This is a serie of some questions posted to me by one of my
subscribers which I will be writing on and sharing with you.
There are different factors that will determine the profitability of
your investment in Real estate.
1) Number one is demand-The rate of demand will have to come first
before any other considerations , a lot of reasons will make people to
migrate to a place, mainly for economic reasons .
In Nigeria three cities will come into mind Lagos, Abuja and
2)Accessibility to a town can also determine the real estate growth in a city. This is why towns in Bayelsa state may not attract real estate
growth despite being very rich in oil.
3)Availability of land and materials will also affect real estate
growth though this is not as important as other considerations.
4)Cost of Construction in a place. Where materials and cost of
construction is low and accessible then real estate will likely thrive
in such places.
5)Capital generation of a town will also determine how real estate will thrive in such areas.
6)Increase in economic growth will also make real estate to be
attractive in a town.
7)Influx of human traffic to a place will definitely drive real estate.
8)Attraction to investors will also determine how real estate will be profitable in a town.
9)Absence of good residential buildings will make the good and new ones to be very desirable to the populace.
10)Availability of mineral resources.
11)Availability of infrastructural resources.
12)Availability of transportational resources like airport, train
stations sea port e.t.c
13)Availability of communication facilities.
14)Good government policies and regulations-Lagos and Abuja will come
to mind in this case, recently houses are being demolished in lagos
because of improper government permit before construction. New investors are now more careful and afraid to build because of fear of demolition.
Getting the permit on itself is very difficult at present because of the bureaucracy involved.
15)Availability of natural resources.
16)Is the town transitory? Hotel will be good for such areas.
17)Does it have plenty of government parastatals? with this you can be sure of growth in such area.
19)War and trouble will definitely affect real estate negatively.
Going by the points stated above,Abuja, Lagos and Portharcourt will
beat the rest in Nigeria, but they also have advantages and
disadvantages too. Abuja is good for hotels, for low income earners you
can build hostels as common in Europe. Political meetings will always
be held in abuja and anytime there is a big programme the hotels are
always completely booked.
But Abuja has developed to a very high rentage zone and total separation
of the rich neighbourhood from the poor neighbourhood will at the long
run not help the real estate industry there, that is why there are uninhabited
houses yet people are going far to the suburb to live in slums. But in
Lagos, in every rich area, very close by you will see poor neighbourhood
zone, this helps to create spillovers from rich neighbourhood.
So if you are an investor you can just get properties
close to these rich areas redevelop and clean up the place then you can
have the affluence of your neighbour rubbing off on the properties in the poor neighbourhood though very close to the rich.
Lagos has very high rate of human traffic and influx of graduates from
other states will always make it very attractive for real estate,
Portharcourt despite the kidnappings is the unofficial capital city of
Niger Delta the oil rich region, so expatriate are always attracted to
the place, there you are sure to make very quick and profitable
In conclusion, economy is the chief driving factor of a real estate
investment in an area and for Nigeria ,Portharcourt and Lagos towers
above the rest.