Despite the fact that the Nigerian property market has been the subject of multiple scams in years gone by, and indeed there are still scams occurring today, if you take away the headlines and look underneath the surface, could Nigeria be a boom property market of the future?
While there is no doubt that you need to be careful when investing in Nigeria, you need to do your homework and you need to avoid all of the scams which occur on a regular basis, the basic facts are very encouraging for property developers. We will now take a look at the prospects for the Nigerian property market and why some experts believe it could be one to look at in the future.
Shortage of homes
It would be foolish to suggest that building new properties in Nigeria will be a smooth affair, does not have its risks and could be subject to corruption and scams, but did you know there are 16 million additional homes required today just to meet current demand?
Quote from PropertyForum.com : “While the historic link between Canada and the USA continues to see billions of dollars invested in US property by Canadian investors, there is no doubt that China is now playing a pivotal role in the US property market.”
There really is an enormous shortage of homes across Nigeria and while in many ways the Nigerian authorities only have themselves to blame, it could be a potentially lucrative market for the future. Experts have highlighted the fact that the population continues to grow, there is already a massive shortage of properties which will only get worse, re-urbanisation programs are now commonplace and, and this is perhaps the key to the door, there is a growing middle class in the country.
Image is everything
Since the Internet became part of our everyday lives there is no doubt that scams, many of which emerge from Nigeria, have been commonplace and have impacted upon the image of the country. There are potentially thousands upon thousands of investors who have looked at Nigeria and automatically been put off by the image of the country, rightly or wrongly, before even looking towards investment and the prospects for the future.
Official figures suggest that the middle class in Nigeria continues to grow and already equates to 23% of the overall population. Due to the relatively cheap cost of living in Nigeria those considered to be “middle-class” earn between $490 and $610 per month. When you bear in mind this kind of income is considered middle-class we can only assume how potentially low the cost of building homes will be compared to developed countries such as the UK, US, etc.
Regulation and structure
At this moment in time regulations and government structure seem to differ from town to town, from city to city and village to village. There is no one set structure for the Nigerian property sector and many areas of the country are deemed “dangerous” because of insurgents. If we focus upon the major business areas of Nigeria, the ongoing influx of overseas investors and international companies expanding their worldwide exposure there is certainly potential.
It seems almost inevitable that at some point the Nigerian authorities will be forced to act in relation to regulation and structure to bring in much-needed overseas investment. Whether or not now is the time to look towards Nigeria, when you consider the risk/reward ratio, is debatable but in the longer term this could be an interesting opportunity to keep your eye on.