.D., 40% had M.Sc. and 46.67% had B.Sc degrees. This study revealed that both pre-letting and pre-sale financing options follow the same procedures with a slight twist. Also, there is absence of government regulation, which is required to govern the practice as obtainable in the developed markets. This study is limited to property development market in Lagos metropolis, Nigeria.
Keywords: Property development, Pre-letting, Pre-sale, Financing options, Financing procedures