Costs of housing surges as prices of dollar denominated building materials spikes

Costs of housing in Africa’s populous nation has continued to surge as the prices of dollar denominated building materials spikes and accelerating inflation, investors in the country’s real estate sector have said.

They noted that FX volatility and high cost of cement is increasing their delivery timeline and building costs.

Speaking at the maiden launch of the newly built Cello luxury apartment 1 in Lekki, Lagos, Gbemisola Ojerinde, managing director, Leadroitt Realty Limited, said an investor in the sector had to resorted to advance purchase of materials to cushion inflationary pressure.

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“We face the challenge of inflation; It is so bad, you know the price of cement at the time we started this project was N3,000 and today cement is selling for N8,300,” Ojerinde said.

“The price of a lot of other items that are quoted in dollars are so very high and remain a major challenge facing the industry. You will see that the cost of housing is going higher.”

“At the beginning of this project we secured a lot of materials in advance. We did a lot of forward contracts even for the lifts, generators and for everything. We bought a lot of things in advance even though we are affected by inflation, the pressure was not much on the firm.”

Speaking on the newly launched project, Ojerinde said her organisation prioritises precision and quality in its projects, noting that it remains the hallmark of the company. She added that the Cell 1 – a condo development of units of two- and three-bedrooms flats is a smart apartment beautifully finished with attention to details.

Damilola Adeniran, senior Investment Adviser, Leadroitt Realty Limited, said spike in prices of building materials has significantly increased cost of completing projects within stipulated timeline.

“The price of building an apartment in the country has increased significantly compared to three to five years ago. FX instability for materials denominated in dollars are affecting the industry.”

“Going back to customers to tell them what they initially paid cannot finish their apartment was always a challenge but a good number of them understood the economy and the reality of things,” Adeniran stated.

However, Ojerinde, underscored the need for industry to adhere to strict compliance with regulatory requirements by ultising quality materials despite the challenges facing the industry.

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She urged fellow realtors in the industry not to cut corners with quality of materials and regulatory requirements.

“For our footprint in the industry, we believe that approval before any stage is critical and there has to be regularities in the buildings.”

“What we do as a company is to make sure we get our approval before we proceed to the next stage. What it does is that it helps the credibility of the company and the potential of the building.”

“Take the right steps, go to the appropriate body, sign the right documents. Get the right products and approval for your building and it won’t collapse.”

“When you are going five floors above the ground, what it means is you have to tick your boxes. The quality of your building materials, you can’t jeopardize it,” she warns.