The second largest economy in Africa is accommodating one of the fastest growing middle classes in the region. If you visit Nigeria today, you will realize how the country has attracted the largest brands and companies from the world. As the market in Nigeria is short of modern spaces, landlords will be favored for the most part of the coming decade. If you are considering making an investment in Africa, here are 10 reasons why Nigeria real estate should be your number one choice.
International investors realize the potential the real estate industry of Nigeria holds. A large percentage of the growing middle class in the country has come from rural areas. Urbanization has helped Nigeria become a stable economy in Africa and the world for that matter. The middle class is eager for modernization and the trend for rural setups is slowly vanishing. However, there is shortage in housing space in just about every major city in Nigeria. Hence, foreign investors can benefit from this by increasing development in the region.
9) Foreign Investment
Nigeria was considered for the most part an economy that drove foreign investment clear. In recent years though, foreign corporations like Actis LLP and Procter & Gamble have invested heavily in the region. Actis LLP has developed the Ikeja City Mall, one of the biggest malls in Lagos which was developed for $100 million. Actis is also planning to spend $100 million in developing a Heritage Place building in Lagos with 194,000 square feet of space. As for Procter & Gamble, they have plans to build a plant worth $250 million in Ogun.
8) Booming Oil and Gas Industry
Any foreign investment in a country is heavily influenced by the oil and gas industry. For Nigeria, the sun is shining brighter as the oil and gas industry expanded by a respectable 6.6% last year. Lagos is also slated to become one of the biggest cities in the world, with the population predicted to reach 20 million by 2020. Healthy reserves and strong industries are being facilitated with an ever growing educated population.
7) Appreciating Investment
In about every three years, the rental dues in upcoming areas like Mowe, Igbesa, and Ibeju Lekki are getting double. The real estate investment in the region is appreciating at a healthy rate, providing good ROI opportunities.
6) Protection against Inflation
A major reason why foreign corporations have increased their investment in Nigeria is because the rental income acts as protection against inflation. As mortgage payments are unchanged during inflation, the rental income acts as a cushion to inflationary trends.
5) Lucrative Opportunities
Statistics on the different industries in Nigeria reveal that real estate is the most profitable of them all. Rental income in Nigeria carries far better value than dividends from stocks. While the stock market of Nigeria is more opportunistic, the real estate industry has ground and the lucrative opportunities are only increasing with the economy.
4) Increase in Construction
Nigeria has been experiencing a boom in the construction and real estate sectors. The construction sector has grown by 10%, while the real estate sector has grown by an impressive 12%. This represents one of the highest growth percentages in African countries. This boom can be contributed to the increase in construction activity from local and foreign construction firms like Cappa D’Alberto, UPDC, and Julius Berger.
3) Source of Regular and Increasing Income
By now you would have realized that real estate in Nigeria presents the opportunity for investors to earn a regular and growing income. As the capital value appreciates overtime, it acts as a shield against capital loans and mortgages. Not just that, but your investment can solve the accommodation dilemmas and contribute to the housing development of the private sector.
2) Growth Oriented Government
The government has to be praised for all the good work in relation to keeping crime rates and forgery low while increasing productivity and the GDP in the country. As Nigeria makes its case for urbanization, the cities have been managed well to accommodate most rural population. With the increase in construction and development, the economy will only get better with time, and the opportunities will increase proportionately.
1) Low Interest Rates
Banks in Nigeria have generally lower interest rates than most parts of the world. While borrowing in not common from foreign investors, it can be a viable option if you want to keep your future costs low while making higher earnings. The maximum interest rate in Nigeria is 10%, while the lowest interest rates can go down to 2%. This provides you an incentive to borrow with favorable terms and invest in a booming economy of Africa.