Property Securitisation

Culled from the Financial Standard ,Nigeria Properties Online reports:

Property securitisation entails the raising of funds from the capital market for housing development, using the house to be developed as collateral security for the capital so raised. In other words, the houses to be developed serve as asset-backed securities (ABS) to which investors subscribe in the capital market. The investors are subsequently paid their 'dividend' when the houses are completed and sold by estate developers. In some types of property securitisation, the investors get annual dividends if the houses so developed are rented and the tenants pay annual rents...Through property securitisation, investors can trade shares held in properties built with their funds. This in effect means that an investor who wants immediate cash could sell off his shares in a securitised property. Property securitisation makes cheap and easy funding available for the housing sector.
This is because, through the capital market, individual investors could pool their resources together for development of property which would be sold or rented at market rates.
The scheme, if properly managed, could provide a positive turning point in housing development in Nigeria. It could lift the burden of housing finance off the government and private developers. Investors will now do it as a worthwhile venture, and housing development would no longer be seen as a social service which the government must shoulder. This implies that housing development would experience exponential growth, and the growing need for accommodation by teeming Nigerians would be assuaged.