Having Invested in Properties in UK, US and Europe, I am been advised to invest in property in Nigeria but am unable to see the investment attraction of the Nigerian property market due to the Following reasons,
1. Capital Intensive---U require a lot of capital or else u have to get mortgage @ a high interest rate and requires 30% deposit unlike overseas where u can get lower interest rate and 15% deposit.
2.Purchase Cost vs Rental Income:- Some properties advertised for N7million will rent for between N250k- N350k hence that is less than 5% yield,  Other Investment vehicles such as shares, bonds, mutual funds; fixed deposits  in the same country will give better yield per annum.
3. Ownership issues-- Omo oniles; fake documents; govt acquisitions
4. Non Payment of Rents by tenants- which is relatively high risk in Nigeria

Although there is argument for price appreciation,  with the economy tightening worldwide; oil price decline  am i wrong in thinking that the boom may be over,
Floor is open for all contributors, lets hear what u think

Moves

Just to give you food for thought.

Capital Intensive - You might want to start small in Nigeria with capital raised at minimal interest rates from the western world. This I have done before.

Purchase vs income - If your P/E ratio is over 10 i.e. over a 10% yield in your terms then you are not doing too badly. For ex those who purchased plots of land in Lekki 1 and VGC in Lagos about 8 years ago for just over 1.5 million Naira could achieve a yield of over 10%, note that building materials were much lower in price in those days. I personally bought cement then at 495 (now about 1700) naira a bag, a ton of iron reinforcement for about 40,000 naira (now about 200k). My point being you can't go wrong when you enter the market at rock bottom price. Those entering the Lekki axis now (prices have peaked to an extent) are taking a greater risk as rental income has not increased as much as property prices over the years and prices could crash.

Ownership issues - Personally, i don't touch plots that don't form part of a recognised estate. Not even with a very long pole. I always purchase properties within estates and from the source i.e. not on the secondary market. You are very safe when you buy VGC plots from HFP engineering, unfortunately they ran out of plots a few years ago. This douses your fear of Omo onile, fake documents and govt acquisition.

Non payment of rents - If you rent out at the top end of the market you hardly encounter problems. High earners seldom like embarrassment. I have rented out to the Oyinbos in the UK and i have in the past had to drag a few of them through courts to gain back possession, infact, because of this I stopped renting out privately. In the UK i do long term leases.

@YANKA,
Hello, appreciate your ideology on investing on naija properties. Pls, i am also based in europe, could you pls enlighten me on how to put my properties on long term lease in the uk instead of private tenants because of their non paying wahala
Pls, kindly send details to drakinterinwa@yahoo.com
Thanks

Oyewole 123

Contact the following, I biz with all of them.

Ideal quarters - 02085990701
Omega Lettings - 02089882838
Smart Hotels - 02084825511

Pls be careful, a lot of fake guys are out there.

Go only with the establishments after checking them out. Omo nile, NOT AN OPTION AT ALL, even if the land is FREE, they are terrible people.

Everybody seems to be into real estate in Nigeria, especially with what happened with the Stock Market, and trust Nijja people to over kill this sector.

Pls, check well before you part with money.

All the best.

yanka:

Moves

Just to give you food for thought.

Capital Intensive - You might want to start small in Nigeria with capital raised at minimal interest rates from the western world. This I have done before.

thanks for your contributions; ur advise is much appreciated, I agree with this as an alternative

Purchase vs income - If your P/E ratio is over 10 i.e. over a 10% yield in your terms then you are not doing too badly. For ex those who purchased plots of land in Lekki 1 and VGC in Lagos about 8 years ago for just over 1.5 million Naira could achieve a yield of over 10%, note that building materials were much lower in price in those days. I personally bought cement then at 495 (now about 1700) naira a bag, a ton of iron reinforcement for about 40,000 naira (now about 200k). My point being you can't go wrong when you enter the market at rock bottom price. Those entering the Lekki axis now (prices have peaked to an extent) are taking a greater risk as rental income has not increased as much as property prices over the years and prices could crash.

[color=#990000]This exactly is where the problem lies; with what is gotten in the west presently wont be surprised if there's a crash, an example is with my properties in Uk; even though the prices has crash and is falling constantly, the rental income has actually gone up 60% due to drastic reduction in interest rates, compared with the value of my deposit ROI is about 30%, is so what areas will u advise someone to look into using ur 10% P/E ratio [/color]

Ownership issues - Personally, i don't touch plots that don't form part of a recognised estate. Not even with a very long pole. I always purchase properties within estates and from the source i.e. not on the secondary market. You are very safe when you buy VGC plots from HFP engineering, unfortunately they ran out of plots a few years ago. This douses your fear of Omo onile, fake documents and govt acquisition.

I agree, like u said availability is an issue; especially when ur not in naija

Non payment of rents - If you rent out at the top end of the market you hardly encounter problems. High earners seldom like embarrassment. I have rented out to the Oyinbos in the UK and i have in the past had to drag a few of them through courts to gain back possession, infact, because of this I stopped renting out privately. In the UK i do long term leases.

How do one source such high end tenants; also bearing in mind that the require high end properties, Is there no market for the mid range

I guess it's becoming more difficult to get plots of land from the VGC side of town. You might want to consider areas like Mowe, Ofada (On Lagos-Ibadan expressway). I bought two plots within an estate less than two years ago and they are now selling at 300% of what I initially bought them. And to answer your question - Yes, Property Investment In Nigeria is Worthwhile.

I found these links very useful. They were sent to me recently by a friend.

http://www.sunnewsonline.com/webpages/news/businessnews/2008/dec/29/bussines-29-12-2008-001.htm

http://www.thenationonlineng.com/dynamicpage.asp?id=55142

Moves

The truth of the matter is that the over 10%'s are not as easy to come by any longer.

If we are to consider Lagos island, I may want to lean towards Lekki Phase 2 where an estate plot of land is considerably cheaper than phase 1. Also one where multi dwelling units are permitted on a plot of land for maximisation. Some estates only allow one unit dwelling on a plot of land.

Most of the Island has peaked.

The likes of Ikoyi and VI may not necessarily achieve the 10% but because the rental income is higher than other surburbs it boosts cash flow.

People are talking about the Mowe/Ofada axis but my view is that there is too much speculation. Nobody knows tomorrow therefore I tend to focus on the present. I will only be tempted because the axis is relatively cheap price wise.

It has also been noted that as close to the Lekki processing zone is a good one but then again it's speculation. Then again as it's relatively cheap I will be tempted.

You may want to consider Abuja. At the end of the day it all depends on how powerful your pocket is and your place of interest.

@ poster!!!

investing in properties in naija is ok if u r dealing with trusted pple, some speculators n govt thieves ve took d cost owning pptys ond island to roof top, currently i believe d cost of pptys on d island r rather on d high, but u cld invest on some areas on d mainland n turn around d sorrounding of d ppty so dat it speak 4 itself, i know a couple of pptys on d mainland dat cld fetch something nice rent or long lease.

if u r interested!!!

Well you all are presumably in the knowing about property investments, goog luck! To be honest, I really think property prices or developments in that country are ridiculous! No regulations for anything, Omo onile could wake up someday and sells a plot of land for N20m claiming prices has to rise yearly whether there's economic slump or not. In the UK, an average worker earns, per year, around 10% of average property price meaning he could possibly own a house within reasonable periods of employment. Presently, you could buy a house for £100k even in places like Blackpool, Bristol etc; Whereas, in Nigeria, affordable homes start around N8m when people earn less than half a million Naira yearly. Social facilities that could enable people afford a home of thiers are not in place, where on earth are people getting the millions to buy the properties from? I wonder!

@ Poster, I must say - Nigeria is one of the best place to invest. Most people that travel abroad, went there to work and send their money home to build Hotels, Schools, Houses or Complex for rentage, cyber cafes etc. Sure Nigeria has the population that will make your investment boom.

C
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liftedone:

I found these links very useful. They were sent to me recently by a friend.
http://www.sunnewsonline.com/webpages/news/businessnews/2008/dec/29/bussines-29-12-2008-001.htm
http://www.thenationonlineng.com/dynamicpage.asp?id=55142

Thanks Liftedone for ur contribution and the above links, I have a problem with the stand in the first article that house as investment cannot crash; that was the same hype sold to people in the europe & US and we all know what we now, house values crashing everywhere;; If a house is a home i.e for personal living it wouldnt matter; it becomes a difference kettle of fish if it is viewed as an Investment, hence ROI become important, So we should all agree on one thing is that house prices can crash, and because it hasnt happened in nigeria doesnt mean it can't or wont happen,

yanka:

Moves

The truth of the matter is that the over 10%'s are not as easy to come by any longer.

If we are to consider Lagos island, I may want to lean towards Lekki Phase 2 where an estate plot of land is considerably cheaper than phase 1. Also one where multi dwelling units are permitted on a plot of land for maximisation. Some estates only allow one unit dwelling on a plot of land.

Most of the Island has peaked.

The likes of Ikoyi and VI may not necessarily achieve the 10% but because the rental income is higher than other surburbs it boosts cash flow.

People are talking about the Mowe/Ofada axis but my view is that there is too much speculation. Nobody knows tomorrow therefore I tend to focus on the present. I will only be tempted because the axis is relatively cheap price wise.

It has also been noted that as close to the Lekki processing zone is a good one but then again it's speculation. Then again as it's relatively cheap I will be tempted.
You may want to consider Abuja. At the end of the day it all depends on how powerful your pocket is and your place of interest.

Thanks Yanka for ur honesty, You have just nailed the issue here;; Property Speculation is the issue; with the Europe and US creditcrunch and property crashing, speculation does not really look promising especially with the crashing of Oil; nigeria's main income generator to less than 25% of it year high , speculating @ present doesnt look good, hence the reason why am keen on rental income vs ROI, atleast that will give an investor something to fall back; just as with nigerian stock market; even with the price having crashed those buying now may not enjoy rapid price appreciation as the case previously was but dividend yield will more than compensate as some blue chip stocks will be paying close to 10% div

I think the property market will crash just like the stock market very soon. Returns of 300% is just not sustainable. I mean how can a house sold for #400 k like 4 years ago be selling for #10 mill. This kinds of returns are mad and unsustainable. London used to have those kinds of returns just about a year ago and look at how it has come crashing down.

People that invested in the first property revolution have been smiling to th ebank(Estate Developers). Today, Nigerians need a decent and affordable home.Government have plans to develop the building sector,  Read this blog by clicking the link or copy and paste on your address bar http://nigeriangovernment. .com/2008/10/fg-to-build-one-million-houses-before.html
read the blog,
The Minister Of State for Environment, Housing and Urban Development, Chuka Odom, has disclosed that the Federal Government was committed to providing one million houses at affordable price for Nigerians between now and 2011.

happy new year

yeah i think is abujaand calabar are de places 2 do property in nigeria now, u really dont hav to rent ddem houses ! the real money is made buying and selling lands and houses, u could make up to 30%-50% ROI on a good deal, i hold a paid job with NNPC but do this on the side and i tell u its been fun because a lot of pple can trust me when they see my card or id nairalanders please feel free to contact me for any info on 08035573957, 08052746233, obbuuz@yahoo.com

Do any of you know about investing in property in Aba Abia State Nigeria.

People belong to the Land. The Land does not belong to it's people.

This is what the ancestors taught.

@Moves, making a statement like house prices cannot crash may be stretching the truth a bit but in the overall, at the moment, one cannot go wrong investing in properties, especially in a place like Lagos where demand far outstrips supply. When we are talking investments, one cannot be overly careful. The people who first went into stocks made loads of money and those of us who got in late are grinding our teeth now.

Two years ago, on the Lekki axis, you could not find one bank between Mobil and Ajah. You had to go to VI if you needed to go to your bank. At the moment, I can count no less than 10 banks on this 15-kilometre road stretch. The rate of development is astronomical. More banks are scrambling to have a presence because there's a huge untapped market.

What I am saying in essence is that one cannot go wrong in property investment in Nigeria and those articles correctly depict the picture of the scenario in Nigeria, in particular, Lagos.

Thank you Moves and Yanka for your helpful contribution and the issues you have raised on this topic . I would personally like to raise some issues/make some comments about real estate investments in Nigeria .

1. It is a relatively new market, there is still a lot of potential for growth . This is great! compared to US or UK MARKETS WHICH IN REALITY ARE OVER SATURATED

2. The Market is relatively unregulated . This has it's pros and cons but more importantly it presents opportunities to make good money to the careful and savvy investor!

3. I agree with Moves that Capital outlay  is heavy but you don't have to start at the high end of the Market depending on your pocket. You dont have to start at Lekki or Ikoyi though this is great if you can afford it. but It is better to ''start low and go slow ''while you build up your experience AND EXPERTISE about the peculiar real estate situation in Nigeria .

4. There will always be some associated risks i.e fake documents., omoonile and so on . Business is risk .the point here is to try and contain your risks and manage them as much as possible for example by employing SUITABLY QUALIFIED AND EXPERIENCED professionals and to ask questions and try to clarify as much as possible before parting with your  hard earned cash /money especially in the current credit crunch climate .

5 Do not get too 'emotionally ' attached to  a piece of real Estates until you have all the facts!!!

6. 'Real Estates' is a Heterogeneous sector . Determine your own niche and try to refine this ,you can not realistically master everything

7. On a pospositivete this is the only sector where  even if you make genuine mistakes you can still recover from this!


8. Dont forget that it is a 'fundamental principle' in Real Estates  that most of your profit is made when you buy locking i n Instant Equity than when you sell . This is another reason to try and buy cheap as much as is possible

9. Finally by virtue of the Land Tenure system currently operating in Nigeria you can not 100% prevent the issue of Government Land acqusition but can minimise this.

10.Being a buy to let Investor in Europe and UK MYSELF I CAN CONFIRM THAT THE REAL ESTATE SECTOR IN NIGERIA STILL HAS A LOT OF OPPORTUNITIES BUT HAS TO KNOW WHAT YOU ARE LOOKING FOR .



Happy New year to all you guys ang Gals . Wish you all every success in 2009 . Amen . Bigstuff

quite honestly me think the last poster got it right. there is no biz without its attendant risk and same goes for real estate in any part of the world. as it is taking the risk in nigeria is quite a worthwhile risk.

Very Very worthwhile.
I stay at Ibeju Lekki (Ajah), and about four years ago,
u could get a plot of land @ between N250,000-N300,000.
Now this same plot is in excess of N1million.
So, grab it while u can.

One of the key issues is the absence of a viable middle class AND institutions/infrastructures for rational analysis as there are several unknown/variables.
These present opportunities and challenges BUT is best for those who like taking risks as they can make a KILL just as the GSM companies, MTN in particular, milked us and continue to milk us dry as we are all too smart for ourselves!!!

Yes in Nigeria property investment has been the best business so far and it has been the best way to make money in Nigeria, is to invest true property.

I have read throgh various comments and will advise other contributors to do so; the prevalent factor i can see is the believe that due to the past 100%-300% rise in property prices, that we can continue to speculate based on the premise that this trend will continue, The question is does the current economic situations allow or posture towards this assertion,
Just read this
http://www.ngex.com/cgi-bin/frame/frameit2.plx?link=%22http://www.businessdayonline.com/%22

Moves,

I have a feeling that there will not really be any adverse effect on the rental side of things. The rental income has not really appreciated a great deal over recent years therefore the common man who really can't afford to buy a house worth over 80 mil on the Island for instance may consider renting on the same island because of better security and at the same time buy and build somewhere on the mainland, possibly Isheri North.

If this is the case then there may be an increase in rental figures due to the effects of demand and supply.

No one can safely say that Nigeria or any other 'emerging market' for that matter is a safe bet in this present economic climate. Everyone you talk to - both knowledgeable and the guy or gal with the Phd in how to make ends meet - will tell you a different story. Do your own research and draw your own conclusions. And oh yeah, always add an extra 40% to what ever final figure you come up with. You will sleep better that way. It also helps if you make a trip or two to Niaja and spend some time there too.

I make bold to say that property investment is worth the while not only in Nigeria but anywhere under the sun! Many people fail in their property investment decisions not because of the locations of such properties but because of the failure to understand what drives the property market.

As someone who has practical experience in property investment, I can readily give informed opinions on how to identify good properties for investment in any location.

Specifically in Nigeria, there is nowhere that one cannot invest in and make good returns. The main challenge is identifying the "hot-spots" in your immediate environment that you can invest in. Another key factor is the property investment fundamentals and how they inter-relate to give you good returns on your investment.

If anyone needs a fool -proof guide on property investment with proofs, verifiable facts, please contact me. I will guide you to profitable investment based on personal experiences in several locations in Nigeria. You will blame yourself why you have not come in contact with the loads of time-tested information that can work in any location anywhere in the world ealier! The fee for the guide is just N5,000.

Contact mobile number +234-8078285732 (Texts only please). Email: hero.kingdom@yahoo.com (Only serious enquiries welcome please).

Be a property hero in the new year!

Am a witness. Property is good anytime anyday. Infact as a growing young man, am more interested in those remote places that will grow with me.

Cheers