Arguably, the Nigerian economy is at crossroads. Virtually all macroeconomic indicators are in the red. According to the National Bureau of Statistic (NBS), the government owned, and one of the country’s leading data generating organizations, the Nigerian inflation rate is currently put at 17.33 percent.
One United States Dollar is being officially exchanged for N412.00 in the foreign exchange market. As at today, the current price of 50Kg bag of cement is N4, 000 at a retail price given to consumers of the product who are majorly real estate players developers.
With the disturbing economic scenario in Nigeria at the moment, businesses in all sectors of the ailing economy, including the property market, have suffered significant setback.
In Nigeria today, one of the major factors affecting the real estate market is the rising cost of maintaining the existing properties with little or no attention being paid to maintenance of properties by some players in the industry, especially private practice professionals who are saddled with the responsibility of managing properties on behalf of their clients.
Most of these properties are in sorry states due to a number of factors occasioned by the Nigerian struggling economy. The disposable income of most property consumers is on the decline which affects their economic ability to pay or renew their rent as at when due and this has a direct effect on the bottom line of the property managers to carry regular maintenance on the properties which ought to be the normal practice.
Taxes being levied on properties are on the rise in most states of the federation. With a very lean and irregular federal revenue allocation, state governments across the country are now adopting unfriendly taxation strategies as a method of improving their Internally Generated Revenue (IGR).
In their new strategies, the property market is one of the worst hit as most properties are heavily and doubly taxed. And with this new development, the property managers will be left with a very lean income or budget for properties that are generating the monies for their owners and the government.
High charges by estate developers on property owners in the estates are part of the rising cost of maintaining a property in Nigeria today. Some developers demand so much on service charge, estate maintenance, and other fees that the landlords are left with very lean resources to keep the properties in good shape and maintain its market value over time. In most estates in Lagos today, properties have over time lost the value of the rent being paid by tenants.
Most mortgage lenders require the property owners to have insurance on the property. This is one factor which has, over the years, hindered their access to capital for development and maintenance of properties. Most mortgage institutions and money lending banks hardly transact big ticket business with property clients who have no insurance cover on their properties.
In a bid to regulate and sustain stable cost of property maintenance in Nigeria, the government has a very big role to play. The current spate of insecurity in the country should be addressed at the earliest possible time to give room for a congenial operating business environment.
The overall macroeconomic policies should be overhauled in line with the current reality of things. Even in a highly deregulated market, prices of building materials like cement should be regulated by the government.
Gaya NasiruMaje, an estate surveyor and valuer, writes from Abuja
Join BusinessDay whatsapp Channel, to stay up to date
Open In Whatsapp
