Instead of houses investors are buying dollars – Estate Valuer

How do you see the recent naira devaluation affecting the property market in the country?When we talk of impact, we have short term impact and long term impact. Short term impact is usually the immediate reaction of the market to the change. And we have the long term impact which is usually the outcome of […]

How do you see the recent naira devaluation affecting the property market in the country?
When we talk of impact, we have short term impact and long term impact. Short term impact is usually the immediate reaction of the market to the change. And we have the long term impact which is usually the outcome of investment decisions that are being carried out now by developers.
In the short term, you will notice that there will be increase in transactions or sales because people are afraid. Those that are afraid will be putting up their properties for sale and those that really want to invest in this type of climate are the ones now buying. This is a short term implication. There is going to be increase in property sale but in the long run sales will fall. That is when the market begins to stabilize.
But another one is medium term impact. You know that devaluation is synonymous with inflation and the moment there is inflation, cost of construction goes up. However, it doesn’t mean that there will be more money in the hands of the would-be-users of these properties whether tenant or buyer. So the naira you have in your hand as a buyer of a property, the value goes down while the cost of the property itself increases so it encourages glut in the market.  
So we anticipate that investors in the very near future will not be willing to let their properties at the current prices because of the high cost of production involved. And we also foresee a situation whereby users will not have the value of money to meet up with the requirements of these landlords.
If we look at it from the aspect of importation of construction materials, don’t you think the devaluation of naira will lead to increase in their prices?
Yes, cost of building will increase, but I don’t belong to that school of thought that is of the view that we must import everything in the building construction. We should begin to look inward and make use of our local materials because if we don’t, the dollar will become more expensive. As Nigerians, how can we import wood that we have here in Nigeria?
Is it advisable for people to buy property now?
What we have now is that people are not really buying, instead of people to invest in real estate people are divesting into buying dollars. Even some of our clients will tell you look we can’t buy this property now because we are not sure of what is going to happen tomorrow. So mostly they divest into the money market until when there is stability in the economy. I can assure you that there will be stability and as soon as this stabilizes the property market will also stabilize.
How has the political situation affected the property market?
Yes, the political situation has impacted so much on the supply side of property market. At the eve of primary elections we are having more properties being offered for sale in the market. Because the individual investor is looking for money to invest in politics. Because of that, we have a lot of properties and as they come into the market the prices crash.
So you can see the conflict, instead of the prices to go up occasioned by the devaluation of the naira, there was rather a crash in the price and it is not unconnected with politics. The moment the political situation or tension settles down, Abuja property market will just respond to the naira devaluation.
Can we now say this is the most suitable time to invest in property market since the market is flooded with buildings for sale?
Politicians need money to run the election and they bought this property as investment properties. If you want your incomes to be guaranteed you buy properties and then sell if you want your liquid cash. For instance if you have let say N50 million, it won’t be wise of you to invest such in your village because if you  do, if it comes to election period who will buy it? But if you do so in Abuja you are sure that in 3-4 years it will increase in value.
Does it affect lands too?
Yes, it affects both lands and buildings. A rational investor can cash in now to buy properties. A rational investor should invest when properties prices are low. One of the golden rules of investment is that you don’t invest when everybody is investing; you invest when everybody is not investing. Some people are investing now because not many people are doing so now. So immediately after the members of the National Assembly are elected the demand for property will increase again because most of them are coming from their various states to stay in Abuja so the market forces will respond to that demand.
As a developer what is your impression of the Nigeria Mortgage Refinance Company (NMRC) being implemented by the Federal Government?
I don’t think it is political; it is real because we were invited as critical stakeholders. People have subscribed 100 percent. It was online and transparent. The process so far is commendable but we still look up until the poor civil servant can afford to own a house of his own.
What are the determinants of property value?
Property prices respond to key economy indicators. When there is demand prices go up but when there is over supply prices go down. For me, I don’t foresee the fall in property prices, but I foresee stability and adjustment in prices to devaluation and political stability – when these two are settled.
What advice do you have for government to improve the sector?
Abuja property market is bedeviled with the problem of too much distrust.  Basically, the fear is who to deal with in the market. The fear of being duped, the fear of buying the wrong property so all these have created a lot of issues bothering on confidence in the market so government through the Abuja Geographic Information System, AGIS, should have put in a place something that would have assisted in ensuring efficient sale in the market so that it will be easy for you as a buyer of a property to just come to Abuja, go to AGIS, seek clearance, get your papers and pay your money without any fear.
It was like that but things are beginning to change. For you to access your titles involve a lot of strenuous activities. The administrative system in Lagos is faster, smoother than what we have in Abuja.
I call on government to look into AGIS because it is the heart of conversion in Abuja. If they are efficient the whole market will be efficient. If they are bad it also affects the whole market. They should ensure that true professionals are employed to man the agency in all relevant positions. AGIS has now turned to a hospital, instead of having more doctors, they are having more administrators and it is not supposed to be so.