Hi nairalanders,

Recent happenings in Nigeria with regards the economy has brought in a bit of mix feelings. Some investors in diaspora will be quick to take advantage of the naira devaluation to acquire more properties. Few dollars now exchange for more naira and as such has necessitated the viable investment from diaspora investors.

Also the falling price of crude oil in the international market has left a lot to be desired, knowing that it is the main source of the country's revenue and as such the budget will be in deficit from the very beginning having set the budget benchmark at 65 US dollars and today crude oil market price is 49 US dollars, it inverably means most of the capital expenditure will be had to meet for example some districts in abuja were infrastructure is ongoing may witness a slow pace of work or suspended for a while. This will definitely affect the value of real estate as infrastructure is a viability indicator. If capital expenditure isn't funded effectively, liquidity in circulation will be very low and local investors in real estate will equally be low.

The state of insecurity by all standard has affected real estate market more especially in Abuja am sure other states will have a fair share of low investors in real estate. We all know that in a secure environment direct foreign investments are encouraged and as such boost the real estate sector.

So I will like to have your view on the topic

ive been looking for an analysis, such as this.
wud like to add that as with all "Nigerian business mentality" stuffs- alot of entrepreneurs ventured into the real estate/development business hoping for an easy/profit kill cos everbody else was doing it ), but with the drop in oil prices, current political uncertainty, and offcourse the liquidity ratio/spending power- the real estate sector is ready for a drop- perhaps we would see realistic prices as investor will be wellpressed on repaying back the bank loans.

jst to add, i got a mail recently from a popular developer "buy 2 get one free" - guess the rapid expansion and now this oil bust is a big blow to his business model.

Rightly as you said a lot of developers want to exit their business loans as most of them rushed estate development in a bid to make quick profit. The liquidity ratio in the economy is already low (2014 was the worst hit in abuja) and judging from the present budget defit, the already crunched liquidity in the economy will hit all high and as you said we expect lots of properties to crash in price.

But pproduction cost and importation of building materials will also shoot u due to devaluation of the currency.
I just see developers allowing a slight marginal profit to maintain and stay relevant in the game.

I guess the banks are going to experience a lot of bad debts, they may also need to bring their interest rate low in order to sustain the real sector.

This is such a complex situation

I just read through chief Soludo's economic analysis of which the real estate sector is part of, though he was relating it on the ongoing political climate but it is still worthy of consideration. Developers need to take a critical look at this http://www.theparadigmng.com/?p=28243&utm_source=twitterfeed&utm_medium=twitter