BuyLetLive's Nigeria Property Price Index Report

BuyLetLive's Property Price Index Report

2022 was a great funding year for Nigerian businesses, here's why. Nigerian businesses recorded 320 deals worth $5.7 billion (N2.41 trillion) in 2022, representing an average of one deal every working day. This is according to the recently released 2022 DealsBook Report, compiled and published by Nairalytics, the research arm of Nairametrics. Compared to the previous year, deals value decreased by 35.8% from $8.88 billion recorded in 2021, while the number of deals surged by 80.8% in contrast to the 177 deals recorded in the prior year. Deal-making, which encompasses various forms of capital formation activities such as venture funding, private equity funding, mergers and acquisitions, grants, equity raises, seed and series funding, and corporate bond issuances, is essential for both startups and listed companies in Nigeria.

2022 was a great funding year for Nigerian businesses, here's why

2022 was a great funding year for Nigerian businesses, especially proptech startups. Here's why

Co-living, as it is widely referred to, is an accommodation model where people from different families and backgrounds operate a shared apartment rental model. In many cases, these people who reside together form new friendship bonds and sometimes even work together. Just think about the possibility of having different people (race, tribe, colour, language) of different backgrounds coming together to live within a shared space. That is exactly what this model is about. Operators usually offer furnished bedrooms and living rooms with individual contracts to each occupant and all-inclusive pricing, making this model more affordable to the unfurnished. Affordability is one of the key factors that make the co-living model attractive, especially for young professionals who are just starting out. In recent times, the co-living idea has been gaining traction around the world including in Nigeria. One question that lingers is the sustainability of this model in a culture-dominated environment like Nigeria and what driving adoption is. This question is what we will be exploring in this article. Before we dive further, let's get some historical context.

The future of the co-living model in Nigeria

Since 2011, shortlet apartments have demonstrated strong profitability potential. Quickly after the pandemic in 2020, the short let business became a gold mine for operators in Nigeria. With no end date in sight for the pandemic at the time, it was clear that the typical hotel model could not sustain people who needed stay options with the feel of being at home. This resulted in a rise of the short let business model, especially within the Nigerian market. But this seems to have taken an opposite turn, and it appears that the bed is not as rosy as it used to be. We want to assess the drivers of this turn, but before we dive deep into the conversation, let’s answer one really important question. What differentiates shortlet apartments from typical hotels?

Is the shortlet apartment business model still a goldmine in Nigeria?

On the 26th of October 2022, the Central Bank of Nigeria announced the redesign of the top 3 denominations of the naira notes. According to plans, the ₦1,000, ₦500 and ₦200 notes were slated to be redesigned and swapped with the old notes. According to the Central Bank, this policy change was aimed at arresting some of the country's most pressing economic challenges including currency fraud and inflation. Many have argued that this policy will shed some positive light on the economy but it however is accompanied by a myriad of impacts on specific segments of the economy and we want to zoom our lens, particularly on real estate. Before we dive in, here are some of the most recent CBN policy changes.

On the 26th of October 2022, the Central Bank of Nigeria announced the redesign of the top 3 denominations of the naira notes. According to plans, the ₦1,000, ₦500 and ₦200 notes were slated

The new CBN policy and what it means for real estate

The completion of Lagos’ 11.8km long third Mainland bridge project which spanned between 1976 to 1990, was supposedly the answer to the connectivity problems that people faced in the city. At the time, there were minimal linkages between the Mainland part of the state and the rapidly growing Island zone. General Ibrahim Babangida, who was the then military president, foresaw the spike in population growth in Lagos and proposed the construction of the 4th Mainland bridge as incorporated in the Lagos State master plan.

The completion of Lagos’ 11.8km long third Mainland bridge project which spanned between 1976 to 1990, was supposedly the answer to the connectivity problems that people faced in the city. At

Will the 4th Mainland Bridge solve the traffic problem in Lagos?

Gold, Diamonds, Crude Oil and People with a variety of other valuable natural resources are what you will find in abundance across Africa. Botswana and The Democratic Republic of Congo for instance are the world’s 2nd and 3rd largest miners of silver after Russia. With a population of over 1.4 billion people, Africa is the second largest continent in the world after Asia, both by population and land mass. When you compare the continent to other continents across the world, especially in terms of resource endowment, you will find very close matches. As one would expect, this should naturally translate to massive economic growth, especially in sectors like real estate where population numbers (demand) and the presence of certain natural endowments determine the size of market opportunities. 

But what we find is the converse. Africa historically has not enjoyed the full potential of these resources. The result is a continent functioning below its revenue and growth potential across markets, and real estate is of particular interest in this piece. Despite its potential, the continent of Africa with its 54 member countries, is the least developed in the Third World. Although some sectors particularly Financial Technology have seen significant growth over the past decade, real estate has not gained similar growth compared to other continents across the world.

Why Africa's real estate market have remained underdeveloped

Nigeria reputably has had the most difficult housing problem that has defied solutions for many years now. As of today, Statistics suggest that the country has a housing deficit of more than 21 million housing units, the highest in the continent. There are two simple explanations for this. On the one hand, only a few people have access to mortgages in Nigeria. On the other hand, many people who are working or living in Nigeria cannot afford to buy a home outrightly through savings.  Based on publicly available data, Nigeria has a mortgage penetration rate that is about 1%, This means that only one per cent of Nigeria’s two hundred million plus population, have the opportunity to access mortgages when buying a home. With the inflation rate at 20.09%, MPR at 15.5%, and minimum wage still around thirty-three thousand naira, most Nigerians can not possibly save up to buy a home.

Nigeria reputably has had the most difficult housing problem that has defied solutions for many years now. As of today, Statistics suggest that the country has a housing deficit of more than 

4 ways to fund down payment on your home

Last month was remarkable for Lagos State in many ways. Two key events that happened in the State were clearly notable, especially for the real estate industry in Lagos. On the one hand, October marked the delivery of the $1.5 billion Lekki Deep Sea Project. On the other hand, Lagos State also got delivery of the federal government's instrument approving the construction of the Lekki-Epe International Airport project. The proposed five-million-annual-passenger airport will be built on 3,500 hectares of land in the Lekki-Epe area.

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