Monday, June 29, 2015

Business Opportunities in Nigeria’s Real Estate Sector

Nigeria’s real estate industry is one of the most lucrative in the world with returns of up to 300% profit made in as little as 5 years. Investing in this sector is one of the most secure forms of investments as houses tend to appreciate in value overtime plus there is an easy exit for investors who can sell off their properties with profit if they wish to divest.

However real estate investments work best in urban centers where there is a larger population with higher purchasing power than rural areas. In addition to this infrastructure and proximity of a property to commercial districts are factors that can determine how much your property could earn you.

Trends in the Nigerian Economy that promote Investments in real estate

·         Fast growing middle class. Nigeria’s middle class is growing by 7.9% per annum and these are the people with purchasing power to pay for rent or purchase houses.
·         Rapidly growing urban population, Lagos state grows at roughly 3.2% per annum, Abuja grows by 4.3% per annum, Kano grows at 3.3% per annum all these imply demand for houses would continue to rise
·         Massive housing deficit of over 16 million units, Lagos state alone has housing deficit of over 1 million
·         Massive Infrastructural Development has been responsible for the spiraling appreciation in property values, good road network, power supply and accessibility to commercial centers increases demand for properties.

Opportunities Available to Investors in Nigeria’s Real Estate Sector
If you are an investor wanting to exploit real estate opportunities, here are a few to consider among many others;

Sites and Services Schemes
Investors can purchase land in large quantities (for instance 200 hectares) then develop them into sellable plots of say 500 square meters each and then resell to prospective home owners. Imagine that you bought 200 hectares of land for say N2 billion in a prime location then resell same at N1.5 million for each plot that is 200% profit as the land entire would contain 4,000 plots.  

Commercial Property Rental
Another good opportunity is with office buildings, shopping malls, commercial car parks and multi-purpose halls which could be put up for rent. A 200 seating capacity hall for instance may just cost N8 million to put up but could generate N500,000 per week in revenue meaning that in 4 months you could recover your entire investment. But this depends on several factors.

Residential Housing Estate
The population of residents will always be on the rise. Lagos will have a population of over 30 million residents by 2025, many of the incoming residents must reside somewhere and with the shortage in housing investors are in for a field day if they cash in now. Imagine for instance places like Lekki 25 years ago had little population, today the place is becoming densely populated and this trend will continue even with other districts in Lagos.

Student Hostel Accommodation
Students tend to pay a lot more than average residents for accommodation in terms of cost per space compared to regular tenants. Many Nigerian universities and polytechnics have inadequate hostels for their teeming student population and so most students actually live off campus but not in student friendly accommodation. The way out is to offer the desired quality accommodation to the right market and the rest will naturally follow.

Property Development
Another option could be to build befitting houses within an estate and sell them off to high net worth individuals making as much as 300% profit in the process. This option however requires huge capital outlay and is suitable for institutional investors.

What are the success factors for Real Estate Investment in Nigeria?
How would you know which particular location is suitable for what kind of investment option? As already stated the fast growing middle class population with improving disposable income, improving infrastructure to name a few are key success factors however through exhaustive research I have discovered several more and key locations in Lagos and Abuja where to invest profitably in real estate.

If you’re a potential investor interested in exploiting these opportunities I’ll recommend you get a comprehensive business plan which details all you need from start to finish. To get the details call me: 0803 206 4106 and my email is Regards