Here are two properties priced at around £4m pounds each in Nigeria and the UK respectively.

Which do you think is value for money? And how do you think they compare?

8 Bedrooms Duplex, 5 Sitting Rooms, 2 Bedrooms Guest Chalet, 2 Rooms Boys Quarters, Penthouse, 2 Kitchen And Swimming Pool

Maitama District, Abuja




















5 bedrooms, 2 receptions, Kitchen/dining room, Utility room, 6 bath/shower en suites, Cloakroom, Garden, Separate studio, Off-street parking

Ealing, London

AjanleKoko

Naijababe

none of the above..

I go just farabale build mine or go buy a property in Texas where everything is big.

Take a guess how much this house is going for?

3strike:
I go just farabale build mine or go buy a property in Texas where everything is big.

Take a guess how much this house is going for?

Depends on what is inside and the location.

think i would go for the Naija house...but with the inside of the UK property... but Naija flooring

Just mix it up

Portsmouth86:
think i would go for the Naija house...but with the inside of the UK property... but Naija flooring

Just mix it up

Considering the price @ £4m? Nah!

3strike:



Considering the price @ £4m? Nah!

well if you got £4m to spend then money clearly is no issue, I prefer Nigeria to the UK and im White British

Portsmouth86:
think i would go for the Naija house...but with the inside of the UK property... but Naija flooring

Just mix it up

You must be joking.

The UK one wins hands down in all ramifications except the exterior.

We all know UK houses have boring and monotonous exteriors.

The Nigerian house has no style, no soul, no planning, no brain.

They just threw in some few shipped in bath and jacuzzi equipments in a poorly lit construction and they think it is worth £4m.

Look at the kitchen cabinets people installed and want to sell for £4m.

Yeye people.

My people have mental health problems.

Portsmouth86:


well if you got £4m to spend then money clearly is no issue, I prefer Nigeria to the UK and im White British

Yep, I prefer Nigeria to the UK as well .....................but always know that everything in Nigeria is always of faaaaaaaaaaaaar lower quality.

Anything of high quality that is equivalent to what we get here in the UK would cost multiple what we pay in the UK.

To get 24 hours light alone, in Nigeria, you will be paying like £2400 per year (for electricity alone) in some Serviced Apartment.

I bet your electricity bill in the Portsmouth does not exceed £400 a year.

If that UK house was built in Nigeria, I can guarantee you that the sale price would be something like £13m, not the £4m.

None of the above. For £4m ?

The Ealing property is definitely more beautiful, more "eye-catching" no doubt about that but I think I'll go with the Nigerian property.

For starters, the latter has got over double number of rooms compared to the former, and the increasing value of any property is directly proportional to the number of rooms it's got. Then when you throw in the prime location of the Nigerian property, you've got a no brainer in your hands in terms of it's potential to generate more money.

Look at it this way: Nigerians are big time consumers of anything branded "foreign" from the West. The cosmetic changes needed to make the Abuja property sparkle or become equally eye-catching can be easily resolved by shipping in a container or two jam packed with stuff from Argos/Currys/B&Q. The cost of doing that is nothing compared to the massive structural changes needed to further increase the value of the Ealing property - for which you may or may not even get planning permission (another bureaucratic, red tape, time-wasting but unavoidable evil).

Secondly, although the value of properties in both locations appreciates over time, the value of the U.K property is subject the constantly evolving "Boom and Burst" cycles - but then again, it depends on what you intended to use it for.

Like I mentioned earlier, dangle a few Western sparkles coated in glitter before the eyes of Nigerians and watch them dance to your tune - meaning you'll recoup the costs of your initial investment and more within the first year or two if you rent the modified Abuja property to high paying government officials / expatriates. Let it serve as a top notch guest house with all the bells and whistles, or covert it to an off campus student accommodation for wealthy parent with Ajebutter kids.

Saga go for the Abuja property and watch your account swell. You'll be smiling all the way to the bank.

Sagamite:
AjanleKoko

Naijababe

How can anyone say no to that Ealing pad?

I would say NO to the Ealing pad and take the Maitama mansion.

As @EfemenaXY mentioned, it is about the future value of the properties. The property growth rate in Nigeria far exceeds the UK. I would rather buy a property that might double (in price) in 2-3 years than the other doubling in about 7-8 years.

EfemenaXY:
The Ealing property is definitely more beautiful, more "eye-catching" no doubt about that but I think I'll go with the Nigerian property.

For starters, the latter has got over double number of rooms compared to the former, and the increasing value of any property is directly proportional to the number of rooms it's got. Then when you throw in the prime location of the Nigerian property, you've got a no brainer in your hands in terms of it's potential to generate more money.

Look at it this way: Nigerians are big time consumers of anything branded "foreign" from the West. The cosmetic changes needed to make the Abuja property sparkle or become equally eye-catching can be easily resolved by shipping in a container or two jam packed with stuff from Argos/Currys/B&Q. The cost of doing that is nothing compared to the massive structural changes needed to further increase the value of the Ealing property - for which you may or may not even get planning permission (another bureaucratic, red tape, time-wasting but unavoidable evil).

Secondly, although the value of properties in both locations appreciates over time, the value of the U.K property is subject the constantly evolving "Boom and Burst" cycles - but then again, it depends on what you intended to use it for.

Like I mentioned earlier, dangle a few Western sparkles coated in glitter before the eyes of Nigerians and watch them dance to your tune - meaning you'll recoup the costs of your initial investment and more within the first year or two if you rent the modified Abuja property to high paying government officials / expatriates. Let it serve as a top notch guest house with all the bells and whistles, or covert it to an off campus student accommodation for wealthy parent with Ajebutter kids.

Saga go for the Abuja property and watch your account swell. You'll be smiling all the way to the bank.

phoenix480:
I would say NO to the Ealing pad and take the Maitama mansion.
As @EfemenaXY mentioned, it is about the future value of the properties. The property growth rate in Nigeria far exceeds the UK. I would rather buy a property that might double (in price) in 2-3 years than the other doubling in about 7-8 years.

I would caution both of you with your assumptions.

You have to take serious consideration into what are the drivers for the value appreciation you allude to and understand the likely changes in future.

Prices are impacted by (i) supply, (ii) demand, (iii) lack of information and (iv) price movement expectations.

House prices in the UK are mainly driven by a significant raise in demand due to the globalisation of its demand market. That is, people from all over the world want to buy in the London.

Expected price movement and supply not keeping up with the astonomical demand also play minor parts in UK prices.

House prices in Nigeria are mainly driven by lack of supply, especially of basic standard housing in safe areas and areas with easy commute.

Lack of information and expected price movements also play a minor part in the Nigerian prices.

Efe, as much as you state that UK houses are subject to Boom and Burst Cycles, I will tell you today (and mark my words), Nigerian houses are prime patients for a strictly Burst Festival.

They are overvalued because of lack of transportation infrastructure and basic standard housing supply. They are mediocre quality products being sold at monumental prices.

Would the UK global demand constrict?

Yes, I think so. Because as the citizenry complain about skyrocketing house prices, the government would have to introduce policies to restrict foreign purchase just like Australia has done. But they would have to do it gently to not damage the economy as many people have invested their net worth in property and a crash would cause an economic meltdown (as people lose their wealth). Government would focus on constraining price growth, not reducing prices.

How is the Nigerian Prices likely to change?

Now we have a sane and clean government, hence things are likely to be done properly.

We have an incorruptible President and we have a man called Fashola as Minister for Power, Housing and Works. We also have a competent Amaechi in Transport.

Then we have the Chinese coming in ready to build.

Once we start having good roads, rail and new housing stock, then you would see (with Fashola responsible for these) the change in supply dynamics and accessibility.

Remember Real Estate is the new big thing in Nigeria at present. Housing stock is already being built drastically. This would be accelerated with Fashola in charge and I see all these overpriced properties (that are mostly junk) crashing.

Already, at least 40% of housing stock in VI and Ikoyi axis are vacant because they are just overpriced. Once the supply increases and people can live in Amuwo Odofin or Ilupeju and get to work in VI by rail, you would see this vacancy rate escalate except prices come down.

http://uncova.com/greed-pib-fingered-for-over-60-vacancy-rate-in-ikoyi-housing-market

http://updates.hopefornigeriaonline.com/slump-in-demand-for-highbrow-properties/

Don't believe the hype you hear from Nigerian unreliable fools with their penchance for misinformation that you will recoup the cost of you buying from renting. These houses are not renting well.

Many blocks of flats in Ikoyi, I am told by reliable sources, are just there completely empty because the people that built them are thieves who don't need the immediate cashflow and did not build it on mortgage. Hence they can afford to leave it empty.

So as far as I am concerned, anyone buying properties now in Nigeria at the inflated prices they are advertised at would be losing part of his money in the coming few months as the prices would crash and they would also struggle to rent it out in the short term.

Here is more details about vacancy rates in Abuja highbrow areas (35%).

http://allafrica.com/stories/201412010024.html

This is before rail construction and good roads.

Overpriced rubbish

Someone wants to sell me such stuuupid kitchen for £4m?

E no go better for their entire generation.

Sagamite:

I would caution both of you with your assumptions.
You have to take serious consideration into what are the drivers for the value appreciation you allude to and understand the likely changes in future.
Prices are impacted by (i) supply, (ii) demand, (iii) lack of information and (iv) price movement expectations.
House prices in the UK are mainly driven by a significant raise in demand due to the globalisation of its demand market. That is, people from all over the world want to buy in the London.
Expected price movement and supply not keeping up with the astonomical demand also play minor parts in UK prices.
House prices in Nigeria are mainly driven by lack of supply, especially of basic standard housing in safe areas and areas with easy commute.
Lack of information and expected price movements also play a minor part in the Nigerian prices.
Efe, as much as you state that UK houses are subject to Boom and Burst Cycles, I will tell you today (and mark my words), Nigerian houses are prime patients for a strictly Burst Festival.
They are overvalued because of lack of transportation infrastructure and basic standard housing supply. They are mediocre quality products being sold at monumental prices.
Would the UK global demand constrict?
Yes, I think so. Because as the citizenry complain about skyrocketing house prices, the government would have to introduce policies to restrict foreign purchase just like Australia has done. But they would have to do it gently to not damage the economy as many people have invested their net worth in property and a crash would cause an economic meltdown (as people lose their wealth). Government would focus of constraining price growth, not reducing prices.
How is the Nigerian Prices likely to change?
Now we have a sane and clean government, hence things are likely to be done properly.
We have an incorruptible President and we have a man called Fashola as Minister for Power, Housing and Works. We also have a competent Amaechi in Transport.
Then we have the Chinese coming in ready to build.
Once we start having good roads, rail and new housing stock, then you would see (with Fashola responsible for these) the change in supply dynamics and accessibility.
Remember Real Estate is the new big thing in Nigeria at present. Housing stock is already being built drastically. This would be accelerated with Fashola in charge and I see all these overpriced properties (that are mostly junk) crashing.
Already, at least 40% of housing stock in VI and Ikoyi axis are vacant because they are just overpriced. Once the supply increases and people can live in Amuwo Odofin or Ilupeju and get to work in VI by rail, you would see this vacancy rate escalated except prices come down.
http://uncova.com/greed-pib-fingered-for-over-60-vacancy-rate-in-ikoyi-housing-market
http://updates.hopefornigeriaonline.com/slump-in-demand-for-highbrow-properties/
Don't believe the hype you hear from Nigerian unreliable fools with their penchance for misinformation that you will recoup the cost of you buying from renting. These houses are not renting well.
Many blocks of flats in Ikoyi, I am told by reliable sources, are just there completely empty because the people that built them are thieves who don't need the immediate cashflow and did not build it on mortgage. Hence they can afford to leave it empty.
So as far as I am concerned, anyone buying properties now in Nigeria at the inflated prices they are advertised at would be losing part of his money in the coming few months as the prices would crash and they would also struggle to rent it out in the short term.

Okay, I get what you're saying and I don't disagree with some of your points - but my outlook is slightly different.

The UK is a developed nation. Nigeria is a developing nation. Housing prices in the UK are closely linked to either upward / downward trends in the economy. Controlling factors such as Inflation Rates, Retail Price Index, Consumer Price Index, etc. are all determining factors. What's the equivalent in Nigeria? Nothing is appropriately monitored there. Does there even exist an equivalent of the Office for National Statistics (OFNS) over there? I had a read of the links you posted but those articles were based mostly on the reporters' opinions. Nothing backed with hard facts and figures, but then again nothing surprising there.

See, my analogy is quite simple. Basic even. With development comes job opportunities, which in turn brings in a lot of potential customers for the housing market in Naija which = a demand for housing. Based on what you say about a changed and cleaner government (which I find hard to believe but let's be optimistic), coupled with the Chinese, expatriates, and foreign investors trickling in - then imminent "progress" should be on the cards, and this should transcend into a surge in people and flocking to major city areas in the hope of acquiring jobs (albeit well-paying jobs), and businesses wanting to cater for high-brow clientèle.

The point(s) you make about transportation and infrastructre are interesting ones, but let's be realistic. How long will it take the government to deliver on it's promises to provide the basics? Take transportation for example - I do not for one second believe an efficient railway can be built an completed within the lifespan of one government in power even if they succeed in running for a second or even third term in office. So until that's up and running, what happens to the expectations for affordable housing?

At the moment, there is a chink in the government's armour and those with a keen eye for detail tap into such situations, milk, make the most of the situation and move on to the next best thing. You didn't address the point I made about transforming that property into a swanky hall of residence for students of wealthy parents. You made some interesting points about a lot of unoccupied properties for rent. Okay. But what about those serving as guest houses / top-end hotels in Abuja prime areas. How do they do it? What or who's to say the same can't be done for this property?

Not all Nigerians are on the breadline, struggling to exist, living solely from hand-to-mouth. There are a lot of them out there living it up with the money to burn. So where else would they burn it if not at exclusively built expensive properties serving as guest houses, etc? I agree the interior of the property you posted looks quite grim to be honest, but like I mentioned in my previous post, it's nothing that a good lick of paint with some imported items from furniture stores over here wont put right.

Finally, you mentioned globalisation being one of the driving factors in pushing up housing prices in the UK. Now if this present Nigerian government is half as good as you say they are, then Nigeria should be heading towards a similar scenario, which in turn should translate into lots of people from all over the world wanting to buy property in Abuja, as they do in London. And if this causes a shortage in supply, then wouldn't it stand to reason that this grossly overpriced property will be snapped up ASAP by foreign investors?

EfemenaXY:


Okay, I get what you're saying and I don't disagree with some of your points - but my outlook is slightly different.

The UK is a developed nation. Nigeria is a developing nation. Housing prices in the UK are closely linked to either upward / downward trends in the economy. Controlling factors such as Inflation Rates, Retail Price Index, Consumer Price Index, etc. are all determining factors. What's the equivalent in Nigeria? Nothing is appropriately monitored there. Does there even exist an equivalent of the Office for National Statistics (OFNS) over there? I had a read of the links you posted but those articles were based mostly on the reporters' opinions. Nothing backed with hard facts and figures, but then again nothing surprising there.

One national statistic agency actually exists. It is called Nigerian Bureau of Statistics.

It is full of products of a failed education system churning out mediocre statistics.

As for the vacancy figures, they are not the respective reporter's opinions. Most of them actually got that figures from Bismarck Riwane firm's (Financial Derivatives Company Limited) reports and Broll Property Services' reports without bothering to reference it. I know because I have seen the reports myself and was tracking it for a while because of something I was doing.

EfemenaXY:

See, my analogy is quite simple. Basic even. With development comes job opportunities, which in turn brings in a lot of potential customers for the housing market in Naija which = a demand for housing. Based on what you say about a changed and cleaner government (which I find hard to believe but let's be optimistic), coupled with the Chinese, expatriates, and foreign investors trickling in - then imminent "progress" should be on the cards, and this should transcend into a surge in people and flocking to major city areas in the hope of acquiring jobs (albeit well-paying jobs), and businesses wanting to cater for high-brow clientèle.

Yep, you are right but the issue there is that there is already over supply in the high end pricing (not quality) range.

The supply for those limited numbers of upper customers already exist, but it is just not value for money.

Most of the flats (not houses) on the Island and Lekki axis, in a sane environment, should be priced and catering for those earning in the N6-8m a year earning range. But when the rents are going for N2-8m a year, some more than the annual salaries of these people, then it is gross price inflation; hence why they are empty.

And more and more are still being built in Lekki.

There is currently a strong mismatch between the quality levels of houses and the occupants' earnings especially at the upper-end.

What people are paying is not matching the quality they are getting relative to sane worlds.

EfemenaXY:

The point(s) you make about transportation and infrastructre are interesting ones, but let's be realistic. How long will it take the government to deliver on it's promises to provide the basics? Take transportation for example - I do not for one second believe an efficient railway can be built an completed within the lifespan of one government in power even if they succeed in running for a second or even third term in office. So until that's up and running, what happens to the expectations for affordable housing?

Neither do I.

I am looking at the far longer term, circa 10-20 years.

There is already a metro system being built in Lagos. From Alaba area to VI.

The Chinese are looking at the rail from Lagos to Kano, which should open up the north of Lagos to the CBD.

If all these kick in, then Lagos would open up.

One of the things causing the price inflation is because of the concentration in Lagos due to lack of infrastructure. Have you noticed anytime you have people from Nigeria visit you in the UK, when you take them out, they are always complaining that the journey is too far?

That is because 70% of people living in Lagos, live in 30% of Lagos. Unlike in London where we are well spread out.

EfemenaXY:

At the moment, there is a chink in the government's armour and those with a keen eye for detail tap into such situations, milk, make the most of the situation and move on to the next best thing. You didn't address the point I made about transforming that property into a swanky hall of residence for students of wealthy parents. You made some interesting points about a lot of unoccupied properties for rent. Okay. But what about those serving as guest houses / top-end hotels in Abuja prime areas. How do they do it? What or who's to say the same can't be done for this property?

If you want to transform it into halls of residence, then no shaking but after you pay £4m, I doubt you would make your money back in your lifetime.

Let me do some quick calculations for you:

It has 8 bedrooms, so lets say you somehow shockingly find some wealthy students with parents willing to pay to rent a room for N1m par annum per room, that is N8m per annum.

£4m = N1.2bn

N1.2bn/N8m should give you 150 years to recoup your investment (ignoring inflation and increases).

You go still get teeth then?

Not to forget, your extra money to refurbish, your maintenance costs and the fact you will not find students paying N1m to rent a room and be going to University of Abuja.

As for guest houses and top-end hotels, they do it because they are the only options for a small pool.

EfemenaXY:

Not all Nigerians are on the breadline, struggling to exist, living solely from hand-to-mouth. There are a lot of them out there living it up with the money to burn. So where else would they burn it if not at exclusively built expensive properties serving as guest houses, etc? I agree the interior of the property you posted looks quite grim to be honest, but like I mentioned in my previous post, it's nothing that a good lick of paint with some imported items from furniture stores over here wont put right.

The volume of Nigerians in those class of 'living it up' is very low.

They are, according to a survey, less than 10,000 Nigerians in that dollar millionaires bracket. And most of them burn it in London, Atlanta and Dubai. Some of them burn it building houses in highbrow areas in Lagos and FCT which they leave empty because they see it as a stable long-term investment.

Even less than 2% of Nigerian households (i.e. about 660K households) earn more than N10m a year. Household income o (i.e. combining husband and wife earnings where it applies), not just individual incomes.

So you can conveniently assume less than 1m local Nigerians live a very well-off life.

EfemenaXY:

Finally, you mentioned globalisation being one of the driving factors in pushing up housing prices in the UK. Now if this present Nigerian government is half as good as you say they are, then Nigeria should be heading towards a similar scenario, which in turn should translate into lots of people from all over the world wanting to buy property in Abuja, as they do in London. And if this causes a shortage in supply, then wouldn't it stand to reason that this grossly overpriced property will be snapped up ASAP by foreign investors?

I agree, but I can guarantee you it would be new housing stock they would buy, not the rubbish like the one above.

Poor quality builds would not attract them.

The supply at the moment at the high-end, if the prices are surprisingly maintained are enough to satisfy any forecasted influx.

Not to talk about more coming from the construction of Eko Atlantic City.

3strike:
I go just farabale build mine or go buy a property in Texas where everything is big.

Take a guess how much this house is going for?

$350K

3strike:
I go just farabale build mine or go buy a property in Texas where everything is big.

Take a guess how much this house is going for?

$180,000?

I would take neither house because both locations are not enticing to me.

Give me the GBP4m and I will go and do up an estate in Ibadan or Ijebu Ode.

EfemenaXY, I just recalled where I saw the vacancy rates and the source.

It was while going through one of the reports of Lagos Business School. They, unlike the quack journalists, referenced their source and you will see it was from Bismarck Riwane's firm.

Look at page 88-92: http://www.lbs.edu.ng/LBSBreakfastClub/Monthly%20economic%20review%20-%20May%202014.pdf

@Sagamite
Some of the facts you have stated cannot be argued with. Nevertheless, some of those theories (e.g. Demand and Supply) does not work in parts of Nigeria. And this Real estate bubble people have been mentioning for years, I am yet to see any. There have been prediction of prices crashing in places like Banana Island as early as 5 years ago, yet guess what happened...The land reclamation in places like Osborne Ikoyi is baffling despite the relatively high vacancy rate on the Island. I know of someone who spent over N150million reclaiming land in Osborne Forshore but recently rejected an offer of over N500million.

From my personal experience, since I took the plunge in investing in Nigeria's real estate, the returns have been impressive (albeit the unorderly business terrain).I have invested in a UK property several years ago so I can make a decent comparison on both sides.

Anyway at the end of the day, depending on each person's objectives: different strokes for different folks...

phoenix480:
@Sagamite
Some of the facts you have stated cannot be argued with. Nevertheless, some of those theories (e.g. Demand and Supply) does not work in parts of Nigeria. And this Real estate bubble people have been mentioning for years, I am yet to see any. There have been prediction of prices crashing in places like Banana Island as early as 5 years ago, yet guess what happened...The land reclamation in places like Osborne Ikoyi is baffling despite the relatively high vacancy rate on the Island. I know of someone who spent over N150million reclaiming land in Osborne Forshore but recently rejected an offer of over N500million.

From my personal experience, since I took the plunge in investing in Nigeria's real estate, the returns have been impressive (albeit the unorderly business terrain).I have invested in a UK property several years ago so I can make a decent comparison on both sides.

Anyway at the end of the day, depending on each person's objectives: different strokes for different folks...

Yep, I understand your argument completely.

Nigeria is so unstructured and unorderly many things there (like the economy) is artificial. I even said this as recently as about 2-3 days ago:

https://www.nairaland.com/2787319/mtef-fec-approves-n6tr-expenditure/6#41172512

The typical traits about bubbles and pyramid schemes is that there would be some that make an absolute killing when it is ongoing and the going seems good, but when it tanks (and they will eventually tank), those left holding the cute baby would know that babies do shyt (i.e. those still in possession of the assets would realise their gold is actually a chimera). The ones that have exited would have been the winners and would thank whatever God they serve that they got out of the investment before it tanked and they made a killing. This is exactly what happened with the mid 2000 buying of shares in Nigeria when buying bank shares in Nigeria was seen as a no-brainer and easy money making scheme until it tanked.

Another trait about bubbles and pyramid schemes is that majority have no clue when it would tank. Many would even believe it would never tank as such groupthink beliefs are what sustains and grows the bubble/pyramid for as long as it lasts. Due to these beliefs, margins from the assets become extremely slim for new buyers as the current owners would be overpricing it as it is still seen as "gold". These beliefs continues until the artificiality is not sustainable anymore.

I am saying all these things about traits out of my independent thoughts, but I can bet my assets on it that someone (some professor/banker) would have written a book stating what I am stating, I just have not seen the book yet.

You can never say supply and demand are irrelevant/does not work in any pricing. That is the core and logic of pricing. The only thing that restricts their importance in pricing is lack of information about them, anticipatory changes of them and government interventionist/control policies forcing a disconnect between them.

My general policies about investments is that: If it looks too good and easy to be true, it would not be that good in the long run.

That policy even becomes more relevant when the product generating the 'good' so 'easily' is of poor and inferior quality.

Sagamite:

One national statistic agency actually exists. It is called Nigerian Bureau of Statistics.
It is full of products of a failed education system churning out mediocre statistics.

Abeg don't start that line again...

Sagamite:
As for the vacancy figures, they are not the respective reporter's opinions. Most of them actually got that figures from Bismarck Riwane firm's (Financial Derivatives Company Limited) reports and Broll Property Services reports without bothering to reference it. I know because I have seen the reports myself and was tracking it for a while because of something I was doing.
Yep, you are right but the issue there is that there is already over supply in the high end pricing (not quality) range.
The supply for those limited numbers of upper customers already exist, but it is just not value for money.
Most of the flats (not houses) on the Island and Lekki axis, in a sane environment, should be priced and catering for those in earning in the N6-8m a year earning range. But when the rents are going for N2-8m a year, more than the annual salaries of these people, then it is gross price inflation; hence why they are empty.
And more and more are still being built in Lekki.
There is currently a strong mismatch between the quality levels of houses and the occupants earnings especially at the upper-end.
What people are paying is not matching the quality they are getting relative to sane worlds.
Neither do I.
I am looking at the far longer term, circa 10-20 years.
There is already a metro system being built in Lagos. From Alaba area to VI.
The Chinese are looking at the rail from Lagos to Kano, which should open up the north of Lagos to the CBD.
If all these kick in, then Lagos would open up.
One of the things causing the price inflation is because of the concentration in Lagos due to lack of infrastructure. Have you noticed anytime you have people from Nigeria visit you in the UK, when you take them out, they are always complaining that the journey is too far?
That is because 70% of people living in Lagos, live in 30% of Lagos. Unlike in London where we are well spread out.
If you want to transform it into halls of residence, then no shaking but after you pay £4m, I doubt you would make your money back in your lifetime.
Let me do some quick calculations for you:
It has 8 bedrooms, so lets say you somehow shockingly find some wealthy students with parents willing to pay to rent a room for N1m par annum per room, that is N8m per annum.
£4m = N1.2bn
N1.2bn/N8m should give you 150 years to recoup your investment (ignoring inflation and increases).
You go still get teeth then?
Not to forget, your extra money to refurbish, your maintenance costs and the fact you will not find students paying N1m to rent a room and be going to University of Abuja.
As for guest houses and top-end hotels, they do it because they are the only options for a small pool.
The volume of Nigerians in those class of 'living it up' is very low.
They are, according to a survey, less than 10,000 Nigerians in that dollar millionaires bracket. And most of them burn it in London, Atlanta and Dubai. Some of them burn it building houses in highbrow areas in Lagos and FCT which they leave empty because they see it as a stable long-term investment.
Even less than 2% of Nigerian households (i.e. about 660K households) earn more than N10m a year. Household income o (i.e. combining husband and wife earnings where it applies), not just individual incomes.
So you can conveniently assume less than 1m local Nigerians live a very well-off life.
I agree, but I can guarantee you it would be new housing stock they would buy, not the rubbish like the one above.
Poor quality builds would not attract them.
The supply at the moment at the high-end, if the prices are surprisingly maintained are enough to satisfy any forecasted influx.
Not to talk about more coming from the construction of Eko Atlantic City.

Re: the bolded - you haven't taken into consideration the alarming rate at which the Naira devalues against the £ Sterling.

Okay, I tried to do a search of the historical exchange rate trend of NGN / GBP from 1960 but the best I could find was a 10 year historical trend provided by XE.com - an online foreign exchange currency converter tool which uses highly accurate, live mid market rates.

http://www.xe.com/currencycharts/?from=GBP&to=NGN&view=10Y

So let's play with some numbers here:

Exchange rate as at 2^nd Jan 2006 by COB (Close of Business) was roughly 224pts (i.e: £1 = N224)
Exchange rate as at COB 20^th Dec 2015 was roughly 296pts
% increase over the 10 year period: ((296 - 224)/296)*100 = 24.32% or let's say 25%

Or better still if we calculate the percentage increase between the highest (315pts) and the lowest (175pts) within that 10 year span = 80% (I like to be optimistic)

So if my £4 Abuja property increases by 80% in 10 years, I'll be looking at an increase of £3.2 which brings the new value of my Naija pad to £7.2m ==> almost double the value in 10 years time. Not 150 years as you postulated... and yes, I think I should have all my dentures intact 10 years from now.

And going by the real life example provided by Phoenix480, I think it's safe to assume the figures I've provided are a moderate - conservative even, increase.

EfemenaXY:

Abeg don't start that line again...
Re: the bolded - you haven't taken into consideration the alarming rate at which the Naira devalues against the £ Sterling.
Okay, I tried to do a search of the historical exchange rate trend of NGN / GBP from 1960 but the best I could find was a 10 year historical trend provided by XE.com - an online foreign exchange currency converter tool which uses highly accurate, live mid market rates.
http://www.xe.com/currencycharts/?from=GBP&to=NGN&view=10Y
So let's play with some numbers here:
Exchange rate as at 2^nd Jan 2006 by COB (Close of Business) was roughly 224pts (i.e: £1 = N224)
Exchange rate as at COB 20^th Dec 2015 was roughly 296pts
% increase over the 10 year period: ((296 - 224)/296)*100 = 24.32% or let's say 25%
Or better still if we calculate the percentage increase between the highest (315pts) and the lowest (175pts) within that 10 year span = 80% (I like to be optimistic)
So if my £4 Abuja property increases by 80% in 10 years, I'll be looking at an increase of £3.2 which brings the new value of my Naija pad to £7.2m ==> almost double the value in 10 years time. Not 150 years as you postulated... and yes, I think I should have all my dentures intact 10 years from now.
And going by the real life example provided by Phoenix480, I think it's safe to assume the figures I've provided are a moderate - conservative even, increase.

I think you have got your numbers mixed up.

A depreciation of the Naira is a net loss for the UK investor in Nigerian property. It makes no difference for the Nigerian Investor in Nigerian property

EfemenaXY:


Abeg don't start that line again...



Re: the bolded - you haven't taken into consideration the alarming rate at which the Naira devalues against the £ Sterling.

Okay, I tried to do a search of the historical exchange rate trend of NGN / GBP from 1960 but the best I could find was a 10 year historical trend provided by XE.com - an online foreign exchange currency converter tool which uses highly accurate, live mid market rates.

http://www.xe.com/currencycharts/?from=GBP&to=NGN&view=10Y

So let's play with some numbers here:

Exchange rate as at 2^nd Jan 2006 by COB (Close of Business) was roughly 224pts (i.e: £1 = N224)
Exchange rate as at COB 20^th Dec 2015 was roughly 296pts
% increase over the 10 year period: ((296 - 224)/296)*100 = 24.32% or let's say 25%

Or better still if we calculate the percentage increase between the highest (315pts) and the lowest (175pts) within that 10 year span = 80% (I like to be optimistic)

So if my £4 Abuja property increases by 80% in 10 years, I'll be looking at an increase of £3.2 which brings the new value of my Naija pad to £7.2m ==> almost double the value in 10 years time. Not 150 years as you postulated... and yes, I think I should have all my dentures intact 10 years from now.

And going by the real life example provided by Phoenix480, I think it's safe to assume the figures I've provided are a moderate - conservative even, increase.

Unfortunately sweetheart, that is not how it works.

For example, the fact that the Zimbabwean Dollar devalued by 102% from $1 = Z$750 in year 2003 to $1 = Z$77,965 in year 2005 does not mean a property you bought in Harare for £1m in 2003 would be worth £102m in 2005.

http://www.aljazeera.com/news/africa/2007/03/200852519429760702.html

If that was the case, I would sell all my bags of garri in Sagamu and invest all the earnings in properties in Zimbabwe, Somalia, Yemen and Syria and become the world's first Trillionaire.

Sagamite:




Unfortunately sweetheart, that is not how it works.

For example, the fact that the Zimbabwean Dollar devalued by 102% from $1 = Z$750 in year 2003 to $1 = Z$77,965 in year 2005 does not mean a property you bought in Harare for £1m in 2003 would be worth £102m in 2005.

http://www.aljazeera.com/news/africa/2007/03/200852519429760702.html

If that was the case, I would sell all my bags of garri in Sagamu and invest all the earnings in properties in Zimbabwe, Somalia, Yemen and Syria and become the world's first Trillionaire.

Abeg stop laughing jare. I was tired when I typed all that.

Kia! I'm embarrassed!

EfemenaXY:


Abeg stop laughing jare. I was tired when I typed all that.

Kia! I'm embarrassed!

Lol. I understand.

That is why sometimes I might see people's response to me in my mentions but I would not reply for days because what I need to say requires good research, concentration and construction. They might even see me commenting on other threads but have not replied to theirs. That happened a lot on the "Girl's Night Out" thread.

The Nigerian bubble is going to burst much sooner than later. At an average $110/bbl of oil, Nigeria was awash with petrodollars and combined with misappropriation (corruption, etc) fuelled the current real estate bubble we are seeing. At $36/bbl of oil and the subsequent cash crunch, it is difficult to see how the present economy can sustain Nigeria's overinflated housing market without a significant correction. I think all the available data point to some form of corrections that will begin in 2016.

Nicklee:
The Nigerian bubble is going to burst much sooner than later. At an average $110/bbl of oil, Nigeria was awash with petrodollars and combined with misappropriation (corruption, etc) fuelled the current real estate bubble we are seeing. At $36/bbl of oil and the subsequent cash crunch, it is difficult to see how the present economy can sustain Nigeria's overinflated housing market without a significant correction. I think all the available data point to some form of corrections that will begin in 2016.

Worse still is the fact that many of the new built empty properties are owned by crooks (many from GEJ's Yam Festival) who can afford to leave them empty and not rent them out because they did not take a mortgage or loan to build them.

When EFCC comes after these people in some few months and these assets start being seized, many of the crooks would try to sell them off or EFCC would be selling the seized ones off, hence flooding the market with supply and leading to a price correction.

Also, with the 50K homes being planned in Eko Atlantic City and a UN report stating Nigeria needs to build 700K homes annually to fill the needs gap (which Fashola is probably going to set as a benchmark), I expect supply to drastically increase by 2020.

This is what some Nigerians went to pay £100K+ for, to an incompetent, crooked quack called Richard Nyong.


https://www.youtube.com/watch?v=HeKMGGkYYDk


https://www.youtube.com/watch?v=8ku3h_QCl9Y