THE ART OF LAND SPECULATION

Speculation is a process or act of Buying Land Low and Selling High.
There are millions of acres of land throughout Nigeria that will never have any real value, such as desert land, for example, that cannot be developed to produce income, to satisfy human needs or to earn money.
- Location is a key
Let us Start with Urban or City Economics, what makes a city a good bet or a poor bet for real estate Investment?

FACTORS TO CONSIDER AS SPECULATORS.


1. LEVEL OF BUSINESS ACTIVITY
Start with the Big picture. What is the general level of business activity in the country as a whole? Nationwide recessions and depressions hurt all real estate values everywhere, but nationwide booms, or prosperous economics times, do not necessarily help all real estate values in the same way.


2. STUDY POPULATION TRENDS.
You must understand the trends in population growth or decline. Real Estate prices increase at twice the rate of population growth and/or three times the rate of inflation.


What does that mean? This means that if there was no inflation, and the population was growing 3% per year, real estate prices would grow at two times 3% or 6% per year. If the population remained stable, but inflation was growing at 3% a year, home prices would increase at three times that, or 9% per year.
But let us say that you have 3% population growth and 3% inflation rate that, would be a total of 6% plus 9% which will be 15% increase or upward pressure on real estate prices, especially home prices, in any given 12 months period.


If any area is losing 2% population per annum, real estate values will decline at 4% in that area.



3. DETERMINE THE LEVEL OF BUILDING ACTIVITY
Find out the volume of building activity and construction cost levels and trends. In other words, if an area requires 1000 new houses per year for the growing population, and developers are building 1000 new houses per year, you will have very little upward pressure on housing prices
4. CHECK THE VACANCY RATES.
You must consider the Vacancy rate in the area in which you are thinking of Investing. This are factor that determine the real estate market trends and values.
5. TRANSPORTATION SYSTEM & GOOD INFRASTRUTURE
Accessibility to a good transportation system in locality is a key that affect real estate market trends and values.
TYPES OF CITIES TO INVEST IN.
In deciding what city you want to live, work and invest in, these are important consideration,

1. GOVERNMENT CITIES.

Government Cities are the best to invest in, State Capitals and Abuja (F.C.T) have stable workforces and solid economic base in any city centered on government. These cities do not grow rapidly, nor do they decline when the economy is low.
2. COMMERCIAL CITIES
Commercial Cities are devoted primarily to commerce and trade. These cities have more stable economies because they re always bust with the trans-shipment of goods and services.
Cities like Lagos, Atlanta, Port-Harcourt, Los-Angeles, San diego and Miami.

3. INDUSTRIAL CITIES
Industrial Cities are located primarily in the northeast and Midwest. They are based on Manufacture and processing of commodities, such as Steel, Coal and raw materials. When the national economy is strong, these cities do well with jobs, wages and real estate prices are stable.

These are cities like (Ajaokuta), Benue State. Chicago, Baitimore and Detroit.


4. RECREATION OR RESORT CITIES.
These are often retirement or vacation centers. Many of these places have seasonal economies and are often the first places to be affected by recession or slow-downs in the national economy.
When the economy is strong, these recreation and vacation resorts and cities have strong economies Real Estate values increase, and sometimes boom.

Example Obudu Ranch, Tinapa in Calabar.
When Economic times are poor for any period of time, these places do poorly as well. A decline in discretionary income, or income available for investments, holidays or vacations always affect the vacation areas first.
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