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| Property Article |
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| Housing Boom Inspite Of EverythingAfter declaring independence from Britain in 1960,
Nigeria plunged into a series of civil wars and then military rule after 1966.
The oil boom in the 1970s gave the government a chance to go on a spending
spree which included the overly expensive transfer of the capital from Lagos to
Abuja.
When
the world recession kicked in the 1980s, oil princes plunged, pulling down
Nigeria. This led to a cycle of massive debt, soaring inflation, large-scale
unemployment and massive corruption.
The country’s real GDP per capita is still below its 1970 level. Last year's
real GDP growth was 3.9%, low compared to 16% inflation rate and 2.3%
population growth rate. Seventy-seven percent of the population lives below the
poverty line.
Despite this, there's a housing boom, even though there have been high levels
of construction during the past few years in Lagos and Abuja, and the supply of
expatriate housing has greatly increased.
Mobile phone companies are investing, creating temporary demand. Nigeria’s
natural gas potential is being opened up, bringing in foreign experts.
Increasingly, wealthy overseas Nigerians are repatriating money to buy in
Lagos.
Most foreign companies in Nigeria, like Shell, sub-let housing from
Nigerian-owned management companies, mostly on Victoria Island and Ikoyi,
although Chevron has built its own estate in Victoria, near Lekki, with
hundreds of houses just like in U.S. suburbia. Foreigners almost always live in
apartments or estates (gated subdivisions) because of serious security and
electric power issues.
The
profitability of housing is drawing many developers into a construction boom.
For instance every plot has been sold at Banana Island, a new development on
reclaimed land near Ikoyi, though barely a house has been built yet.
Nigeria allows any company or non-resident to buy land rights for a maximum of
99 years for the purpose of their activity, as long as the purchase is declared
to the government beforehand.
RENTAL YIELDS
Last Updated: Dec 05, 2005
Housing boom, in
spite of everything
Lagos has some of the most highly-priced real
estate in Africa, at around US$1,000 to US$1,200 per square metre (sq. m).
The recent increase in housing supply has squeezed rents, while prices are
holding their ground. Rental yields for apartments in Ikoyi and Victoria Island
in Lagos are around 3% to 5.3%. Yields are generally higher in Abuja than in
Lagos due to less supply; at 6% to 8%. Beach estates have rental yields that
range from 7% to 8 %. |
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