‘Real estate is safest investment portfolio’

Nigeria’s economy is said to be improving, how true is this? One of the fundamental principles of investment is to never make permanent decisions based on temporary situations. A perfect example is the current economic recession that hit the country, watering down many investment portfolios. Some investors, who do not understand the dynamics of investing […]

Nigeria’s economy is said to be improving, how true is this?

One of the fundamental principles of investment is to never make permanent decisions based on temporary situations. A perfect example is the current economic recession that hit the country, watering down many investment portfolios. Some investors, who do not understand the dynamics of investing in the 21st century, joined the bandwagon of naysayers and hedged their investment on the weakness of the Naira. They have their pockets to blame, and they are now lamenting as the naira went from 530 to 380 in less than five days.

Before now, the Nigerian economy was almost grinding to a halt; especially with oil being our major source of revenue. The anticipation of a recession made lots of people make permanent investment decisions over temporary situations. Some wives left their husbands for greener pastures. Some companies had to lay off their best hands as they were unable to foot the running cost of the organisation. 

Things went from bad to worse. However, with the vision of the President Muhammadu Buhari- led administration, and a great political driver like the Vice President, Yemi Osinbajo and his economic team, the country is gradually showing signs of improvement as the Naira gradually gains weight against the dollar. 

Big brother OPEC didn’t make things easier either. The militants graduated from oil bunkering to pipe bursting. Those who invested heavily in oil saw their investment crumbling by the day. The stock market also took a downward plunge with investors recording massive losses. Interest rate skyrocketed, with interest on fixed deposit remaining fixed. Are bankers or customers benefitting? Unlike other investment portfolios, the real estate and property market was slightly affected but properties in the Ikoyi axis, especially in Banana Island, have enjoyed great stability as their prices have consistently held value. 

Andrew Carnegie, an American industrialist who led the expansion of the American steel industry in the late 19th century, and  identified as one of the richest Americans, said; “More money has been made in real estate than in all industrial investments combined.” This same industry giant was once quoted saying; “90% of all millionaires become so through owning real estate.”

What are the risks involved?

One vital lesson investors need to learn from this is that those who depend on the weakness of the Naira will have their pockets to blame, as real estate has proven to be the safest investment portfolio that guarantees the best ROI, and it is secured. “No one can carry a house from Lagos to Ibadan.”

While some may opine that there are lots of empty apartments as a result of the recession, many of these empty apartments are substandard and were built on the principle of profit maximisation, rather than quality creation.  The prolonged economic recession and the crash of the forex market have forced landlords and caretakers to reduce the prices of their apartments. 

What is your forecast of the market in the nearest future?

As the economy gradually rises from the jaws of a recession, it is apparent that the housing market will experience a great boom as more savvy investors are buying heavily into real estate – the new oil. However, investors must be very sure they are investing into the right property that will guarantee value, great returns, and peace of mind, at a great price.