Nigeria's leading finance and market intelligence news report.

Nigeria’s potemkin virus


In 2016, during a brand activation in Ekwulobia, Anambra State, I took a trip to the nearby town of Nanka to visit my friend from university who was in the country to bury his father. I had heard a few stories about an Igbo obsession with building “at home”, but this was the first time I got to see it first-hand. Nanka was not what I expected at all. Instead of your typical rustic Nigerian village with naked kids running around and a chorus of chicken and goat sounds, it looked like a fairly modern town.

Most of the houses were storey buildings with satellite dishes hanging out and a surprising amount of Mercedes Benz and BMW vehicles littered everywhere. At the centre of Nanka was a palatial Catholic church and an impressive-looking Catholic school. There was just one problem – there didn’t seem to be any young people. Everyone seemed to either be a student attending the school or a retiree. Those around my age like my friend, were only visiting, and we all left together. Having buried his father, my friend went back to Manchester and returned to Nanka two years later for his traditional wedding.

Being a born and bred Lagosian, the similarity of our situations did not strike me until a few weeks ago while I was driving through Ogudu GRA, the neighbourhood I grew up in. Like so many other oil boom-era developments in Lagos, it is filled with symbols of the heady 70s and 80s when people first moved in. Most houses in the area are like my family house – an 8-bedroom monstrosity built across two and a half plots complete with a 35kva generator, a 1000 litre diesel tank, three-step water filtration system, and four underground and overhead tanks to service the 5 children and two parents who once lived there in our very own semi-independent Republic of Hundeyin.

These days, the 5 kids are spread out across three continents, and the story is the same with most of our neighbours. Ogudu GRA is now populated almost exclusively by retirees and workers coming in to several converted business premises. The demographic of mid-30s to late-40s professionals I grew up seeing everyday has all but vanished. If you like, you can still make an inquiry about renting a flat there, but the N1.5 million average annual rent would probably discourage you.

Where are all the young people?

The term ‘Demographic Death’ typically conjures up images of Japan and its problem of low birth rates and an ageing workforce. Nigeria, a country where fully 75% of the country is under 40 years of age seems like an odd place to talk about such a thing. Yet the reality is that when we talk about Nigeria’s real estate market or its property ladder, young middle class professionals are conspicuously absent.

Of course there are a few exceptions, such as those working with oil majors but by and large, the wage-driven gentrification of places like San Francisco’s Bay Area and Lewisham in London by young professionals is not taking place anywhere in Nigeria. Young people simply have no economic presence in Nigeria, which means Nigeria’s middle class is not expanding in line with Nigeria’s population. According to the laws of economics we were taught in school, low demand alongside steady or increasing supply should lead to lower pricing.

Nigeria obviously operates by a different set of economic rules. Real estate prices continue to trend artificially upward, driven by nothing but speculation and simple hope. In a country where fully 100 million people live in absolute poverty, with 6 people falling into poverty every minute, real estate values continue to go up with no supporting economic rationale to account for this whatsoever.

N180,000 a month net of taxes is considered a well above-average monthly wage in Lagos, but the majority of rental listings anywhere outside of an absolute slum simply do not reflect this reality. Developers keep marketing sleek N2m rentals and furiously tearing down old buildings to put up these overpriced ‘luxury’ developments, but the jobs to support this gentrification simply do not exist.

Nigeria: A real life potemkin village

Nigeria’s real estate market is a microcosm of the country as a whole. It is one big potemkin village – a construction whose entire purpose is to present a situation as better than it actually is.We are obsessed with building and acquiring property without really having a plan or strategy, both on a micro scale and on a macro scale. On a micro level, whether it was my friend’s dad in Nanka or my aunty in Badagry, the message to us is the same – build, build, build! Why? For whom? At what cost? Who cares? Just build!

On a macro level, developers and governments ignore vast areas of existing inland and waterfront real estate, choosing instead to repeatedly execute the technological marvel of reclaiming land from water bodies for no discernible reason whatsoever.Eko Atlantic this year, Orange Island the next, Third Mainland Courts the year after. Why do we do it? Because… land! A feko’le! It doesn’t have to make sense, just build! Build! Build!

Overpriced, ‘luxury’ developments keep sprouting everywhere from Abonema to Yaba, only to stand empty, apparently waiting for a time when general prosperity will make them a real option. In the meantime, since I am determined not to cough out the best part of a million naira at once for a decent flat on Lagos Mainland, I am stuck house-hunting.

The few services offering monthly rental facilities turn up their nose at my N70,000 monthly budget because they are only available on the Island, you know? If I am interested in the Island, that will be just N230,000 per month, because you know, that is totally how real-life middle class Nigerians in 2019 spend money that they actually work for. Despite my relatively privileged status, Nigeria’s real estate market apparently has nothing for me, which then begs the question: who exactly is it for?

Late-stage bubble economics

In 2017, I had the opportunity to listen to some sobering insights from a former banker with access to some interesting CBN data. According to him, after taking into account the number of bank accounts receiving a cash inflow of up to N200,000 a month and some other parameters, it is safe to say that Nigeria has an addressable market of only about 5 million people for the purpose of buying anything other than necessities.

Of this number, if you generously estimate that 10% have any hope of getting on property ladder, that means that Nigeria’s big real estate bet is that 500,000 people will continue to fuel its unsupported price explosion while poverty, brain drain and capital flight also accelerate, reducing the middle class to a mere memory.

In layman’s terms, Nigeria is chasing a completely nonsensical outcome. The cold, harsh reality is that the cash-rich, luxury mansion-constructing baby boomer generation of our parents which enjoyed the oil boom is dead or dying. Their descendants are moving abroad because Nigeria’s economy is simply not creating the jobs to support them. There are only so many oil workers, politicians and well paid bankers. This group of people that cannot number up to 100,000 is not big enough.

Without young professionals with significant disposable income, there is no middle class. Without a middle class, nobody can sell overpriced cement, or sell refined petrol, or rent out overpriced real estate or get on the housing ladder. Without young, well-heeled people, Nigeria has no economy because you cannot have an economy made up of superrich retirees and destitute youths. A comfortable middle class is a basic necessity for any successful economy – this point cannot be emphasized enough.

What is more, unlike my friend mentioned at the outset, a growing number of young Nigerian émigrés have no desire to return or invest back home. Disillusioned by their experience of Nigeria, these young professionals do not identify as Nigerian emigrants, but as citizens of the world whose entire interaction with Nigeria is limited to occasionally retweeting a jollof rice joke or putting up a flag on their social media pages every October 1. Diaspora remittances are not going to save this market.

Only a large and permanently settled middle class can solve this problem. In the absence of any real effort to grow its middle class, Nigeria is trying to copy the wage-driven gentrification of western real estate markets – without any of the well-paying jobs and accompanying ecosystem to support such growth. This quite frankly, is utterly ludicrous.

None of this is real

I posted a thread that went viral on Twitter last week, where I talked about meeting my fellow high school alumni and realizing that many of us are selling up our parents’ ‘luxury’ property portfolios and moving abroad. Typically, a large number of replies carefully missed the point of the thread and instead took the opportunity to joyously revel in the alleged wealth transfer from spoiled Atlantic Hall rich kids to “mainland/Aba hustlers.” Nothing goes down well like a good class war in Nigeria, after all.

What I didn’t mention in my thread was that it is not just privileged people who are leaving. Every organization, from PwC to the federal civil service to the local pharmacy on your street, is also hemorrhaging talent. Unlike yours truly, the majority of these people did not go to Atlantic Hall or Grange, but we have all converged in similar spaces, and here’s a newsflash – we are all leaving together because they want a better life too. They are not somehow more ‘loyal’ to Nigeria than us ‘spoiled, stuck-up rich kids’. Nobody wants to suffer needlessly, whether they grew up in Ogudu GRA or in Ojota.

There is no “non-Atlantic Hall gene” that makes anyone more tolerant of suffering than others. The so-called “Mainland/Aba hustlers” are in fact also checking out of Nigeria, and those gleefully buying up real estate in the hope that it will be a winning investment may well be making a catastrophic miscalculation on a scale hitherto unseen in Nigeria’s market. At the current rate of middle class decimation, the entire demographic of Nigerians who give this country’s real estate market any value may well be non-existent within 15 years.

When that time comes, anyone who understands the term “real estate bubble” will tell you that those selling up now are actually the smart ones.


David Hundeyin


1 Comment
  1. Eniola says

    Did you seriously just say “hitherto unseen”…? Lol!

Leave A Reply

Your email address will not be published.