Recall the good old days of Real Estate boom in £the United States of America? Now fast forward to the current situation of depreciating prices in the US, Dubai and other places. Some analysts contend that the current recession, depression bedeviling the United States and the rest of the world is inter alia, a spin-off of the boom and bust phenomenon in real estate in the United States.
In the hey days of this property boom, it is not unusual for prospective house owners and investors in the United States and United Kingdom to access upwards of 100% or more mortgage from Banks or Building Societies such as Fannie Mae, Freddie Mac, Northern Rock amongst others. Depending on the prospective home owner’s credit history and other factors, a mortgagee can be asked to make 10% deposit payment for the apartment whereas the balance is spread say over a 25-30 year period. With the 10% down payment, the mortgagee now becomes a landlord/landlady and will make monthly remittances to the appropriate Bank or Building Society usually through direct debit payments.
Let us reconcile this with the trend in Nigeria where Real Estate seems to be the in-thing. It is not atypical to see prices of Properties: Buildings, Plots of Land running into several millions or billions of naira especially in highbrow areas in Abuja (Asokoro, Maitama, and Garki etc), Lagos (Ikoyi, Victoria Island, Ikeja, Lekki, Banana Island, VGC etc). A couple of years ago, I had a chat with a friend of mine- Ugo on this unprecedented trend in real estate prices in Nigeria. What prompted our discussion was when we stumbled across the asking price of an undeveloped less than full plot of land in Allen Avenue in Ikeja dangling for a whopping N250 million! This translates to about a million pounds! Is this not outrageous? Certainly, N250 million can fix an estate somewhere in Ikorodu (Lagos state), Abakiliki (Ebonyi State), Okigwe (Imo state), Umuahia (Abia state) amongst others, with high returns on investment as well. Don’t forget in a jiffy also that a million pounds can buy one or two houses, apartments in the United States or any part of Europe so why should one throw it into buying such an undeveloped piece of land in Ikeja (Lagos State) where the government can wake up one morning and revoke the C of O or repossess the said land with a very flimsy excuse?
There is no doubt that real estate is thriving and will continue to be attractive in Nigeria in view of the fact that our enormous population is truly devoid of sufficient accommodation. However it will help if we are a bit more savvy, discerning and not carried away by façade, sales pitch. Juxtapose the current Real Estate windfall with the boom and subsequent bust in Stock prices in Nigeria a while ago which sent some people to their early graves.
Where are the Real Estate gurus and devotees? I am trying to stimulate an intellectual discourse on this. How sustainable is this hype, an unprecedented and unjustifiable property prices? Are we approaching a breaking or saturation point? Are we heading for a déjà vu akin to that of the bust in Stock prices?
What is your take? Please kindly enlighten us with a comment below. Thank you.