At the annual Investment Meeting in Dubai, United Arab Emirates, on April 8, 2019, President Muhammadu Buhari met with investor groups and invited them to come to Nigeria and invest.
Among them was the Lulu Group, which operates a chain of supermarkets and shopping malls in the Middle East and Asia.
Regarding the real estate business, the meeting was attended by the Rotana hotel chain, which was interested in the hospitality sector in Nigeria. The Nakheel Properties and Limitless Group, which is considered one of the world’s leading developers, is interested in real estate and also in Dubai investments.
The more fundamental question, however, is how safe is the real estate investment climate in Nigeria to attract these investors and more.
In the Property Advisory Network, we examine Nigeria’s current security challenges and how they affect property development in Nigeria.
The level of uncertainty in various parts of Nigeria has left a bad taste in the mouth of the nation’s development path and, in particular, has had a negative impact on real estate development in Nigeria.
Amid these security challenges, the persistent housing deficit in Nigeria is currently evident. We believe that as challenges persist, this housing shortfall may worsen as property investments decline due to security challenges.
Regarding northern Nigeria, the President of the Northern Elders Forum, Professor Ango Abdulahi, summed up the situation in northern Nigeria in an address to journalists on April 14, 2019, when he stated that the north now lives under the terrible Boko Haram. Threats, banditry, kidnappings, armed robbery, looting youth gangs, mini-wars of shepherds and farmers.
While we find that the Mataisine sect under former President Shehu Shagari terrorized northern Nigeria, under the Boko Haram sect it has taken on a very damaging dimension since its inception in 2009.
A 2016 World Bank report states that since the Boko Haram plague began in 2009, clashes between Boko Haram and the Nigerian military in the 27 boroughs of Bornu state have destroyed or damaged: 956,453 (nearly Aug. Percent) of 3,232,308 private homes; 5,335 classrooms and school buildings in 512 primary, 38 secondary and two tertiary institutions; 1,205 municipal buildings, local governments or ministries; 76 police stations;
In addition, the permanent secretary of the Bornu State Department for Reconstruction, Rehabilitation and Resettlement was quoted in 2017 as saying that Boko Haram had destroyed one trillion naira worth of real estate in the past six years.
He went on to say that the insurgents had destroyed 986,453 homes; 5,335 classrooms, 201 health facilities, 1,630 water supply systems and 726 power plants and transformers, 800 public structures such as offices, prisons, police stations and other structures.
Banditry is another threat that has resurfaced in the north. Their focus is to carry out armed attacks against the residents of their villages or travelers along the road and take their belongings. In this attack, victims can be killed or kidnapped as ransom. This leaves villagers and travelers in constant fear of attack, leading to the abandonment of residential properties in the attack areas. The state of Zamfara is now said to be at the mercy of armed bandits. It is public knowledge that about a month ago armed bandits stormed the Kawaye community in Bornu’s Anka government district and destroyed millions of naira worth of land. In parts of Katsina state, bandits are also supposed to destroy lives and property at will, while kidnappings are devastating other parts of the state.
Another threat to insecurity in the north is the attack by Fulani herdsmen in Benue state, Adamawa state, Kaduna, Sokoto and the plateau, to name a few. Typically, this group also attacks residents, breaks into their homes, takes their own lives, and burns houses, among other atrocities they commit.
Ethno-religious wars do not go unnoticed. A public news report published last year found that Kaduna Sate has been embroiled in an ethno-religious crisis between south and north Kaduna for nearly forty years that has resulted in the loss of lives, members and property of millions of people. nairas.
There is no doubt that housing is one of the basic human needs. At Property Advisory Network, we believe that a common denominator in the above attacks is the attack on homes or real estate in general. Real estate is one of the most valuable assets in the world, if not the most. After this, the dream of practically every right thinking person is to acquire property over time. This mindset and desire are driving natural demand for housing and the ability of investors to meet those demands and generate huge profits. It seems, therefore, that for the perpetrators of these heinous crimes, the destruction of property is a way of leaving a tremendous negative impact on their victims, hence the repeated attacks on homes, buildings and real estate in general.
In the southwest, there has been another increase in ransom kidnapping in Lagos, Ekiti, Ondo, Oyo and Osun. In two weeks or less, a man is said to have fought his family members of the kidnappers along the Lekki-Ekpe axis in Lagos, and the acting director of the Lagos State Fire Service was kidnapped along with six others people in Ikorodu.
There is also the recurring problem of travelers getting into unfamiliar vehicles manned by armed robbers and ritual killers who obtain personal property from these travelers, including their phones, clothing, etc. This trend is known colloquially in Nigeria as “an opportunity”. . These groups are known to operate in specific areas that change from time to time. Worst of all, some travelers lose their lives through ritual killings in these situations.
Cultism and cult clashes are also major security problems in the Southwest, particularly in Lagos State. The popular cult group “Bado” is known to the public, who terrorized the residents of Ikorodu for some time until they were controlled by interest groups. However, some investors and home seekers will never dream of approaching Ikorodu for fear of a resurgence of this threat. It was not until Sunday, April 7, 219, that there was a public confrontation involving Abraham Adesaya along the Lekki-Ajah highway, in which members of a rival cult were beheaded and/or mutilated for life. The Lagos town of Oworoshoki is reeling from the threat of cult groups attacking each other with weapons and machetes in broad daylight and looting residents’ homes and businesses.
Fulani herdsmen have also carried out their nefarious attacks against the killing and destruction of farmland in parts of Ekiti, Oyo and Osun. Armed robbery and mysterious deaths that are suspected of being related to rituals are not left out either. The news reported that on April 9, 219 armed robbers attacked a bank in Ondo state, killing seven people and taking sums of money away from the robbers.
It was also reported in the news in January 2019 that armed robbers attacked a bank in Osun state.
There is a recurring problem of militancy in the south-south region of Nigeria, which the Nigerian government continues to administer. Also on the list are the proliferation of weapons, illegal oil bunkers, armed robbery, political violence, the cult, pipeline hijacking vandalism, etc.
In the southeast, there are threats such as armed robbery, kidnapping, proliferation of weapons, communal crisis, cultism, clashes between herders and farmers, and the ongoing activities of MOSSOB and IPOB.
With this in mind, we will now examine how these disaggregated uncertainties affect or imply real estate development in Nigeria.
First, areas prone to security attacks by Boko Haram, Fulani herdsmen, bandits, cultism, recurring ethno-religious crisis and other insecurity problems in Nigeria will see a serious decline in the home of house hunters. This is because the safety of the home environment remains an important consideration when home seekers make decisions about buying or leasing space. No home hunter is going to rent or buy property in an area where the aforementioned atrocities for fear of theft or invasion and murder of their homes are widespread. In addition, the luxury of moving around the area to meet daily needs is also vital.
If a home hunter fears that his desire and need to move freely around the neighborhood will be hampered by the constant curfew, ethno-religious crisis, clashes between cults, kidnappings, etc., he is unwilling to settle in that neighborhood. . To carry the message home, no one is going to rent or buy an apartment in Bornu, the Boko Haram cave, or rent or buy in the other areas mentioned in the previous part of this essay in relation to questions of uncertainty. Another effect of this is the abandonment of the property and its gradual deterioration.
In the meantime, we must realize that the lack of security in certain areas is likely to put pressure on existing properties in areas that are considered safe by people fleeing unsafe areas. The result is that the cost of buying or leasing real estate in these “safe” areas goes up and developers and / or owners make more profits. However, the downside is that pressure can lead to sporadic construction of unsafe and unsanitary structures that can eventually collapse or cause epidemics to break out. An experience that does not fit into an ideal real estate development.
From a commercial point of view, for fear of the safety of their investments, businessmen will not be willing to buy or lease real estate to do business in areas that could be looted by bandits, cultism, kidnapping, robbery, etc.
The ripple effect of the above trend is a decline in demand for existing residential and commercial properties in the affected areas and a loss of investment for developers who have spent personal and borrowed funds on such developments. This trend is sure to put some real estate developers out of business if they can’t properly manage the situation.
From the developer’s point of view, no real estate investor will invest funds in areas threatened by insecurity if they know that there is no sponsorship and that the built structure may be burned or destroyed by ethnic Fulani herdsmen within minutes of a raid on Bigots. , Cultists or Boko Haram bomb blast or armed robber grenade.
Furthermore, financial institutions are unlikely to provide credit facilities to investors to establish business structures in some parts of Nigeria where investment security is an issue or where the project is not feasible due to planned zero demand for such structures funded when built.
We at Property Advisory Network are aware that foreign investors courted by President Muhamadu Buhari will eventually conduct their pre-investment study of the Nigerian environment and the safety of their investment in the context of the above uncertainties may be a predominant factor in their investment decisions. Therefore, the federal government and all stakeholders must come together to address these issues of uncertainty.
We urge that, in the interests of real estate development, the underlying causes of these uncertainty issues be addressed over time.