I came across this blog post recently:

I was discussing with real estate agent recently about why there were so many unoccupied houses in lekki and in some parts of Lagos Island. His answer was that the landlords were unwilling to let down on the rent price and would rather have the houses unoccupied than occupied for a rental amount considered too small.

Curiously I wondered who is loosing in that regard as an owner of an unoccupied building
surely must be finding hard to repay the cost of construction. At the moment of asking the reason became mutually obvious. These guys have no cost of borrowing. Neither do they face any form of loss of value on their property. It was a win win situation for them. The funds were simply unlevered and unencumbered. It was corruption money. Money belonging to the people of Nigeria basically 'housed' in grandiose properties all over Lagos and indeed Nigeria.

It's no wonder house rents never seem to go down. It's probably how some of our parents also built those mansions in the village that can't ever be monetized as no one ever lived in them all year long.

So that explains it. The sad truth is that most of the housing units in Nigeria are funded from corruption money. Money looted from both the public and private sector at a pandemic level.

As Lagosians bask in the euphoria of the new Tenancy law, be reminded it is just a short term respite, till housing become low cost and funded via mortgage, it will continue to be a shelter for looted funds.

Housing Corruption

I think it's wrong to assume that anyone who would build a house without renting it out must have built it with corruption money; you can only say that they must be very rich people.  I think real estate can be used as a means of protecting your legitimate savings from inflation.  If you build or buy a house for that purpose, then you would not want to rent it out at a cheap rate, because the cheap rent may not adequately compensate the owner for damages due to usage and the stress of collecting rent every month.  I don't think you can fairly conclude that the owners must be corrupt because they didn't take any tenants.

I was discussing with real estate agent recently about why there were so many unoccupied houses in lekki and in some parts of Lagos Island. His answer was that the landlords were unwilling to let down on the rent price and would rather have the houses unoccupied than occupied for a rental amount considered too small.

Curiously I wondered who is loosing in that regard as an owner of an unoccupied building
surely must be finding hard to repay the cost of construction. At the moment of asking the reason became mutually obvious. These guys have no cost of borrowing. Neither do they face any form of loss of value on their property. It was a win win situation for them. The funds were simply unlevered and unencumbered. It was corruption money. Money belonging to the people of Nigeria basically 'housed' in grandiose properties all over Lagos and indeed Nigeria.

It's no wonder house rents never seem to go down. It's probably how some of our parents also built those mansions in the village that can't ever be monetized as no one ever lived in them all year long.

So that explains it. The sad truth is that most of the housing units in Nigeria are funded from corruption money. Money looted from both the public and private sector at a pandemic level.

As Lagosians bask in the euphoria of the new Tenancy law, be reminded it is just a short term respite, till housing become low cost and funded via mortgage, it will continue to be a shelter for looted funds.

The only acceptable excuse for this idiotic write up is that it was written by a 7years old child (no offense to the smart 7 years old children out there). How on earth did he come to the conclusion that the owners of these homes looted money. . .did the he make any attempt to find out who those homes belong to? How they made a living? Find out the circumstances behind the homes remaining occupied? Did he even attempt any form of investigation before flexing his fingers?

Sigh! Guess anyone can be a writer these days. Damn you wordpress!! 

A lot of people in Nigeria simply do not understand the impact of corruption. It cripples everything, distorts free markets and makes a mockery of simple principles of economics.

Especially when we make no one pay for their crimes.

People simply don't get it, that's why they keep voting the same loooooters in while cheering them on.

^^^^why else would we have the priciest slums and some of the most expensive hotel rates in the world?

But no one is denying the effect of corruption or even saying those in government aren't looting. The bone of contention here is the wuruwuru to the answer way the writer concluded that those homes where built by looters. I know people who own an unoccupied home in the parts of Lagos he mentioned and the reason the house remains empty is because the family is fighting over it since the patriarch died years ago. One side of the family wants it sold, the other wants it to remain in the family. . .any attempt to rent it out is sabotaged, so until they can come to a reasonable compromise, the house remains unoccupied.

And before you ask, I can honestly tell you. . . they ain't no looters!

okada_man:

A lot of people in Nigeria simply do not understand the impact of corruption. It cripples everything, distorts free markets and makes a mockery of simple principles of economics.

Especially when we make no one pay for their crimes.

People simply don't get it, that's why they keep voting the same loooooters in while cheering them on.

Corruption is cancerous,it throws common sence to the wind and ground reasoning.

redsun:

Corruption is cancerous,it throws common sence to the wind and ground reasoning.

gbammmmm well said

alj_harem:


gbammmmm well said

The truth must be spoken.And truth must prevail.

When Corruption is reduced then Nigeria's economy will increase. Corrupt people must have all assets stripped and sold and they must be jailed for 20 years.

Sisi_Kill:

But no one is denying the effect of corruption or even saying those in government aren't looting. The bone of contention here is the wuruwuru to the answer way the writer concluded that those homes where built by looters. I know people who own an unoccupied home in the parts of Lagos he mentioned and the reason the house remains empty is because the family is fighting over it since the patriarch died years ago. One side of the family wants it sold, the other wants it to remain in the family. . .any attempt to rent it out is sabotaged, so until they can come to a reasonable compromise, the house remains unoccupied.

And before you ask, I can honestly tell you. . . they ain't no looters!

Yes, the writer's logic is weak.

But that is not the only issue, that fact does not totally negate their question or dismiss their concern.

You gave an explanation which is very plausible, but I'm sure that cannot fully explain the problem.

I also believe the problem is caused by our cash and carry economy, we rarely use mortgage or other home Finance instruments, so many of those houses are fully paid for and the owners do not have the financial burden of monthly debt servicing, that can explain it too.

We can also assume that most of these houses are holiday homes or retirement homes built by Nigerians abroad.

Yes, they are all possible explanations.

But they still beg the question; Why such a stupendous display of wealth (all paid for and they don't care if it generates money or not) in a country with very high poverty rates and very low GDP? That is the issue.

The only thing that brought boko haramism to nigeria is endemic corruption,they pitch where the system is totally broken,where there is no rule of law

redsun:

The only thing that brought boko haramism to nigeria is endemic corruption,they pitch where the system is totally broken,where there is no rule of law

but that does not give boko haram the right to be killing us ?

yes there is corruption and in fact when i pass through lekki, i just use to wonder, How many are Tinubu's houses in this hundreds of "so called lekki, ajah estates"

okada_man:

Yes, the writer's logic is weak.

But that is not the only issue, that fact does not totally negate their question or dismiss their concern.

You gave an explanation which is very plausible, but I'm sure that cannot fully explain the problem.

I also believe the problem is caused by our cash and carry economy, we rarely use mortgage or other home Finance instruments, so many of those houses are fully paid for and the owners do not have the financial burden of monthly debt servicing, that can explain it too.

We can also assume that most of these houses are holiday homes or retirement homes built by Nigerians abroad.

Yes, they are all possible explanations.

But they still beg the question; Why such a stupendous display of wealth (all paid for and they don't care if it generates money or not) in a country with very high poverty rates and very low GDP? That is the issue.

Good question. . .unfortunately to get an answer, one would have to tread the the dark recesses of these people's psyche. I mean we're talking about a society where people are judge not by what they've done but how large their pocket is, everyone is trying to keep up with the joneses in Nigeria.

Having said that, I'm gonna play devil's advocate for a min. . .Yes it is a bit "uncool" to be that show offy in a country with very high poverty rate and low GDP but it is their money and they can do whatever they wanna do with it. What right do we have to tell someone how they may or may not spend their money?

Sisi_Kill:

Good question. . .unfortunately to get an answer, one would have to tread the the dark recesses of these people's psyche. I mean we're talking about a society where people are judge not by what they've done but how large their pocket is, everyone is trying to keep up with the joneses in Nigeria.

Having said that, I'm gonna play devil's advocate for a min. . .Yes it is a bit "uncool" to be that show offy in a country with very high poverty rate and low GDP but it is their money and they can do whatever they wanna do with it. What right do we have to tell someone how they may or may not spend their money?

Of course people can do whatever they like with the money in their pocket, stolen or worked for, after all it's already in their pocket.

Maybe I should not have used the word "display" in that context. I was simply asking where people got such home building funds from that they can afford to easily lock it up and snub renters for so long.

Like @OYB alluded to, try and compare hotel rental rates in Lagos to hotel rates in NY or even less developed cities around the world. You will be shocked to discover how unreasonably high the prices in Lagos and across Nigeria are.

That suggests that we have an underground economy that defies economic logic, well, correction, except the logic of corruption and dysfunctional trade.

Free market in Nigeria simply means free to loot. The economy is awash with Billions of dollars that got into the markets through corrupt back doors, causing inflation and distorting the true value of products. Hence the dysfunction.

okada_man:


Free market in Nigeria simply means free to loot. The economy is awash with Billions of dollars that got into the markets through corrupt back doors, causing inflation and distorting the true value of products. Hence the dysfunction.

end of.

Capitalism at its best. Thrive or die. Its a freeworld and you can do whatever you wish with your bucks.

Despite how presumptuos the write up may sound, I find it hard to believe that any individual will work hard, make money legitimately, build houses and leave them vacant because of some policy that reduces how much rent he can get per time. It doesn't make sound economic sense to me.

cicero:

Despite how presumptuos the write up may sound, I find it hard to believe that any individual will work hard, make money legitimately, build houses and leave them vacant because of some policy that reduces how much rent he can get per time. It doesn't make sound economic sense to me.

Nigeria defies all economic laws because we have a distorted economy based on massive corruption and graft. Someone once said that the Nigerian economy is based on 3 key pillars: government/political corruption, fraud, and drug trafficking. He also said there is a new kid on the block namely the religion industry run by private jet flying commercial pastors. If you make money from any of these sources, you can afford to build 10 villas at Lekki and lock them up till kingdom come.

This is largely correct for Abuja;

Whilst it is wrong to throw a blanket accusation at the issue. I have had it confirmed that a lot of unoccupied houses in the lekki area do actually belong to politicians. Funny enough, this is aso the case in parts of the UK. I was once in a cab in South East London, the driver asked me where i was from, I told him, and that was how our discussion started. Oh so, you are from nigeria he said, My favourite customer is from Nigeria, a minister in the Obj administration. In the stretch of South east London we travelled, the Taxi driver confirmed that the minister had no less that 12 houses, most if not all were unoccupied, infact it was so bad that the minister had come to the UK only to meet one of his properties ransacked and looted, especially the Kitchen which he spent approx £20,000 refurbishing. now I may not have been able to verify the strory, but surely the driver had no reason to lie or make up the story and his attention to details showed he had some inside info. believe me those bloody politicians do not have any ones interest at heart. And by the way, house prices in that part of London are in excess of £300k, so not cheap

Chubhie:

[b]Capitalism [/b]at its best. Thrive or die. Its a freeworld and you can do whatever you wish with your bucks.

What has capitalism to do with this?

I have to agree that the OP is right to a large extent. Agreed not all the houses are bought with stolen money but it must be a sizeable number. It's also possible that some of these owners have been jailed in foreign lands. we all know that Houses start to depreciate as soon as you finish building it so for you to allow the house to depreciate and also not get any rent on it then you must be really rich and if you are really that rich in NIGERIA most times there are k-legs. It is also possible that these houses have issues relating to family squabbles but these are not so common.

Another thing that also works well for these unoccupied house owners is because the state Government has no records and do not collect house taxes or else you will also have to pay for that even though you are not generating any revenue.

A lot of people in Nigeria simply do not understand the impact of corruption.

If you're referring to those who ARE corrupt, of course they understand! They simply do not care about the impact it has on others.

They only care about the impact it has on their own bank accounts. Greed and selfishness go hand-in-hand.

Sisi_Kill:

The only acceptable excuse for this idiotic write up is that it was written by a 7years old child (no offense to the smart 7 years old children out there). How on earth did he come to the conclusion that the owners of these homes looted money. . .did the he make any attempt to find out who those homes belong to? How they made a living? Find out the circumstances behind the homes remaining occupied? Did he even attempt any form of investigation before flexing his fingers?

Sigh! Guess anyone can be a writer these days. Damn you wordpress!! 

while there might be some generalisations and conclusions without evidence in the write up,nevertheless it doesn't warrant the amount of venom you have cast upon it in your comments.more over in your follow up you stated that you know people/families(certainly not every single landlord of unoccupied luxury mansion) who have left it unoccupied due to family squabbles however what the writer is saying is simply that knowing what it takes financially to erect these edifices,on the balance of probabilities no legitimate business person will leave a house worth hundreds of millions sometimes billions unoccupied rather than accept what they feel is not worth paying as rent.
secondly it is an open secret that this is one of the most effective and popular ways in which nigerian politicians launder their ill gotten funds,so the writer is not saying anything new.
while you might know people who have abandoned their properties as a result of  family squabbles,i also know people who are as close as can be who have buildings in different parts of the island empty as proceeds of laundered government loot.
on a art note you should go look for an article from a british national daily about bishops gate area in london,popularly known as millionaires row,there are million pound properties there which has been empty for years owned by nigerian politicians and presently illegally occupied by squatters

Thirst4Lif:

If you're referring to those who ARE corrupt, of course they understand! They simply do not care about the impact it has on others.

They only care about the impact it has on their own bank accounts. Greed and selfishness go hand-in-hand.

I'm definitely not referring to those who are corrupt. Of course they know what they are doing and don't give a damn about the country.

I was referring to gullible Nigerians who are mostly poor, violated, abused, controlled, hungry and confused. Yet they file out everytime to hail their oppressors.

The only acceptable excuse for this idiotic write up is that it was written by a 7years old child (no offense to the smart 7 years old children out there). How on earth did he come to the conclusion that the owners of these homes looted money. . .did the he make any attempt to find out who those homes belong to? How they made a living? Find out the circumstances behind the homes remaining occupied? Did he even attempt any form of investigation before flexing his fingers?

Sigh! Guess anyone can be a writer these days. Damn you wordpress!!



@ sisi kill - a plot of land in lekki is over 40M. How many nigerians can afford that. ,This is an area where only one road leads in and out , and literally gets flooded every time it rains, yet rent has not crashed ,prices of land still too high in lekki. Its still a status symbol. doesnt make sense to me. The only explanation ---CORRUPTION!!! If you worked hard for every dime you used to build your house, if you sweated to raise funds legally-trust me you would not leave the house unoccupied.

Sisi_Kill:

The only acceptable excuse for this idiotic write up is that it was written by a 7years old child (no offense to the smart 7 years old children out there). How on earth did he come to the conclusion that the owners of these homes looted money. . .did the he make any attempt to find out who those homes belong to? How they made a living? Find out the circumstances behind the homes remaining occupied? Did he even attempt any form of investigation before flexing his fingers?

Sigh! Guess anyone can be a writer these days. Damn you wordpress!! 

With the stupendous amount being reported stolen or embezzled why would you discard corruption as the main reason behind the housing boom?
Why will someone put his money into a venture and not want to reap from it?

The housing sector has been going through a major boom since the return of democracy. This isn't necessarily tied into both an economic boom(as the growth witnessed in the economy isn't filtering down or significant to major such growth in the latter sector) or inflation(since if there is economy growth investors will put their money in the market rather than in fixed assests like properties) rather the key indicator is corruption. The boom in the housing sector is mainly in the upper-scale and high-end luxury department.
Recent regulation makes it more difficult to launder ill gotten wealth in local banks or near impossible to stash it in offshore accounts.
I witnessed a property being bought in a high-brow area in Abuja for 600mil, only for it to be pulled-down and rebuilt from the ground.
For example; a former Gov. from the SE ended up owning over 100 houses on the expiration of his tenure.

The case in lekki is child's play compared to what is happening in Asokoro, Maitama and Wuse II districts of the FCT (Abuja).

Though it may be erronous to comclude that most of these house are built with corruption money, this may be the case to a large extent in Abuja. here you see house that have remain vacant or upward of six years and they are most owned by director and top shot in the ministries, departments and agency.

i think we are actually getting some points wrong. im into the real estate sector and do jobs for these governt pple alot. well high prices are sometimes attributable to scarcity, stiff necked landlord etc whom are not necessarily politicians. infact i recently sold a house in osborne owned by ex gov in one of the hausa states. he borrowed money for election and he lost to CPC candidate. hence he told us to sell a house worth 120Million for 50 to 70 m. politicians do sell anyhow cos they didnt sweat for their money, yet they buy 1billion property in ikoyi. i wouldnt want to mention names here

toba:

i think we are actually getting some points wrong. im into the real estate sector and do jobs for these governt pple alot. well high prices are sometimes attributable to scarcity, [b]stiff necked landlord [/b]etc whom are not necessarily politicians. infact i recently sold a house in osborne owned by ex gov in one of the hausa states. he borrowed money for election and he lost to CPC candidate. hence he told us to sell a house worth 120Million for 50 to 70 m. politicians do sell anyhow cos they didnt sweat for their money, yet they buy 1billion property in ikoyi. i wouldnt want to mention names here

so true.

cases of landlords looking for a ''corporate tenant'' (an organisation) to take a block of 8 flats for minimum period of  three years + service charge and rent quoted in dollars really did my head in back then.  these houses have been unoccupied for as long as two years.

sometimes, one can get an individual that's willing to rent one of the flats, yet the landlord wont budge and still insist on the ''corporate tenant''.

and yes, most of these houses were owned by politicians

The writer has a valid point. Nigerian politicians have been using real estate to launder money for years! Go check the property registers in London and Dubai, your jaws will drop!

the agents should play their advisory roles based on whats obtainable in the market. theres a certain liaison office of a south south state that needs to be sold. i went to the property and advised the special assistant to the gov who gave my firm the job on the best price they can get from eventual sale. we need to tell them the truth on what is realistic. some agents are deceptiveand not truthful just to get the brief by all means