by
Patrick Ogungbola
MD/ CEO, BLUEHEDGE REALTORS
We welcome you to the exciting month of April, 2017; and we sincerely appreciate everyone that commended us on our last article titled ‘Charity Begins at Home’ (http://bit.ly/2m6JCAm). We also appreciate those that forwarded and shared the article with their friends and loved ones via email and social media. We are very much delighted that our articles are making positive impact to all readers, and this is one reason we cannot afford to stop.
It is great to be alive and to witness what is happening in the world. It’s been said that the day we stop learning, we’ll start dying; and I must confess, I learn every day. As a matter of fact, I am still a learner, and I believe that Nigeria is the best learning ground.
Before going any further, we must heartily congratulate one set of people whom we refer to as ‘The Bravos’. These are people who took the decision to buy property in Nigeria and have actually bought in the last one year till date. Looking back, it is now very obvious that their decision is a wise one, because without doing anything, their properties have automatically appreciated in value. The reason for this will be made obvious at the end of this article. Once again, we congratulate these sets of people.
In the past one year, many things have happened in Nigeria, most especially with respect to the economy. The country was officially declared to be in recession, and even before then, the economic system was practically unpredictable and grossly unstable. Of all these, the most obvious is the sporadic loss in value of the local currency (the Naira) in relation to other major currencies such as the U.S. Dollar, the Great British Pound, and the Euro. Everyone had different wishes and feelings for the situation, depending on what favours each individual. Some people took maximum advantage of the depreciation of the naira, some incurred huge losses as a result, while others are indifferent.
During this time, some Nigerians in diaspora seized the opportunity to buy and invest in properties, while some others were still waiting for further decline in the value of the currency before taking action, but they forgot that there is a time and a season for everything under heaven. As at the time of writing this article, one U.S. Dollar is being exchanged for N375; the value of the Naira is really firming up. To Nigerians living in Nigeria, this is a fantastic development, but to those living and making their money overseas, it is a ‘bad omen’. Ordinarily, one would think every Nigerian (irrespective of where they reside) will be happy that the Naira is gaining value, but alas, this writer was really shocked when two clients that flew into the country to buy property were lamenting on how much they’ve lost due to Naira appreciation. They recounted how some of their friends came last month to buy their desired properties in Lekki, Lagos when the rates were still ‘good’, however, they counted themselves so unlucky as the current rate is no longer favourable to them; they had envisaged that the free-fall of the local currency will continue for a longer time. This situation is really so serious that they are contemplating taking their money back, as it could not afford to buy their desired property. Truly, procrastination is a thief of time.
There is a saying that the best time to buy anything is last year, this holds true because within the space of 30 days, the prices of almost everything has more than doubled. The reason for this is very obvious, sometime last month, one U.S. dollar exchanged for more than N500 in the parallel market, and moreso, it was almost practically impossible to get the greenback at the CBN official rate of N305 because of its scarcity. Also, knowing fully well that Nigeria is heavily import-dependent, the prices of every imported goods increased sporadically. This also affected the prices of local products as the cost of production also increased, coupled with the rise in the prices of raw materials used for local production, since most of them are imported. As funny as it may seem, the prices of local agricultural produce such as yam, palm oil, beans, cassava (garri), and kolanut amongst several others were also hiked because ‘dollar has gone up’.
The prices of real estate materials also skyrocketed. The price of 50kg bag of cement increased from N1,700 to N2,700; Iron rod (for reinforcement) increased from about N120,000 per tonne to about N270,000 per tonne, the price of Plaster of Paris (POP) cement rose from about N2,000 per bag to N4,300 per bag; the prices of other building materials such as tiles, sanitary wares, roofing sheet, plumbing and electrical materials also went up. Expectedly, the prices of properties also increased, in some cases, more than 50%. About 3 months ago, a brand new and well finished 5 bedroom detached duplex sitting on about 400 square metres at Osapa, Agungi and Chevy View Estate, all in Lekki, Lagos was sold for about N70-N75million. Today, similar property sells for between N90-N100million. It is simple economics to know that the higher the cost of production, the higher will be the selling price of the final product.
Another interesting scenario is the fact that houses that have been built, but were not sold before the surge in the dollar also increased in price. For instance, a 4 bedroom semi-detached duplex located at Idado (before Chevron roundabout in Lekki, Lagos) which was marketed for N43million about 6 months ago was sold for N55million just 2 weeks ago. Also, a 5 bedroom detached duplex on Chevron alternative road that was built about a year ago and marketed then for N75million was recently sold for N90million.
This writer has been questioned severally, most especially by Nigerians in dispora as to the reason for the rise in the prices of properties, since Nigeria is in recession, whereas the opposite is expected to be the case. The above reason as already explained is the justification for this situation. Nigeria is a peculiar nation; this is the only country I know that have defied all economic and political theories/ laws. The fact that one law or theory worked elsewhere does not mean that it will work in Nigeria. There is always the Nigeria factor which must be put into proper consideration.
Agreed, this is a period of recession in Nigeria, but I have observed that the rich are getting richer, while the poor seems to be getting poorer. Is this not a paradox? What this mean is that the rich are using the recession to their advantage, while the poor seems not to know the way out. They are quick to quote Job 22:29 as their consolation, ‘When men are cast down, then you shall say, there is lifting up; and he shall save the humble person’ Amen!!!
In closing, let us know and remember the following:
– Wisdom is the principal thing; therefore get wisdom: and with all your getting get understanding (Proverbs 4:7)
– My people are destroyed for lack of knowledge (Hosea 6:6)
– Go to the ant, you sluggard; consider its ways and be wise! (Proverbs 6:6)
– And wisdom and knowledge shall be the stability of your times (Isaiah 33:6)
– Be wise as serpents, and harmless (innocent) as doves (Matthew 10:16)
As usual, we want to remind you that we care so much about you, and that when it comes to your real estate investment, we are always here to give you the very best service you can never get elsewhere. That is our promise, and will always be.
We wish you the very best in the month of April 2017.
Thank you.
We remain;
Very truly yours,
