Investing in Real Estate in Lagos Nigeria during Inflation

Introduction:
Inflation is one of the most talked about topics in Nigeria today. With the current rate of inflation at 18.72% as at August 2020, according to the National Bureau of Statistics, it is important for Nigerians to look for alternative investments that can hedge against inflation. Real estate is one such investment.

The current state of the economy has led to an increase in the cost of living, with food and transportation costs rising on a daily basis. This has put immense pressure on household budgets, leaving many Nigerians struggling to make ends meet. However, despite the challenges that inflation presents, there are still opportunities for those looking to invest in real estate.

Nigeria is a rapidly urbanizing country, with Lagos being one of the most populous cities in Africa. The demand for housing continues to outpace supply, making Lagos a ripe market for investors looking to take advantage of the current situation.

There are a number of factors to consider before investing in real estate in Lagos, Nigeria during inflation. This guide will provide an overview of some of the key considerations for individuals looking to invest in this rapidly growing market.

Economic conditions in Nigeria

The current economic situation in Nigeria is one where the inflation rate is high and the naira is weak. Despite these conditions, there are still opportunities to be had in the real estate market in Lagos, Nigeria. If you are considering investing in real estate in Lagos, Nigeria, it is important to be aware of the current economic conditions and how they may affect your investment.

Inflation

Nigeria’s economy has been in a state of flux in recent years. The country has seen high levels of inflation, which has led to a depreciation of the naira. This has made it difficult for Nigerians to invest in real estate, as the cost of living has become increasingly expensive.

However, there are still opportunities to invest in real estate in Lagos, Nigeria despite the inflationary environment. One way to do this is to invest in properties that are below market value. These properties can be found by working with a reputable real estate agent who is familiar with the market conditions in Lagos.

Another way to take advantage of the current economic conditions in Nigeria is to invest in real estate that is income-producing. This type of property can provide a stream of revenue that can help offset the effects of inflation. Income-producing properties can be found by working with a qualified real estate investment advisor.

The current economic conditions in Nigeria may seem daunting, but there are still opportunities to profit from investing in real estate. By working with a qualified professional and doing your research, you can find ways to make money even during periods of high inflation.

GDP

Nigeria is the largest economy in Africa with a Gross Domestic Product (GDP) of almost $500 billion in 2017, according to the World Bank1. The country has a population of over 190 million people2, making it the world’s 7th most populous nation. Nigeria is endowed with human and natural resources, including oil and gas reserves, fertile farmland, forests and a variety of minerals. Despite these advantages, the country has experienced economic challenges in recent years, including high inflation and unemployment rates.

Inflation in Nigeria hit a 16-year high in November 2017, reaching 18.72 percent3. The high inflation rate was caused by increases in the prices of food and transportation, as well as a devaluation of the naira (Nigeria’s currency). The Nigerian government has taken steps to address the inflation problem, including increasing interest rates and restricting access to foreign exchange. As a result of these measures, inflation has begun to decline, albeit slowly. In May 2018, it stood at 15.37 percent4.

Unemployment is another key concern in Nigeria. The country’s unemployment rate was about 12 percent in the fourth quarter of 20175, up from 10.4 percent a year earlier. Youth unemployment is especially high, with more than 60 percent of Nigerians aged 15-24 not employed or underemployed6. The Nigerian government is working to create jobs through initiatives such as its “Made in Nigeria” program, which encourages businesses to produce goods and services locally instead of importing them from other countries.

Despite challenges like high inflation and unemployment rates, Nigeria continues to offer opportunities for investors interested in real estate development projects. In particular, the country’s growing population and middle class are creating demand for housing that developers can tap into. Additionally, the Nigerian government is taking steps to improve infrastructure and make it easier for businesses to operate in the country. These efforts should make Nigeria an increasingly attractive market for real estate investment in the coming years.

Interest rates

The Nigerian interest rate decision is taken by the Central Bank of Nigeria’s Monetary Policy Committee (MPC). The MPC sets the overnight lending rate – also known as the benchmark interest rate – at its meetings.

Nigeria’s central bank has left its benchmark interest rate unchanged at 11.5 percent, despite inflationary pressures in Africa’s largest economy.

The bank said in a statement that it would maintain the rate “in order to better anchor inflation expectations and curb inflationary pressures arising from exchange rate pass-through.”

Nigeria’s inflation rate rose to 18.72 percent in February, up from 17.78 percent in January, according to data from the National Bureau of Statistics. Nigeria’s economy is struggling to recover from a recession that lasted for much of 2016.

Real estate market in Lagos

The current economic situation in Nigeria is a bit volatile. Inflation is high, and the cost of living is rising. Despite this, the real estate market in Lagos is still growing. There are many reasons to invest in real estate in Lagos, Nigeria during inflation.

Prices

Nigeria’s economy has been in recession for about a year, and the real estate market has been hit hard. Property prices have fallen by as much as 50% in some areas, and there is an oversupply of unsold homes. However, the market is beginning to recover, and prices are starting to rise again.

Inflation is a major problem in Nigeria, and it has been increasing steadily for the past few years. This has made it very difficult for people to afford to buy homes, and many have had to make do with renting. However, rental prices have also been increasing, so it is becoming more and more difficult for people to afford housing.

The government has introduced some measures to try and stabilize the housing market, but it is still struggling. There is a lot of speculation about what will happen next, but it is clear that the real estate market in Lagos will continue to be volatile for the foreseeable future.

Rental yields

In general, rental yields in Lagos are higher than the national average, making it a good location to invest in real estate. The average rental yield in Lagos is 8%, while the national average is 5%. This higher yield is due to the high demand for rental properties in Lagos, as well as the relatively low cost of properties in the city.

Conclusion

In conclusion, while investing in real estate in Lagos, Nigeria during inflation may not be without its difficulties, it can still be a profitable endeavor if done correctly. With careful research and planning, you can make your investment work for you even in tough economic times.

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