Sixteen months after the removal of the fuel subsidy by the Federal Government, the International Real Estate Federation (FIABCI), Nigeria chapter, says it has impacted negatively on the real estate and construction industry in Nigeria.
The federation, a body of construction and real estate stakeholders, notes that, more than anything else, the fuel subsidy removal has affected property values in more ways than one.
At a day seminar on ‘Urban Infrastructure: Toll Gates and Its Effects on Property Development’ in Lagos recently, William Odudu, former president, Nigerian Institution of Estate Surveyors and Valuers (NIESV), noted that the fuel subsidy removal had directly affected the three major economic inputs of the real estate sector – labour, materials and overheads.
The subsidy removal, he explained, had affected labour, resulting in increment in wages and salaries of artisans, technicians, professional staff and support staff in the construction industry.
“It has also affected building materials; the cost of production and haulage increase not linearly, but geometrically; also, the overhead costs have increased like the cost of land by speculators and vendors,” he said.
Odudu, who spoke in a paper titled ‘The effects of Fuel Subsidy Removal on Property Values,’ noted that the removal of fuel subsidy had led to movement of population to the peripheral areas of the established and growing settlements, citing movements from the Lagos Island to the mainland.
“There have been movements from the established mainland settlements like Surulere, Ikeja and Gbagada to areas like Egbeda, Igando, Mowe, Ibafo, etc. Those in the peripherals have moved further out or into slum settlements,” he said.
According to him, these movements have directly affected land values, property values and rental values, pointing out that the effect on the established settlements and also on the dormitory settlements has resulted in increase in property and rental values, while similar situations arise in other urban centres like Abuja, Port Harcourt, Ibadan, etc.
“In the established settlements, there has been a slowing down of sales; reduced demand and adjustment of prices of land and buildings. In the medium to long term, there is likely to be fall in rental and capital values in the established settlements while for the dormitory settlements, increase in rental and capital values will occur,” he added.
“The effect of partial fuel subsidy has been felt in various parts of the country and more noticeable in the established urban areas like Lagos, Enugu, and Port Harcourt,” he added.
