Is 2021 the best year for real estate in Nigeria
Property investment is a growth investment which means it’s suitable for long term investment and has a tendency to appreciate over time. Be it virgin lands, apartments detached or semi detached houses, the value of real estate appreciates over time more than it doesn’t .
Nigeria has seen great growth in real estate in the last decade. Advancement across different industries has led to a subsequent increase in the demand for office spaces and residential buildings. Early developed areas in Lagos like, Yaba and some parts of Lekki has seen mass demolition of old buildings giving room for newer and more modern buildings with comfort and privacy as the leading justifications and a need to maximize the land space and gain more groom the booming real estate.
The January 2015 report by CPO capital. Showed the value of real estate in Nigeria to be worth $39bn (6.4 trnNaira) and estimated it at a growth of 10% yearly. This would mean a property bought at 10mn Naira in 2010 would be valued at a staggering 26mil Naira in 2020.
However, 2020 came with it’s peculiarities and this affected the Nigerian real estate market. Access to funding which came majorly from the government and few interested investors took a hit. Less availability of funds led to a less than expected number of new buildings springing up.
Currently, one of the biggest challenges the sector has faced in recent times is access to funding. With a growing middle-class population, rapid urbanization, and young demographics compared to stronger economies, Nigeria possesses all the key factors for real estate investment. Despite all of this, financing has remained a problem for property developers and prospective homeowners.
A however subsequent increase in the price of real estate resulted. A skyrocket of value on available properties due to the scarcity was noticed. So, the previous property investment of 10mil naira in 2010 would have been valued at a whooping 30-35mil naira today.
What does this mean for investors in 2021?
The real estate boom is not going to drop anytime soon. It’s yet to reach a peak and would continue this home run for the next decade. Industrialization would keep growing and would keep the real estate prices rising. Individuals wanting to own places and more families springing up would require more housing.
There is a high demand and not so high supply of housing, office spaces and business spaces in Lagos. Markets like Trade Fair commerce centre, Ojo. Lagos has been on a building rampage to accommodate the wide increase in the need for business shops and warehouse spaces and even this is barely enough.
An investor going into real estate, either as a seed investor or property owner stands to make a lot of profit as the buildings would sell out or rent out almost immediately, and proceed to start another would be great.
So if you’re wondering if investing in real estate 2021 would be a good idea, the answer is yes and if you’re looking for areas to invest, a suburb or largely middle-income earners is best. As well as close to a new factory, or industry or office spaces or even buying a couple of shops in the nearest market.
Despite the job losses and salary cuts caused by Covid-19 pandemic which prevented many home seekers from renting better apartments or purchasing new homes in 2020, experts are optimistic that 2021 will be a good year for the real estate sector in Nigeria
The Nigerian real estate market in the last few years has rapidly expanded and is recording exponential growth, Prices of landed properties in Places like Ibeju-Lekki, Ota and Asaba are moving high at an alarming rate.
Presently Real estate investment in Lagos Nigeria is far more profitable than elsewhere in the country because Lagos is a bustling commercial city. And it has emerged as one of the most profitable investment destinations in Nigeria. In addition, there is little or no government regulation in terms of pricing and property values. Market research shows that Lagos State has the highest property values and the most vibrant real estate market in Nigeria. Some Locations are catching up so fast with Lagos. Uyo has been attracting investors of recent due to the Governors development goals.
Rising property and rental prices are a reflection of the huge supply-demand gap of affordable housing in Lagos. There are more renters than owners in Lagos property market due to the high cost of home ownership coupled with a very underdeveloped mortgage market. The mortgage market is very small and unaffordable with rates ranging from 16 – 30% and tenors between 1 – 15years. Study shows that over 75% of property seekers are looking for rental accommodation.