How Many Real Estate Players Got It Wrong In 2024

• What City People Found Out

The year 2024, has so far been the worst year for many real estate players across Nigeria! Many top real estate players, have diversified into other businesses. While some have relocated their businesses to a saner climes, sadly, we also have some who have lost out and the company is no longer in existence as a result of Nigeria’s bad economy, bad government policies and environmental issues. It should be said here that

most businesses and companies have folded up completely, while some others are barely afloat and have reduced staff strength and office space for them to survive. The sector is now in the state of “the fittest survives the battle”, as the saying goes.

A few days ago, one of the top property developers in the Lekki Ajah axis, Engr. Lekan, told City People how the economic instability, characterized by fluctuating exchange rates and uncertain fiscal policies, have created an unpredictable environment for investors. This uncertainty, has led to a cautious approach, with both domestic and foreign investors applying a wait-and-see approach before investing in real estate.

He says “top developers are currently going through a lot. More than 70 percent are under pressure. Why? They are owing banks and they are unable to pay back. Some of the landed properties they have put up for sale are still there. People hardly buy property these days especially, property that require huge fund to purchase. The purchasing power has drastically reduced to a record low. That’s why many of these guys are doing other businesses to be able to stand, as a company,”,

“This volatility is mirrored in other building materials. The price of softwood has risen from N400 to N650, while hardwood prices have also escalated sharply. Additionally, the cost of binding wires have more than doubled, and roofing a standard three-bedroom house now costs between N1.2 million and N1.5 million, depending on materials and transportation costs”

Another notable thing is that, coming to this year 2024, the Lagos State government started clean up scheme of houses/structures that fall on the drainage and other unapproved locations across the state. It also has affected real estate business. In fact, many real estate players are down financially. This also has caused a decline in investor’s confidence.

Negative news or a feeling that things aren’t clear has affected investors confidence in the real estate market. This has led to investors defer on putting their money into real estate projects. Every investor wants to feel secure and informed before investing, and negative news or a lack of transparency can make them feel uncertain. This hesitation from investors have slow down the real estate sector and its contribution to the overall economy in 2024.

Another point is that, the cost of building materials have increased astronomically in the last 12 months, and it has become a concern to Nigerians because of its direct impact on the supply, affordability and accessibility to housing, especially, to low and middle-income earners.

This include cement, that was sold around 3,500 naira last year. It’s about 8 thousand naira now.

Factors resulting in this increase include dependency on imports, the international supply market, and local production problems. Basic construction materials like cement and steel have increased in price. Local production is often hindered by inadequate infrastructure, high energy costs, and regulatory barriers, resulting in higher costs for both developers and buyers.

As a result of these some real estate companies are under immense trouble. First, they have customers who have paid in full for a project that hasn’t been delivered but in the process of trying to build, the cost of materials doubled by over 100 percent. What about those who fund their projects with a bank loan? They have the loan but it’s not enought to complete what they thought would be enough. In the process of trying to get another fund, the loan has started reading while the project is still have way.

When City People spoke with Dr Bashiru, a property developer in Lagos, he told us it hasn’t been easy. “Some of us hardly sleep these days because we want to meet the deadlines. Majority of us have developed BP as a result of this. The government is not even helping matters with their policies that are not helping the business. It keeps getting worse and harder by the second. But we would survive it”, he said.

We can authoritatively tell you now that, many real estate companies have folded up, while some CEO’s in the sector have relocated abroad as a result of this. From our findings, we have up to 4 real estate companies that have folded up in the last few months.

Again, the Lagos Calabar Coastal road, affected many real estate players. Over 100 property owners in Lafiaji Community, Eti-Osa Local Government Area of Lagos State, are planning legal action against the federal government as they have been issued demolition notices to evacuate their properties for the Lagos- Calabar Highway construction.

Going to Ibeju Lekki axis, over 500 players would also be affected by this project. The property owners in those axis accused the Minister of Works, David Umahi, of altering the original right of way to shield prominent politicians. Some of these properties have been sold out. Some are still selling. While others have bank loans they are servicing as a result of these projects.

These risks in the industry can be attributed to civil unrest, high crime rates, or even the threat of terrorism and general insecurity. Investors, with a keen eye for long-term stability, may be hesitant to commit capital to areas where the future is uncertain.

Other issues are perceived tribal war and other environmental crisis.

This discourages investment, potentially, leading to a stagnation or even a decline in the real estate and construction sectors.

There is a growing demand for affordable housing and sustainable building practices. The existing market offerings may not align with these changing consumer preferences, leading to a mismatch between supply and demand. Developers who fail to adapt to these trends may find it difficult to attract buyers and tenants.

–Isaac Abimbade

08155107955