Despite the impact of inflation on all sectors including real estate, there are still some areas that offer opportunities investors can tap and get good return on their investment.
With inflation pushing the cost of common goods and services higher, households are prioritising their needs by cutting down their expenditure on non-basic needs. Properties have been affected by the increase in the prices of building materials, cost overrun on construction, and delays in project delivery.
Despite all these and given that fixed income securities are gaining traction as an investment asset class due to higher yields, real estate is still well considered for investment and there are some areas that investors can invest in, not only to hedge their money against inflation, but also to get good returns.
Top among those areas is land-banking, which involves buying land in large tranches and keeping them in anticipation of value appreciation that will attract higher prices than the cost price.
Oluwole Abegunde, group managing director at Meristem Securities Limited, explained at a business forum in Lagos recently that investment in land-banking was better done in areas where developments were taking place and not necessarily the city centres which are already built up.
He mentioned such areas in Lagos as Ibeju Lekki, Epe, and Badagry which are green areas with new developments coming up, especially Ibeju Lekki where the Dangote Refinery, Lekki Deep Seaport, airport and others are coming up with strong demand for real estate assets.
Nigeria has a housing deficit that is over 20 million units which is a need that has to be met. For that reason, demand for residential real estate is high. But for a combination of reasons including affordability and need, demand for smaller residential units devoid of extra rooms is now higher.
For that reason, Fawole Olusanjo, an associate partner at Ubosi Eleh + Co, advised that those who want to invest in this segment of the real estate market should take interest in smaller units such as one-bedroom and two-bedroom apartments.
According to him, many investors are already taking position in this market, and demand is higher for build-to-let or buy-to-let properties than building for sale, which may take longer time to dispose of, depending however on location and pricing.
For those who want to buy homes to live in or as a form of investment, some real estate firms such as RevolutionPlus, Adron Homes, Merit Abode, Richfield Limited, and Greenville Estate are offering home buyers the opportunity to own homes and also to live in exclusive estate layouts.
RevolutionPlus, for instance, has developed Royal Haven Garden, Ofada, along Lagos/Ibadan expressway, close to Sagamu interchange, saying the estate is designed to offer an affordable living experience in a friendly neighbourhood with good road network and other great benefits.
With N8.5 million which can be paid by instalment, interested home buyers can own a 2-bedroom bungalow which is already completed, while a 3-bedroom bungalow, also completed, goes for N10 million.
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Similarly, Richfield Property is out to address the housing deficit in Ogun State. It pays savvy investors interest for being partners. The company is the developer of Richfield Residences, a premium residential development that is only 20 minutes from the old Lagos Toll Gate.
The estate consists of 20 units of fully detached 3-bedroom bungalows and 10 units of 2-bedroom terraces all located on Abeokuta/Lagos Expressway, opposite Midland Galvanising Company, Ile-Ise. With N4.8 million, buyers can own a plot of land in the estate with a minimum of N1 million deposit.