Changes in the price of crude oil and the resulting currency devaluation have had a significant impact on the Nigerian economy. With a 70 percent dependency on crude oil for external revenue, the drop in world oil prices is affecting the Nigerian business space.
Lamudi Nigeria reflects on how the fall in Nigeria’s primary source of income will impact the country’s real estate industry.
As the majority of real estate projects in the country are government-funded, the devaluation of the Naira may result in less available funding for property development. Whilst commercial hubs and larger cities such as Lagos, Abuja and Port Harcourt are not expected to suffer due to their diversified economies, the development of new properties across Nigeria is predicted to slow down.
Obi Ejimofo, Managing Director of Lamudi Nigeria commented that: “The problem for both foreign and domestic investors is how long this currency devaluation lasts. It is currently too early to tell. The question now is whether the low oil prices are here to stay, or whether they will increase again in 12 months.
This will determine how the real estate industry is affected in the long-term. However, if low oil prices become a long-term consideration, we may see some much needed pragmatism entering into the real estate sector in terms of pricing.”
The slide in the value of the Naira means that foreign investors are now able to purchase more than they could previously afford. Furthermore, the costs of foreign components for construction have gone up, which is impacting local investors.
As the value of the dollar increases, more Nigerian construction companies will turn to locally-sourced products, to keep property prices as stable as possible. This will result in a positive shift for the Nigerian economy.
About Lamudi Nigeria:
Lamudi Nigeria is a leading online real estate market place exclusively focused on emerging markets. The website offers an easy to use and secure platform to buy, rent or sell real estate online. Lamudi.com.ng, which started operations in October 2013, has over 40,000 residential and commercial property listing from developers and real estate agents. The company has active offices in Lagos, Abuja, Ibadan and Port Harcourt.