The Chief Investment Officer of Pantera, Ayo Ibaru, has identified investor protection and a predictable legal framework as key factors in attracting foreign investment into West Africa’s real estate sector.

Ibaru made the remarks during an interview with ARISE News on Monday, where he discussed factors influencing the attractiveness of real estate markets to investors.

He said economic activity was an important consideration in assessing real estate opportunities, but legal protection and regulatory certainty were particularly critical to foreign investors.

According to Ibaru, the assessment draws on the Real Estate Investment Attractiveness Index developed by researchers Lieser and Groh in 2011.

He explained that the index examined 66 countries and used six key factors to evaluate the attractiveness of their real estate investment environments.

Ibaru said economic activity generally carries significant weight because of its influence on other aspects of an investment environment.

“Economic activity is generally touted as the, uh, more important one, and that’s because of the heft that it brings to every conversation,” he said.

However, he stressed that the protection of investors and the predictability of the legal system become especially important when foreign capital is involved.

Ibaru cited Cabo Verde as an example of a country that has focused on building a predictable legal environment to attract foreign investors.

He said the country had streamlined its laws and investment processes because of the importance of foreign investment to its tourism-dependent economy.

According to him, efficient processing of permits, clear laws and transparent investment procedures are necessary to sustain an economy that relies heavily on tourism.

“So what they have decided to do is be the most predictable legal environment,” Ibaru said.

He added that Cabo Verde’s approach contributed to its performance in the real estate investment assessment, including when the report was conducted in 2023.

On Nigeria, Ibaru said the country’s population, economic size and substantial unmet housing demand presented considerable opportunities for real estate investors, particularly in Lagos and Abuja.

“When you’re looking at West Africa, it’s almost a no-brainer that Nigeria will be the largest by sheer size,” he said.

He, however, noted that the major challenge was turning the country’s scale and demand into investment opportunities that could attract capital.

“Now, the challenge is, how do we translate all of this, um, into actual, um, real estate opportunities that are investable?” he asked.

Ibaru also highlighted the role of domestic investors in Nigeria’s real estate market, noting that research conducted several years ago had pointed to a strong local-investor bias.

He said Nigeria’s legal protection ranking was among the factors that weakened its overall position despite the country’s economic strength and significant investment potential.

“So, Nigeria is sheer size and sheer opportunity, but then, um, there are still a few inefficiencies in the system that, uh, drew it back, not least of which is our, um, ranking around legal protections,” he said.

The Pantera executive further suggested that increasing the number of real estate companies and investment products listed on the stock exchange could improve market transparency and strengthen investor confidence.

He noted that listings could signal greater transparency and potentially attract both domestic and foreign-denominated capital.

However, Ibaru cautioned that increased listings alone would not guarantee returns, stressing that the quality of the underlying assets remained crucial.

He said investors should therefore carefully examine the real estate markets and assets supporting investment instruments such as Real Estate Investment Trusts.

“It’s good to have more instruments, ’cause it does suggest, uh, transparency, and you are able to attract more investment, local and foreign-denominated currency. Uh, but asset selection, in the case of Nigeria, is really where, um, the rubber meets the road,” he said.

Ibaru also identified high interest rates as another challenge for real estate developers, saying elevated borrowing costs could restrict the range of projects that developers could pursue profitably.

He explained that expensive financing tends to push developers towards specific real estate submarkets and asset classes where returns are more predictable and cash flows can better accommodate financing costs.

“It just makes borrowing more expensive. That’s that’s really how to put it,” he said.

Ibaru expressed hope that interest rates could ease, although he acknowledged uncertainty over the direction monetary authorities would take.

He said lower rates, alongside stronger investor protection, greater transparency and more efficient legal processes, could improve the conditions for real estate investment across West Africa.