In the last few years the world property market has grown significantly and also at the same time crashed significantly. Nigeria has been able to side step this problem, mainly because we do not rely heavily on mortgages or bank finances. What is clear though is that there is need for immediate and increased growth in property construction in Nigeria to support the rapid increase in our population. We constantly hear in the media that thousands of homes are being built in some remote areas to meet the housing needs, but go to those areas years later and you may only find bush that has been partially cleared.
It appears that billions of naira is promised frequently by government agencies together with private developers and banks, but the projects that they are meant for are either not completed fully or not at all, leaving investors counting their losses. In some countries like Dubai, the US and the UK, the last eight years was extremely uncertain in their property market which witnessed property investors losing huge amounts of money and property prices crashing spectacularly. What is welcoming to note is that in the last few months property prices in these countries have started rising again and will continue this rise for the foreseeable future, which makes it the perfect time for investors to snap up bargains before prices become unaffordable again. Dubai in particular, a country has witnessed the most spectacular construction boom in the 90s up to 2008, between 2008 – 2013 when the world financial market crashed, they had to put their construction works on hold and many investors panicked when their investments were not delivered, many companies went bankrupt. They have now started construction again and are selling some of their luxury properties for much less than it had been previously offered for although this is only temporary to garner renewed interest in their property market. These countries have been able to recover from their property crashes because their governments put in place processes and procedures that went some way towards protecting investors. If an Agreement was signed prior to the property crash, this same agreement held after the recovery. Some of Dubai’s biggest investors are Nigerians who are now snapping up some of the best prime real estate there and in other areas around the world. It is not uncommon to find a Nigerian owning several units in a block of flats or several homes on a street in these countries
In our own country Nigeria, property prices have been rising steadily over the years, especially in Lagos and Abuja, but may now be heading for a stage where prices will slow down significantly due to growing competition from private developers, we need stricter regulations to protect buyers. We are a nation of wannabe home owners and would rather buy than rent, this need for buying however is not sustainable as even the lowest cost of good properties and building materials is now spiraling out of the reach of the average Nigerian. The cost of building individual homes on its own plot in good areas is so expensive that buyers now prefer to buy on estates where the acquisition of the land has more than likely been sorted out by the developer already. A major problem with land acquisition continues to be the title papers and demands by land owners. Apartment costs in some high brow areas in Lagos like Ikoyi or Banana Island, can now command at least N170m or as is now the case and priced for foreign investment, over $1million which is certainly out of the reach of 99% of Nigerians. Even a modest N30m home in Ajah is unaffordable for most. The cost of these properties would buy prime real estate abroad which would yield better returns for any investor, something that may be worth thinking about for those who can invest abroad. We need to learn from the mistakes of our big brothers and ensure that they are not repeated here in order to develop a healthy property market.
Caroline A. Akinlotan