Real-Estate Resource Control: Policy Incentives and Investment for Development

Abstract

Real estate investments are increasingly seen as the cornerstone for prosperity and stable economies in both the developed and the developing world. The potential for real estates to play this role effectively depends on the scale of real estate investment opportunities that exists in the society in question. These investment opportunities at any rate depend on the nature of government policies that regulates real estate markets and the general investment environment. The African policy environments that have given birth to the current regime of real estate policies in Africa are highly monopolised. These have led ultimately to real estate policies that have vested in respective government’s enormous control over real estate resources. The broadly skewed real estate resource control configurations that have emerged as a result are definitely generating perverse investment incentives. These policies are difficult to remove because of the incentives they offer and the costs of doing so. It is unlikely that even well meaning governments would succeed in reforming them in any definable way. Perhaps the most plausible way to get round this albatross would be to employ incentives/disincentives of development aid conditionalities to compel these governments to hand back controls of these real estate resources to the market and private sector so that the distortions of the past policies can be corrected. (RICS)