In our last blog publication, we started looking into the challenges in Nigeria’s property market. “High Costs of Property Development” and “Limited Source of Funding” are the two challenges that we discussed. In our blog publication for today, we will be discussing additional two challenges, and we will conclude this topic in our next publication. Here are the third and fourth challenges:
- Devaluation of the naira
The recent devaluation of naira is a huge obstacle for the development of Nigeria’s real estate sector. Mainly because the Nigerian construction industry is heavily dependent on the importation of the raw materials and equipment they use for construction from foreign countries. However, a devalued naira increases the cost of purchasing these raw materials and equipment. In order to remain profitable when there are abnormally high costs of doing business, most property developers would take out the additional costs incurred, on the market. The effect of the devalued naira would have been much milder if construction materials were produced locally, as the cost of getting these construction materials would reduce, in turn, making properties more affordable to the average Nigerian citizen.
- The “Omo-onile” (Land-grabber) menace
Most of the scams in the Nigeria real estate sector are perpetuated by the “omo-oniles”. Apart from the fact that they are known to extort money from buyers who are developing their properties, most of them sell the lands inherited from their parents or grand-parents to more than one person. They tend to act on lands that have been sold but are yet to be developed and then they sell to a new buyer. Sometimes, they even sell lands that have been developed half-way to buyers and these buyers, in turn, find themselves in a continuous battle for possession of the land. There are a whole lot of land cases in this category presently in court and unfortunately, the “omo-oniles” are nowhere to be found and there are no means for these buyers to get their money back.
The presence of these Omo-Oniles especially in the Southwest region of the country is also part of the issues affecting the Nigeria Real Estate industry.
They demand levies for everything! Ranging from a levy for the foundation of a building, to fencing of a land, to erecting a gate, to levies for every building material transported to the site! All these are enough reasons to discourage anyone investing in real estate. Their activities often lead to an increase in labor cost, cost of building materials as well as cost of completing a building project.