Northern Nigeria property market in subdued demand as insurgency escalates

The property market in parts of northern Nigeria is experiencing another round of recession following escalating terrorist activities and insurgency in that part of the country, bringing down demand and reducing property values by 30-40 percent.

The insurgency has scaled up in recent times, as seen in the abduction of over 200 students of Girls Secondary School, Chibok, Borno State, about five weeks ago; two major bomb blasts at Nyanya motor park in the suburbs of Abuja, in which 75 lives were lost and several others wounded; and the twin explosions at a market in Jos, Plateau State, last Tuesday, which left about 200 dead.

Many residents of the hotbeds of these terrorist attacks have consequently fled to relatively peaceful places in the region, while others, particularly non-indigenes, have left the region completely for viable states down south.

Fred Akinloye, former chairman, Nigerian Institution of Estate Surveyors and Valuers (NIESV), Kano State chapter, confirmed to BusinessDay that the property market in parts of the north (especially the north-east) was passing through difficult times.

“Unarguably, people are moving down south. The insurgency is really affecting the construction industry negatively, though there are other factors like the upcoming general elections. Property values have gone down considerably because demand is very low,” Akinloye said.

The former NIESV chairman, who spoke in a telephone interview with BusinessDay, explained that the impact of insurgency on property was such that in some prime locations in Kano, prices have come down 30-40 percent to N6 million-N7 million per plot of land, from N10 million per plot.

He added that the upcoming general elections were also part of the reasons for the low property demand and value, explaining that typically when elections are coming on, a lot of properties come into the market from those who want to raise money to execute political campaigns. 

“Many layouts are now in the market, forcing down prices. Before now land in those layouts was selling for N60,000 per square metre, but now you can buy land there for between N50,000 and N55,000 per square metre,” he said.

Akinloye noted that in places like Maiduguri, the Borno State capital, Yobe and Adamawa – the core north-east – nobody was even talking about building and construction, explaining that these were the hotspots of the insurgency.

In the Federal Capital Territory (FCT) Abuja, easily one of Nigeria’s most vibrant housing markets, activities in the property market are also slowing as recent security threats have resulted in loss of investment appetite by savvy real estate investors, a development that analysts say might lead to supply glut.

BusinessDay investigation reveals that since the turn of this year, both foreign and indigenous property investors have become sceptical of investing in the capital city because of the high risk associated with such investments.

Some property vendors operating in the city who spoke to BusinessDay were pessimistic of an imminent rebound in property prices, explaining that the forthcoming election had also contributed its quota to the lull in the market as investors prefer to play the “wait-and-see” game.

“Abuja’s property market can be best described as one that has been sleepy since the turn on the new year,” said a property vendor based in the Maitama area of the city who preferred anonymity, adding that the security threats posed by insurgents on neighbouring states had exposed Abuja’s vulnerability, thereby dampening the interest of property investors and homebuyers who had consequently resolved to seek new addresses down south.

Ralph Osueke, a property vendor with Bridge Plus limited, maintained that since the security challenge in Abuja and its environs attained a worrisome height, property investors had remained sceptical of ploughing huge funds into the market.

“Foreign investors who usually come to the market with as much as N300 million to buy choice properties and consequently lease or rent to willing tenants are now looking elsewhere because of the deteriorating state of security,” Osueke said.

Wole Awojobi of Wole Awojobi & Associates, who operates from the Wuse district of the city, revealed that despite a price-reduction strategy by some developers in a bid to attract buyers, investors had remained adamant and resolved to look towards less-risky destinations such as Lagos, Owerri and Port Harcourt.

“At a particular estate comprising three-bedroom bungalows along Airport Road, a unit that sold for N18 million before now currently sells for N15 million, yet homebuyers are sceptical of buying units in the estate,” Awojobi disclosed, adding that the market also suffered the same fate even at highbrow areas such as Maitama and Asokoro.

Ibrahim Haruna, immediate past president, Nigerian Institute of Architects (NIA), stressed that insurgency in the north was affecting all facets of socio-political and economic activities in that part of the country.

Haruna, who spoke with BusinessDay at the architects forum organised by the Lagos State chapter of NIA recently, observed, however, that in some parts of the north not affected by the insurgency, construction activities were upbeat, stressing that in Kano, for instance, government was building four new cities and work was on-going at the various sites.

BusinessDay checks show that the property market remains the major victim of the insurgency up north and that vacancy rate is as high as 30 percent in Yobe, Adamawa, Borno, Katsina and Kano.

Similarly in Borno, Yobe, Bauchi, Katsina, Kano and Kaduna, there are high vacancy rates in both commercial and residential properties, pointing to the continued frustration of private property developers in those states.

The findings, however, show a surge in public sector investment in commercial housing development by all the state governments, with the commercial city of Kano experiencing the biggest public sector housing development.

According to the checks, while private developers in Kano have put investment and development plans on hold, the state government is upbeat, developing three new housing estates at the moment.

BusinessDay had earlier reported that insecurity has stalled seven hotel projects valued at N15 billion in northern Nigeria, while a few hotels already completed or nearing completion cannot be opened due to low patronage and apprehension resulting from insurgency.

According to the report, losses from the botched projects come to about N15 billion. These include the Magwan Water Hotel in Kano, which would have cost close to N5 billion; the Kaduna Plaza Hotel (about N3 billion), and the Bauchi three-star hotel estimated at N1.5 billion. The remaining four three-star hotels would have cost not less than N2 billion each.

CHUKA UROKO, ODINAKA MBONU & ADEOLA AJAKAIYE