- Title: NIGERIA: Nigerian property boom luring hardy investors.
- Date: 30th October 2013
- Summary: LAGOS, NIGERIA (RECENT) (REUTERS) VARIOUS OF GATE READING: "THIS LAND IS NOT FOR SALE, BEWARE" VARIOUS OF ONGOING BUILDING CONSTRUCTION VARIOUS OF BILLBOARD SHOWING PICTURES OF HOUSES FOR SALE WITH PRICES EXTERIOR OF HOUSE IN LAGOS PEOPLE WALKING INTO THE HOUSE BANNER READING: FOR SALE, CONTACT BRAINTREE SOLICITORS BARBED WIRE FENCE READING: "DANGER, ELECTRIC FENCE" EXTERIOR OF HOUSE CCTV CAMERA ESTATE AGENT SHOWING A CLIENT AROUND THE HOUSE IPAD HOLDER/CENTRAL MONITOR ESTATE AGENT SHOWING A CLIENT THE KITCHEN FIRE EXTINGUISHER BANNER READING: "LAMUDI, GET YOUR PROPERTIES ONLINE NOW" VARIOUS OF ALLIE MORSE, MANAGING DIRECTOR, LAMUDI, NIGERIA, IN HER OFFICE ANIMATED PHOTOGRAPH OF BUILDING IN LAGOS SHOWING FOR RENT/ FOR SALE SIGNS (SOUNDBITE) (English) ALLIE MORSE, MANAGING DIRECTOR, LAMUDI, NIGERIA, SAYING: "I think that people really understand that property is an incredible opportunity for investment here in Nigeria. Nigeria is an incredible economy that is booming, there are so many opportunities here and I think a lot of people if and when they have the resources, they want to invest in property because they understand that it's an asset that has real..... it can retain its value or retain real value in the market place and they can ultimately live in their properties, you know, no matter what happens, so as an investment, I think it's very important, important tool for a lot of Nigerians and I think that a lot of Nigerians are very excited about the possibilities of home ownership because it has so long been unattainable for the vast majority of the population and now for more and more people, it's becoming a reality." HOUSES UNDER CONSTRUCTION VARIOUS OF DILAPIDATED BUILDING ABUJA, NIGERIA (RECENT) (REUTERS) VARIOUS ABUJA SKYLINE NEW BUILDINGS VARIOUS OF WORLD TRADE CENTER UNDER CONSTRUCTION AND CHURCH GATE TOWER LAGOS, NIGERIA (RECENT) (REUTERS) VARIOUS OF BIDEMI FADAYOMI, VICE-PRESIDENT, REAL ESTATE AT AVANTE PROPERTY, ASSET MANAGEMENT SERVICES GOING THROUGH SOME DOCUMENTS IPAD AND PHONE ON THE DESK (SOUNDBITE) (English) BIDEMI FADAYOMI, VICE-PRESIDENT, REAL ESTATE AT AVANTE PROPERTY, ASSET MANAGEMENT SERVICES, SAYING: "In the commercial sector, our clients are becoming a lot more sophisticated and they are demanding more purpose built commercial buildings so we have seen a move from residential conversions to buildings which are specifically designed for offices. In the residential market, we've seen a huge demand for good quality residential properties." VARIOUS OF ESTATE AGENT SHOWING CLIENT, OMMO CLARK, INFORMATION TECHNOLOGY CONSULTANT, THE POOL AREA (SOUNDBITE) (English) OMMO CLARK, INFORMATION TECHNOLOGY CONSULTANT, SAYING: "In England, I own my own property, I bought it outright not outright obviously, I had a mortgage and getting the mortgage was very simple, easy, hassle free; in Nigeria, it's not the same and in Nigeria, the interest rates are crippling if you can get it, you know so you have to go through the hassles of getting it and then you've got this huge interest to pay in a short time span as opposed to England where you can spread it for 20 years or 25 years." (SOUNDBITE) (English) BIDEMI FADAYOMI, VICE-PRESIDENT, REAL ESTATE AT AVANTE PROPERTY ASSET MANAGEMENT SERVICES, SAYING: "There are rumours of a credit rating system which is likely to be implemented for individuals, also the fact that we have a burgeoning pension fund industry means that banks will soon get access to long term finance which is often one of the problems preventing them from giving out mortgages which are in effect long term loans so there are a number of things which are changing in our market which will soon make it more convenient and financially attractive for banks to actually provide mortgages to people." AERIAL VIEW OF HOUSES IN LAGOS
- Embargoed: 14th November 2013 12:00
- Keywords:
- Location: Nigeria
- Country: Nigeria
- Topics: Economy
- Reuters ID: LVA413ALBTEWK0ITU4CMI6RT4AOH
- Story Text: Nigeria is becoming an increasingly popular investment destination due to the huge potential of a consumer market of more than 160 million people and GDP growth of over 6 percent, far outstripping the stagnant economies in developed countries; a combination that is producing a new wave of property buyers.
On one of the most exclusive streets in Nigeria's pricey commercial city is a crumbling mansion with an unwelcoming message painted at its entrance: "Beware! This house is not for sale".
The warning refers to a popular property scam.
In the most elaborate version, robbers break into your house while you are away, change the locks, then forge multiple copies of fake title deeds.
Posing as estate agents, they show buyers around your house, then sell as many deed copies as possible. When you get back, your house belongs to six people.
Scary as it may seem, with the right local partner, limited debt and a careful choice of project, there are huge returns to be made in a property market where around 16 million homes are needed just to meet the current demand surplus, government says.
Nigeria is becoming an increasingly popular investment destination due to a huge potential consumer market of more than 160 million people and Gross Domestic Product (GDP) growth over 6 percent, far outstripping the stagnant economies in developed countries.
The construction and real estate sectors are growing at more than 10 and 12 percent respectively, a boom for foreign and Nigerian construction firms, including UPDC (UACN Property Development Company PLC), Cappa D'Alberto and Julius Berger.
Allie Morse, managing director, Lamudi, a real estate firm under Rocket Internet, says Nigeria represents the perfect storm for real estate investment owing to its huge population and rapid urbanisation.
Launched five months ago, Lamudi currently has over 200 different sellers on their website and 34 premium partners.
"A lot of people if and when they have the resources, they want to invest in property because they understand that it's an asset that has real..... it can retain its value or retain real value in the market place and they can ultimately live in their properties, you know, no matter what happens so as an investment, I think it's very important, important tool for a lot of Nigerians and I think that a lot of Nigerians are very excited about the possibilities of home ownership," the director, Allie Morse said.
A successful real estate investment in Nigeria can earn an internal rate of return of 30 to 35 percent, while rental income yields in cities like Lagos and Abuja can easily reach 10 percent, developers and estate agents say.
Yet, new quality housing has been slow to materialise because of a lack of building expertise and financing.
Some housing estates have been left unfinished after projects ran out of capital, while many are poorly constructed.
But several well-financed new developments are rising.
In Abuja, privately-owned Churchgate Group is building its ambitious 1 billion US dollars World Trade Centre, a series of skyscrapers, housing offices, flats and upscale shops.
But, outside of the two richest cities, a lack of information about land and regulation is off-putting, while a violent Islamist insurgency has made the north of Nigeria unattractive, despite huge unmet demand in cities like Kano.
The best opportunities remain in Lagos and Abuja, where purchasing land is less risky and more middle-income workers with disposable incomes want to live.
Property in Lagos, a heaving metropolis of around 20 million people, can be among the most expensive in the world with two-bedroom flats costing more than 1 million US dollars in upmarket areas.
The most popular units are those selling for 25 to 35 million naira (152,900 to 214,100 US dollars), developers and estate agents say.
Bidemi Fadayomi, vice president, real estate at Nigeria-based Avante Property Asset Management, who manages several multi-million dollar residential projects in Lagos says she sees demand from the middle class higher than ever before.
"In the commercial sector, our clients are becoming a lot more sophisticated and they are demanding more purpose built commercial buildings so we have seen a move from residential conversions to building which are specifically designed for offices. In the residential market, we've seen a huge demand for good quality residential properties," Bidemi said.
Despite this demand, investors are taking on high risks.
Developers and buyers both struggle to get financing inside Nigeria where lending rates are typically around 25 percent.
The only way to unlock all the latent demand is to make borrowing affordable but the mortgage market is almost non-existent.
Nigerian banks do not like giving out mortgages because reliable information about buyers and land is scarce, while there is no secondary market to offset the risks.
"In England, I own my own property, I bought it outright not outright obviously, I had a mortgage and getting the mortgage was very simple, easy, hassle free; in Nigeria, it's not the same and in Nigeria, the interest rates are crippling if you can get it, you know so you have to go through the hassles of getting it and then you've got this huge interest to pay in a short time span as opposed to England where you can spread it for 20 years or 25 years," said Ommo Clark, a 38-year-old information technology consultant who is surveying a five-bedroom apartment going for around 120 million naira in Lagos's popular Lekki district.
The government says it is trying to fix this.
"There are rumours of a credit rating system which is likely to be implemented for individuals, also the fact that we have a burgeoning pension fund industry means that banks will soon get access to long term finance which is often one of the problems preventing them from giving out mortgages which are in effect long term loans so there are a number of things which are changing in our market which will soon make it more convenient and financially attractive for banks to actually provide mortgages to people," Bidemi added.
Developers are also battling with costs, which they say are three times higher than in South Africa, because of woeful state infrastructure and high import costs due to rampant corruption.
London-based estate agent Jones Lang LaSalle ranks Nigeria 96th out of 97 on its transparency index, just in front of Sudan but behind six other African countries. - Copyright Holder: REUTERS
- Copyright Notice: (c) Copyright Thomson Reuters 2013. Open For Restrictions - http://about.reuters.com/fulllegal.asp
- Usage Terms/Restrictions: None
