2023 election: 2 things to expect from the Nigerian real estate market.

More than any other single factor, political events, especially in emerging economies have remained a major influence in shaping the trajectory of real estate markets. Within Africa’s key cities, we have seen politics and the nuances around a change of Government altering the outlook of real estate markets. For instance, the instability that came with South Africa’s 1994 democratic election, resulted in social upheaval. This drove a mass migration of South Africans to other countries as people feared the outcome of the election. The ripple effect of the mass migration was a battered real estate industry in South Africa, resulting in the city becoming a buyer’s market as people sold their properties at significantly discounted prices. Although the market later took a turn, the impact on overall market performance and investor return were severe. 

We have seen similar situations play out in other African countries including Nigeria over the last 2 decades. Irrespective of your political affiliation or ideology, 2023 presents a remarkable time in the history of Nigeria. Forward-thinking analysts in different industries are already thinking about how the coming election will potentially impact different sectors and the overall economy. In this note, we will be discussing two major things that we can expect to happen within the Nigerian real estate market as the country approaches another election year.

Big-ticket assets will be sold off for liquidity.

Nigeria’s elections are capital intensive and a lot of money is spent on campaigns and logistics. As the country approaches another election year, we expect to see a number of politicians and their sponsors disposing of off properties to fund their campaigns. The election would fuel the disposal of high-end properties in Nigeria’s core cities including Lagos and Abuja over the next 6 to 12 months. This is similar to what we saw in 2015 and will be a medium to mop up funds to sponsor campaigns for the forthcoming election. As typical for the high-end market, details of most of these transactions will be private and undisclosed to protect the interest of the participants. This will fuel a boom in property sales and presents an opportunity for discerning investors with good liquidity.

Significant completion in many Government-sponsored projects.

This year, the  Federal Government in her appropriation bill, approved a consolidated revenue fund of ₦17.126 Trillion, resulting in a 30% increase than the ₦13.082 Trillion approved in 2021. Capital expenditure allocation for 2022 also stood at 5.467 Trillion, a 51% increase from the 3.603 Trillion allocated in the previous year. The objective, according to the Federal Government is to build new and ensure completion of ongoing infrastructure projects across the country. We have seen quite a number of these public sector projects reaching completion in the past few months with much more in the pipeline.  In Lagos State, multiple road networks in Ikoyi, Victoria Island, Gbagada, Kosofe, and many other neighborhoods across the state have been completed. A number of road and bridge projects are still ongoing in Lagos State, and the State has promised completion for most of them within the year. This includes the Lekki Regional Road, other roads within the Lekki-Epe artery as well as Ikorodu, Yaba, and many other sub-regions across the state. While many will argue that this is a bit to get more votes in 2023, we cannot deny the impact that some of these projects make in improving our day-to-day lives and the overall economy. With these projects in mind, we can expect to see growth in property value across Nigeria’s key cities. 

In general, as the election approaches, big-ticket assets will exchange hands for liquidity. This presents an opportunity for investors with a large capital pool to make more money as most of these properties will be sold under duress and below market value. Additionally, we expect to see significant completion in many Government-sponsored projects across the country, thus improving property values in affected neighborhoods. 

This is not exhaustive, and we know that as the election comes closer, a lot of political activities will be going on around the country and will impact the real estate sector in diverse ways.  We would love to hear your thoughts. Send us your comments and feedback to research@buyletlive.com. You can follow us on LinkedIn and Instagram to get more insights into the Nigerian real estate market.

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