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Northern Nigeria Real Estate Market Suffers As Insurgency Escalates

Northern Nigeria Real Estate Market Suffers As Insurgency Escalates

Growing terrorism activities in Northern Nigeria has hurt the real estate market in the region as demand for property fell by as much as 40 percent in that part of the country in the first quarter of the year.

Islamist militant group Boko Haram has intensified attacks in the Nigeria’s northern region, spreading from its confines in the upper part of the country to the country’s capital Abuja and killing thousands in the process.

The militants latest antic of abducting more than 200 schoolgirls in Chibok, Borno state, has caused a global outrage. Residents of the affected areas have also fled to relatively safer parts of the country.

“Unarguably, people are moving down south,” said  Fred Akinloye, former chairman, Nigerian Institution of Estate Surveyors and Valuers in Kano state, told BusinessDay. “The insurgency is really affecting the construction industry negatively, though there are other factors like the upcoming general elections. Property values have gone down considerably because demand is very low.”

Akinloye said that in some prime locations in Kano, prices had come down 30-40 percent to $36,000 per plot of land.

He added that the upcoming general elections were also part of the reasons for the low property demand and value, explaining that typically when elections are coming on, a lot of properties come into the market from those who want to raise money to execute political campaigns.


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‘Wait-and-see’ attitude

In Abuja, one of Nigeria’s most vibrant housing markets,  investors have adopted a ‘wait-and-see’ attitude, which has slowed the property market in the capital. Market players said recent security threats have resulted in loss of investment appetite and could lead to a supply glut.

“Abuja’s property market can be best described as one that has been sleepy since the turn on the new year,” a property vendor based in the Maitama area of the city told BusinessDay.

Ralph Osueke, a property vendor with Bridge Plus limited, maintained that since the security challenge in Abuja and its environs attained a worrisome height, property investors had remained sceptical of ploughing huge funds into the market.

“Foreign investors who usually come to the market with as much as N300 million to buy choice properties and consequently lease or rent to willing tenants are now looking elsewhere because of the deteriorating state of security,” Osueke said.

A spot-check by BusinessDay showed that the property market remains the major victim of the insurgency up north and that vacancy rate is as high as 30 percent in Yobe, Adamawa, Borno, Katsina and Kano.

Similarly in Borno, Yobe, Bauchi, Katsina, Kano and Kaduna, there are high vacancy rates in both commercial and residential properties, pointing to the continued frustration of private property developers in those states.