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Election, Inflation To Shape Real Estate Market In Nigeria

Election, Inflation To Shape Real Estate Market In Nigeria

Feb 24, 2023 News

The real estate market in Nigeria has been experiencing significant growth over the years, but recent events such as the upcoming election and inflation are expected to have an impact on the market.

The 2023 general elections in Nigeria are fast approaching, and as is typical with most election cycles, it is expected to have an impact on the real estate market. In the months leading up to the election, there is often a period of uncertainty and caution among investors, which can affect the real estate market.

One of the ways the election may impact the real estate market is through a decrease in foreign investment. International investors are likely to hold back on making any significant investments until the outcome of the election is known. This can lead to a slowdown in the real estate market as investors take a wait-and-see approach.

Another way the election may affect the real estate market is through government policies. Depending on the outcome of the election, there could be changes in policies that directly affect the real estate market. For instance, a new government may introduce policies that make it more difficult for foreigners to invest in the Nigerian real estate market.

Inflation is another factor that is likely to shape the Nigerian real estate market in the coming years. Inflation has been on the rise in Nigeria, with the country experiencing a double-digit inflation rate. This has led to an increase in the cost of goods and services, including the cost of building materials, which are essential in the real estate market.

The high cost of building materials is expected to lead to an increase in the cost of real estate properties. This can make it more difficult for middle and low-income earners to own or rent properties, which can lead to a slowdown in the market. Additionally, the high cost of building materials may discourage real estate developers from starting new projects, which can lead to a shortage of available properties.

The impact of the election and inflation on the different sectors of the real estate market in Nigeria.

Residential Real Estate Market: The residential real estate market in Nigeria is likely to be affected by the high cost of building materials due to inflation. The increase in construction costs is expected to make it more expensive for developers to build new homes, which will translate to higher prices for buyers and renters. This may result in a slowdown in demand for residential properties, especially among middle and low-income earners who may struggle to afford the high cost of living. Additionally, the uncertainty surrounding the election may lead to a decrease in foreign investment, which can affect the demand for high-end properties.

Commercial Real Estate Market: The commercial real estate market in Nigeria is expected to be more resilient than the residential market, as it caters to businesses that are less sensitive to economic and political conditions. However, the high cost of building materials may discourage developers from building new commercial properties, leading to a shortage of available office spaces and retail spaces. This may cause a spike in rental prices for existing commercial properties, making it difficult for small and medium-sized enterprises to afford office or retail spaces.

Industrial Real Estate Market: The industrial real estate market in Nigeria is expected to be the least affected by the election and inflation. This is because most industrial properties are owned by large corporations, and are not usually influenced by changes in government policies or economic conditions. However, the high cost of building materials may lead to an increase in the cost of developing new industrial properties, which may be passed on to tenants in the form of higher rental prices.

In summary, the upcoming election and inflation are expected to impact the Nigerian real estate market in different ways. While the residential real estate market may experience a slowdown in demand due to the high cost of living, the commercial and industrial real estate markets are expected to be more resilient. However, it is important to note that the Nigerian real estate market has shown a remarkable ability to recover from past economic and political challenges, and it is expected to continue to grow in the long term.

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