Abuja big men broke •Can’t find buyers for properties •Estate firms grumble


Written by Olawale Rasheed, Abuja Saturday, 13 October 2012 Saturday Tribune

THERE are good times and bad times too. Now, it is not only the poor that are crying; the rich are equally currently crying in the country, especially in the federal capital, Abuja.

One of the principal reasons for their lamentation is that the prices of their choice properties in highbrow parts of the federal capital, have crashed as cash-strapped members of the elite class have created a glut in the real estate sector.

Saturday Tribune findings during the week showed that many individuals, known across Abuja as ‘big men’, have gone broke due to a number of factors.

As a way of getting out of the cash crisis, it was discovered that many top individuals with significant real estate holdings are now flooding the real estate market with choice properties in high- brow areas. The situation, however, is compounded by the lack of prospective buyers for such properties that dot the landscape of the city with conspicuous “for sale” signs.

Some banks, it was gathered, are also offering some of their real estate holdings for sale to raise the level of their cash holding, a situation that is creating a new level of crisis for the real estate sector.

Investigations showed that many, who had hoped to simply ‘fling’ one or two of their properties to meet daily needs, were faced with very low level of demand, even after they had reduced the price to almost the lowest level. For example, Mike Omero, an auto dealer in Abuja narrated that for the past three months, he had been looking for buyers for his N10m land along airport road, adding “even when I reduced the price, no buyer has shown up yet. I have some fine cars here normally to be sold for nine to N10m but no market, my brother.”

A real estate firm operator, Adaka Henry, who had made a fortune in the business told our correspondent that he had never witnessed the current level of downturn in the Abuja real estate business as what he is experiencing now.

“I don’t understand what is happening. The market is simply very dull. People will come; check property and go, never to come back. Go round Maitama, Asokoro or those new districts, the sales are down. People are rich but they don’t have the cash,” he said.

Reminded of the many heavy-duty estate constructions ongoing all over the city, Adaka said “that is the irony of the situation” but added, “when you build, you must sell. People are not buying. That is the point,” he said.

Checks of prices of houses in some areas revealed that the crisis was generating a gradual collapse of the real estate sector as prices were crashing across board.

Investigations and interactions with many top figures within the city indicated spreading economic woes as many of them complained of biting cash crunch which they attributed to constant mopping up of cash from the system by the Central Bank of Nigeria (CBN).

The harsh times is also reflected in the increasingly curtailed high profile lifestyle of many elite with reports from many hoteliers in Abuja showing that patronage had dropped by as much as 60 per cent, leading to laying off of workers in some hospitality firms in the federal capital.

A chief executive officer of a highbrow hotel and guest house in Maitama, Abuja told Saturday Tribune that in a month in the past, their turn-over always hovered around N34m but lamented that nowadays, the firm was struggling to clock half of that amount.

“Patronage has dropped. The fact is, cash flow is hard now. In fact, I had to lay off some of my workers. I don’t know what caused it but I think the elite are not spending,” the hotelier from a North-Central state noted.

The low cash availability has led to what Saturday Tribune discovered to be a sharp depletion of bank deposits and savings apart from the growing offering of choice properties for sale.

A check at some Abuja-domiciled banks indicated that the run-on bank deposit was even threatening the survival of one of the banks with high net-worth customers with fixed deposits said to be withdrawing their deposits at a rate that was putting the bank management on edge.

Saturday Tribune was told of a customer who had close to N700 million but had, under four months, withdrawn more than two thirds of the savings while others reported many big customers terminating their fix contract deals to gain access to their funds.

A top official of a bank in Abuja, who was leading to what he called near insolvency of Abuja branches of many banks.

“Withdrawal is too high now. Please, we don’t have to publicise this but I can tell you things are not okay with the banking system. Our customers are withdrawing more and saving less,” he said

Saturday Tribune can authoritatively report that a bank in the capital city had stopped granting loans to customers on account of run-on bank deposit.

While the management called the decision a temporary one to allow for audit, insiders said the bank was under pressure from excessive withdrawals and termination of fixed deposit deals.

Further checks showed that some banks are now raising their fixed deposit rates with a view to attracting deposits.

A banker told Saturday Tribune that the rate as high as 30 per cent was being offered for fixed deposits but complained that the offer was not attracting high response as was envisaged.

It was learnt that unscrupulous top civil servants, who fixed projects money to gain interest, could also not patronise the banks as before due to the tight fund release mechanism by the Federal Ministry of Finance and what a source called unusually tight monitoring of cash movement by CBN.

While deposits were being depleted, findings also showed that many elite who could repatriate funds from abroad, could not do so due to the high risk of being caught in money laundering web, as incoming fund must be properly declared. Many of such high net worth individuals are wary of being questioned about the sources of such foreign holdings and cash.


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