Nigeria Real Estate Outlook 2016-17

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Nigeria Real Estate Outlook 2016-17

August 23, 2016

 Nigeria has one of the fastest growing economies in Africa. It has a population growth of 2% every year, with the population in the cities growing at 4% each year. Nigeria also has a flourishing real estate sector, which has been estimated by PricewaterhouseCoopers (PwC) to be worth $13.65 billion.

However, there are many issues that affect the real estate sector in Nigeria, which prevent it from achieving its true potential. In this article we look at some of these issues and discuss the latest trends in the Nigerian property market. If you’re looking to buy cheap land in Nigeria fast, you may find this interesting.

#1: Bureaucratic inefficiency affects the real estate industry in Nigeria more than anything else. It takes ages to get your land registered in Nigeria. Indeed, the registration process can take anything from 6 months to 2 years and a file has to go through 12 layers of bureaucracy for the process to be completed. This can cost up to 20% of the value of the property.

One doesn’t know what the Nigerian government has been doing to curb such lethargy and inefficiency. It does claim to be doing something about, but the results are yet to be seen.

 The new Second Lagos State Development Plan (LSDP) is expected to speed up the process of land registration and narrow down the inefficiencies.

 #2: Another big issue in Nigeria is that building a house here can be very expensive. A 4-bedroom house costs $50,000 to build in Nigeria, while it costs just $36,000 in South Africa, which is a richer country and around $30,000 in India.

 There are three reasons why the cost of construction in Nigeria is so high – the high labour costs, despite Nigeria being a third world country; the poor quality of the infrastructure – such as the roads and transport, which makes it so difficult to bring the materials for the home construction and finally, the high cost of building materials.

 Also, 75% of the homes in Nigeria are made from concrete. Since the country does not produce enough cement of its own, the cost of cement here is much higher than that in other countries in Africa. The cost of cement generally contributes to 30% of the cost of the construction.

 #3: The greatest roadblock to the growth of the property market in Nigeria is bribery and corruption. The renowned real estate agency JLL placed Nigeria at the bottom of its international transparency index for real estate deals. Nigeria has a serious problem with corruption and this has a direct bearing on the nation’s real estate sector.

#4: Another major problem home buyers have in Nigeria is, having to deal with the arbitrary taxes. There are a number of different taxes in Nigeria, such as income tax, property tax, development cess, building plan cess, land use tax, renovation tax and much more. This can be a problem and makes one hesitant about investing in properties for sale in Nigeria.

 In spite of the roadblocks discussed above, Nigeria has much to cheer about – a fast growing middle class with higher disposal incomes, a growing economy and a real desire for change. Also, there is political stability in the country after many decades of civil war and strife. This is certainly a development in the positive direction.