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Is Property Investment In Nigeria Worthwhile?

Having Invested in Properties in UK, US and Europe, I am been advised to invest in property in Nigeria but am unable to see the investment attraction of the Nigerian property market due to the Following reasons,

1. Capital Intensive---U require a lot of capital or else u have to get mortgage @ a high interest rate and requires 30% deposit unlike overseas where u can get lower interest rate and 15% deposit.

2.Purchase Cost vs Rental Income:- Some properties advertised for N7million will rent for between N250k- N350k hence that is less than 5% yield,  Other Investment vehicles such as shares, bonds, mutual funds; fixed deposits  in the same country will give better yield per annum.

3. Ownership issues-- Omo oniles; fake documents; govt acquisitions

4. Non Payment of Rents by tenants- which is relatively high risk in Nigeria

Although there is argument for price appreciation,  with the economy tightening worldwide; oil price decline  am i wrong in thinking that the boom may be over,

Floor is open for all contributors, lets hear what u think

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29 answers

@ no other

Commercial real estate as with other types of real estate in Nigeria is very profitable if you do your due diligence and buy from a credible source. Currently it's at a high, with the rapid increase in the number of estates (residential and commercial) in emerging communities, especially in Lagos and Ogun State. A number of states have begun wooing ivestors wit easy land acquisition in order to encourage commercial development.Also, in recent times, Nigeria has seen the influx of foreign companies looking to take advantage of the peculiar nature of our real estate, void of the amount of taxes and regulations they face in their home country. Investment property in Nigeria is in constant demand and you can never go wrong investing as long as you do your homework properly.

www.businessdayonline.com/NG/index.php/news/111-politics/35021-ogun-woos-investors-with-easy-land-acquisition

www.hapiproperties.com/component/content/article/1-latest-news/56-actis-foresees-bright-future-for-nigerian-retail-real-estate

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Very resourceful information. I'll keep these in mind.

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Note: The following info is based on my personal experience. I have lived in two countries in Europe and currently based in the US.

Property investment in the US/UK/ EU can be very profitable if you have millions of Euro/ Dollars/ Pounds in cash to finance the projects.

If you are going to depend on mortgages then prepare to take a very serious financial hit. This is because cash payments eliminate bank requiements like deposits, life insurance, and property/ home insurance, and high interest payment on the house. Note the life and property insurance is only applicable to UK/EU. Not currently an issue in the US.

For example, if you buy a house @ $300,000 / 250,000 Euro/ 220,000 Pounds, with cash payment, you will only need to pay the taxes on the profit you make.

But if you buy with mortgage, and say with 10% deposit, you will need to also pay home and life insurance, including taxes.

Your monthly mortgage payment + insurance + interest rate payment + property taxes + normal profit taxes = very little or no profit with the current climate.

The banks in UK/ US/ EU may not finance the homes because you live outside their areas of operations and the issues of credit history and their ability to verify your income.

On the other hand, property investment in Nigeria is more profitable due to: lack of insurance and property taxes. Your profit margin is better, and you can invest with lesser amount because the cost of building or buying is cheaper.

Cost and profit analysis for a 5 or 10- year period by comparing UK/ EU/ US with Nigeria and taking all of the above issues into consideration will demonstrate that you are better off in investing in Nigeria. The above contribute largely to the reasons why Nigerians in the diaspora prefer to invest at home (Nigeria).

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How profitable is owning a property in the UK/US/EU compared to Nigeria? Is it possible for a non-citizen of those countries to own property there?

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Investments could take different forms; but the most appreciable investment is the REAL ESTATE [/b]or what is generally refer to as [b]PROPERTIES. [/b]Buildings like any other products need to be maintained periodic to sustain its service life otherwise the rate of deterioration would be fast; resulting in Low Return on Investment.

Building or Concrete Structures are all susceptible to both internal and External Stress when exposed to External Factors e.g Corrosive Ground Water table, Atmospheric Moisture, Wind and heat. These result to corrosion of reinforcement bars, efflorescence, rising dampness, leakage, Cracks, Paint Blisters, Water Patches on Painted areas etc, which deteriorates the service life of the structure.It is also Worth Mentioning that Because the Building Structure is a Heterogeneous Product, it shows signs of[b] DISTRESS over time if adequate attentions are not paid on specific details during the construction process.

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Protection of Foundation from underground water containing salt.

Fountains,

Floor Slabs that need to be waterproofed. etc

For more information contact us at housepointbm@yahoo.co.uk

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@vic3 ltd,

i thank you very much for your reply, let now digest your link which goes to buttress my caution,

1.par.4 by the acting president stated thus.OUR ECONOMY GREW BY ALMOST 7% \\\\\\\\\\\\\\\\\ WITNESSED BY 150MIL.PPLE LIVING ACCROSS 36 STATES.' In this statement we have nothing to support the 200 mil claim.

2.In baroness walleseys comment , she then made mentioned of the 150 mil. and moreover she cautioned that ' INVESTORS TO TAKE MEASURED LOOK AT NIGERIA I do not see enough enthusiasm in that statement as far as i am concerned.

pls be aware that i am as well an investor in this sector of our economy and i see a long way of hardwork both from stake holders and government in this area of before we are home and dry.

fact are dd.is zillion more than supply ,hence the imbalance in the system.our government are totally not sincere when it comes to providing shelter for the populace.

these and other probs make a mockery of the term 'affordable homes.'

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We do not mean that the Nigerian Real Estate Market is the most funded rather it is underfunded neither did we declare that the 200,000,000 population figure is based on actual census, but it being settled that 1 of every 6 inhabitants of sub Saharan Africa is Nigerian, you can do the math.

We do not mean to lock horns, the worth of the Nigerian Real Estate sector cannot be defined as there is no indices to deduce value, but ask yourself, how many major cities are there in Nigeria where Real Estate investments are very strong and then check to see how many such cities there are in the whole of sub Saharan Africa, you will get the idea.

Fact is the sector is being harmonized and new ideas are flourishing and being embraced, I am sure in a few years you will understand how it is that Nigeria’s economy is the most important in the sub continent.

While at it, please visit this site and study the Nigerian Investment Report (2009) http://www.africamatters.com/site_content_files/files/nigeria_investment_report_2009.pdf

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Market Statistics show that in the year 2008, the African Real Estate Sector performed stronger than the US Real Estate Sector, as strong as the European Real Estate Sector with only the Real Estate Sectors of Asia Pacific and the Middle East showing more strength than the African Real Estate Sector. That the African Real Estate sector was the least affected by recent Global economic crisis indicates that the African Real Estate is the most resilient of the world's real estate markets and the factual position of the African real estate market is that it is not only an emerging market with great capacity for growth, it is also as profitable as any other market in the world. It should be mentioned also that  growth of the African real estate market is inhibited by the general misconception of international  investors who erroneously perceive Africa as the dark continent to their own peril, because Africa is a new frontier for business and as a matter of fact, the last frontier.

Any savvy or prudent real estate investor would know that because the African real estate market is still in its infancy,  this is the proper moment to enter the  market and entering the market at this time places investors and developers in vantage positions because in a market where demand far exceeds supply, maximum returns can be generated over a very short period of time; moreover, in most African countries the need for development has led to liberalization of statutory requirements placed on investors which is a good indicator for investors and this reflects in lower tax considerations, easier capital repatriation and zealous protection of investor funds.

Without controversy, the Nigerian real estate sector is the most relevant on the continent of Africa, not just because of being the market with the highest realizable ROI but also because demand for property is very high owing to a vibrant local economy constituted by a population in the excess of Two hundred million ( 200,000,000) supported by petro dollars, this so not surprisingly considering that Nigeria is the biggest petroleum producer on the continent.

Nigeria has a uniquely high local demand for property;  this demand creates opportunity for investment. With high demand for property comes high ROI for investors who invest in real estate development in Nigeria, active investors have recorded AROI’s of over 100% under certain conditions, but the market guarantees AROI of as high as 40%. There exists a high demand for  residential, commercial and hospitality real estate in Nigeria; but the Nigerian market is beclouded with mystique often considered uncertain and even dangerous to many investors  who may otherwise wish  to exploit the opportunities existent in the Nigerian real estate market.

Our company VIC THREE LIMITED  has a purpose to demystify the Nigerian Real Estate market and expose it for what it really is i.e. A real estate investment market where a strong local demand creates an environment offering better security to the investors investments unlike say UAE or Costa Rica which must attract foreign demand for local real estate to sustain their real estate industries.

If you wil want to discuss how you can enter and take advantage of the Nigerian Real Estate market please do not hesitate to contact us.

Vic Three Limited. 

Lawan Gawanabe Cresent, Apo Qtrs,                                               

FCT, Nigeria.                                                         

Tel: + 234 (0) 8 133 150 150

Tel: +234 (0) 70 406 202 14

Web: www.vic-3-ltd.net           

Email: vic-3-ltd@hotmail.com

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I just found a new property listing website http://www.nairaproperty.com mainly for nigeria property investment, landlords, and tenant.

Its pretty cool to have such website where you can log on to search for house to rent or even rent out your.

If we can think like Nigerians who are doing this freely our world will be better!

Guys please check it out at www.nairaproperty.com

Suprise, it has geocoding facility as well! (i.e) geocoding is a goggle map real-time online location of your property to be rented or sold. Cool!

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YOU CAN OWN AN INVESTMENT IN THE TINAPA CITY.

Our Client, Ata-Isi Supplies& Services co ltd is offering a limited number of 3-bedroom luxury apartments, 2 rooms semi-detached apartments and 2 bedroom detached bungalows at Ata-Isi River-side Estate , Ikot Offiong Ambai, Government Residential Layout (GRA) Akpabuyo, Calabar, at a cheap price. This estate is less than 10 minutes drive from the Calabar International Airport( margareth ekpo airport) and about 7 minutes drive from Tinapa.

Ata-isi river side estate is the second estate in calabar and is in high demand.Limited no of hours are available.

PRICES:

2 bedroom semi-detached- N4.5m

2 bedroom detached N5.5M

3 bedroom luxury apartment N7M

PAYMENT TERMS.

35% upfront payment and a flexible repayment plan of 65% up to 180 days.

All payments should be made to :

Account name: Ata-Isi Supplies & Services Co. Ltd.

Account No: 6110709607 Zenith bank

Application forms are obtainable from all contact points @N5000

For further inquires please contact:

Ify-08023379557, 07025025175

Ifeoma- 08059030815

victor-08039557451

CARE CONCEPT NIGERIA

Sales/marketing solutions,Innovation,superior effectiveness.

4th flour front wing, suites 402

17/19 allen avenue , ikeja lagos

070417181818

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YOU CAN OWN AN INVESTMENT IN THE TINAPA CITY.

Our Client, Ata-Isi Supplies& Services co ltd is offering a limited number of 3-bedroom luxury apartments, 2 rooms semi-detached apartments and 2 bedroom detached bungalows at Ata-Isi River-side Estate , Ikot Offiong Ambai, Government Residential Layout (GRA) Akpabuyo, Calabar, at a cheap price. This estate is less than 10 minutes drive from the Calabar International Airport( margareth ekpo airport) and about 7 minutes drive from Tinapa.

Ata-isi river side estate is the second estate in calabar and is in high demand.Limited no of hours are available.

PRICES:

2 bedroom semi-detached- N4.5m

2 bedroom detached N5.5M

3 bedroom luxury apartment N7M

PAYMENT TERMS.

35% upfront payment and a flexible repayment plan of 65% up to 180 days.

All payments should be made to :

Account name: Ata-Isi Supplies & Services Co. Ltd.

Account No: 6110709607 Zenith bank

Application forms are obtainable from all contact points @N5000

For further inquires please contact:

Ify-08023379557, 07025025175

Ifeoma- 08059030815

victor-08039557451

CARE CONCEPT NIGERIA

Sales/marketing solutions,Innovation,superior effectiveness.

4th flour front wing, suites 402

17/19 allen avenue , ikeja lagos

070417181818

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the market is a bubble waiting to bust

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There is no country where property investment is not profitable. the profitability varies from one country to another. specifically, as a property consultant, i will advice that you get a property professional not quack, to assist you. depending on the depth of proposed investment, the service should be free. profitability varies significantly with different variables e.g location, sophistication of design, proposed use, financing alternatives, cashflows, govt policies et cetere. pls dnt jump into any property investment without a concrete advice from a property professional. i cn assist you for free if anyone is interested. 08038197104; realestate1804@yahoo.co.uk.

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Good reading,

http://www.castlesweekly.com/ShowArticle.aspx?ID=5

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I absolutely agree with that smart idea. That was the same thing a friend of mine said some time ago. I heard they've even launched a real estate portal where estate agents can post free and unlimited images and videos of their properties (http://www.estatebasket.com/).

Even life itself is a risk. Imagine the stock market crash for example!

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The recent flooding in Lagos as definitely changed the dynamics of real estate investment in Lagos. Areas that can guarantee relative security from flooding are likely to see appreciation in prices while flood-prone areas will see a fall. Bear this in mind when seeking to invest in property in Nigeria.

GetNAIJAProperties.com

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Hi, I am a south African shopping mall developer and was wondering what the state of the Nigerian commercial re.al estate market is ? Would any of you be able to assist me?

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@ poster!!!

investing in properties in naija is ok if u r dealing with trusted pple, some speculators n govt thieves ve took d cost owning pptys ond island to roof top, currently i believe d cost of pptys on d island r rather on d high, but u cld invest on some areas on d mainland n turn around d sorrounding of d ppty so dat it speak 4 itself, i know a couple of pptys on d mainland dat cld fetch something nice rent or long lease.

if u r interested!!!

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Moves

The truth of the matter is that the over 10%'s are not as easy to come by any longer.

If we are to consider Lagos island, I may want to lean towards Lekki Phase 2 where an estate plot of land is considerably cheaper than phase 1. Also one where multi dwelling units are permitted on a plot of land for maximisation. Some estates only allow one unit dwelling on a plot of land.

Most of the Island has peaked.

The likes of Ikoyi and VI may not necessarily achieve the 10% but because the rental income is higher than other surburbs it boosts cash flow.

People are talking about the Mowe/Ofada axis but my view is that there is too much speculation. Nobody knows tomorrow therefore I tend to focus on the present. I will only be tempted because the axis is relatively cheap price wise.

It has also been noted that as close to the Lekki processing zone is a good one but then again it's speculation. Then again as it's relatively cheap I will be tempted.

You may want to consider Abuja. At the end of the day it all depends on how powerful your pocket is and your place of interest.

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I found these links very useful. They were sent to me recently by a friend.

http://www.sunnewsonline.com/webpages/news/businessnews/2008/dec/29/bussines-29-12-2008-001.htm

http://www.thenationonlineng.com/dynamicpage.asp?id=55142

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I guess it's becoming more difficult to get plots of land from the VGC side of town. You might want to consider areas like Mowe, Ofada (On Lagos-Ibadan expressway). I bought two plots within an estate less than two years ago and they are now selling at 300% of what I initially bought them. And to answer your question - Yes, Property Investment In Nigeria is Worthwhile.

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How do one source such high end tenants; also bearing in mind that the require high end properties, Is there no market for the mid range

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Pls be careful, a lot of fake guys are out there.

Go only with the establishments after checking them out. Omo nile, NOT AN OPTION AT ALL, even if the land is FREE, they are terrible people.

Everybody seems to be into real estate in Nigeria, especially with what happened with the Stock Market, and trust Nijja people to over kill this sector.

Pls, check well before you part with money.

All the best.

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Oyewole 123

Contact the following, I biz with all of them.

Ideal quarters - 02085990701

Omega Lettings - 02089882838

Smart Hotels - 02084825511

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@YANKA,

Hello, appreciate your ideology on investing on naija properties. Pls, i am also based in europe, could you pls enlighten me on how to put my properties on long term lease in the uk instead of private tenants because of their non paying wahala

Pls, kindly send details to drakinterinwa@yahoo.com

Thanks

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Moves

Just to give you food for thought.

Capital Intensive - You might want to start small in Nigeria with capital raised at minimal interest rates from the western world. This I have done before.

Purchase vs income - If your P/E ratio is over 10 i.e. over a 10% yield in your terms then you are not doing too badly. For ex those who purchased plots of land in Lekki 1 and VGC in Lagos about 8 years ago for just over 1.5 million Naira could achieve a yield of over 10%, note that building materials were much lower in price in those days. I personally bought cement then at 495 (now about 1700) naira a bag, a ton of iron reinforcement for about 40,000 naira (now about 200k). My point being you can't go wrong when you enter the market at rock bottom price. Those entering the Lekki axis now (prices have peaked to an extent) are taking a greater risk as rental income has not increased as much as property prices over the years and prices could crash.

Ownership issues - Personally, i don't touch plots that don't form part of a recognised estate. Not even with a very long pole. I always purchase properties within estates and from the source i.e. not on the secondary market. You are very safe when you buy VGC plots from HFP engineering, unfortunately they ran out of plots a few years ago. This douses your fear of Omo onile, fake documents and govt acquisition.

Non payment of rents - If you rent out at the top end of the market you hardly encounter problems. High earners seldom like embarrassment. I have rented out to the Oyinbos in the UK and i have in the past had to drag a few of them through courts to gain back possession, infact, because of this I stopped renting out privately. In the UK i do long term leases.

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