Does real estate affect the Nigerian economy? Of course it does!
There may be a looming recession by the corner and spells a certain doom for real estate if certain steps are taken.
But first, I need you to understand how real estate drives our economy.
In foreign countries like the U.S.A, real estate is a primary economic driver. From the transactions of buying and selling homes, to all related activities. Think of it as a network, individually intra-connected. Put in mind, a picture of your resident community, all your neighbors, every houses you pass everyday while going to work. Each one represents an investment by someone putting in hard work to own or rent.
Remember, a time where Lekki was a place nobody knew, if you had owned or bought a few plots then, you can imagine how much it cost now. If you had built on it a standard property for lease, there is no telling how much you could be accumulating right now.
An example – would be having to buy a plot back then for a least 250,000 naira. Selling those plots now will cost nothing less than a million (1,000,000) at the very least. Which is more than 200% of what you spent purchasing it. Buying vacant lands ahead of time is like putting your money into a savings account. With time and approaching development, its value appreciates.
Now, the seller who sold that land will either spend some of the profit on buying various things within the country thus increases value in the national economy.
Home usually requires a lot of maintenance including the fact that expenses will also increase as the number of resident’s increase. And that’s an extended cycle of economic activity. There will be a need to burglary proofs, replace mosquito nets, repaint the walls, change doors… the list goes on and on.
This causes those people to use either public transport or private cars for transportation, this means “fuel” which drives the national economy will be bought from gas stations.
Keep in mind that these handymen have homes too, so the cycle keeps going, and keeps growing. You get idea, yea?
Infrastructure is another important driver of economic activity. Just like the handymen, construction workers, contractors will have to drive trucks to the timber shed, pick up bricks, stone from the quarry, all this requires fuel and further spending and in all likelihood boost economic growth.
Put in perspective, if the prices of real estate housing falls, there will be a good number of shortages of activities. Homeowners, landowners will hold all properties, and not sell until things return to normal.
By chance, should you buy at a good price with all things true, then thank the stars.
Equally, landlords will not be paid due rents. Threats will fill the air, notices will be served but nothing will amount.
When people don’t spend money on real estate, it is enough to cause a recession. Fortunately, the Nigerian economy is dependent on Crude oil sales. So we are not going to experience this, unlike the United States of America.
I might add that beginners looking to invest in real estate might take the opportunity to make cheap purchases of land in deep local areas where development hasn’t began.
Tenants will be having a good face off with landlords this period, especially if your rent is due by April ending. Both parties should know their rights before engaging f
When people don’t have money to spend on housing, we are most likely going to suffer a major loss in terms of home equity and economic activity. Think of it as – No Real Estate?
- No jobs for timber factories.
- No infrastructural construction.
- No jobs for handymen (people will be learn to fix things themselves. Which is risky)
- Reduced fuel purchase. (Big construction trucks will not be seen anywhere)
Real estate is vital to our economic growth. It could lead us out of recession if the government chooses to invest heavily in that sector.
Hope this helps.
Feel free to comment below anything you might want to add.