Nigerian Online Property & Real Estate Market
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20th September, 2009, 46 Views
Nigerian Online Property Market:
State Of The Market
Unlike many other markets, Nigeria has experienced a 150% rise in properties depsite the global credit crunch and despite the Nigerian stock exchange meltdown. According to Businessday.com, Analysts expect property prices to come down in response to the falling share prices. Investigations revealed that property prices are increasing. Experts agree that there is a correlation between the stock market and other sectors of the economy, and they expect that the falling share prices should affect property prices despite the fact the stock exchange market lost about N4 Trillion to ravaging forces of demand and supply, but the property market remains the most active at the moment, with some saying it is even expected to gain from expected investment shifts that will see savvy investors moving cash to areas with high dividend potentials. From a global perspective, Nigeria is the least likely to be affected by the global credit crunch, because of the magnitude of the housing stock deficit, and the fact that credit underwriting was still very low and a few people are being financed by mortgages in the country. Nigeria which is Africa's most populous country lacks some 17 million housing units and new housing is urgently needed to meet the needs of a growing and aspiring population. Despite a robust economy, access to finance for property developers and home buyers alike remain extremely limited.
There's a housing boom, and there has been high levels of construction during the past few years in Lagos and Abuja, and the supply of expatriate housing has greatly increased.
Mobile phone companies are investing, creating temporary demand. Nigeria’s natural gas potential is being opened up, bringing in foreign experts. Increasingly, wealthy overseas Nigerians are repatriating money to buy properties back home.
The profitability of housing is drawing many developers into a construction boom. For instance every plot has been sold at Banana Island, a new development on reclaimed land near Ikoyi,Lagos State.
Lagos has some of the most highly-priced real estate in Africa, at around US$10,000 to US$120,000 per square metre (sq. m).
The recent increase in housing supply has squeezed rents, while prices are holding their ground. Rental yields for apartments in Ikoyi and Victoria Island in Lagos are around 3% to 5.3%. Yields are generally higher in Abuja than in Lagos due to less supply; at 6% to 8%. Beach estates have rental yields that range from 7% to 8 %. (Source) globalpropertyguide.com
Nigeria allows any company or non-resident to buy land rights for a maximum of 99 years for the purpose of their activity, as long as the purchase is declared to the government beforehand.
According to a recent United Nations study, Mortgage loans extended by Nigerian financial institutions total around 70biilion naira ($594million), where there are homes, buying them is not a simple matter, the mortgage market represents just a small fraction of the total loans and advances made. The vast bulk of this is concentrated in the major cities like Lagos, Abuja and Port-harcourt. Following the successful Nigerian Banking system, banks are disbursing funds and loans to property developers and mortgage loans to property buyers. According the new york times report on global economies, they say the banks have the financial capacity to offer mortgages of up to 20years, according to their estimates, raising the proportion of mortgage finance in the lending portfolio to 20percent would yield an additional 425billion naira ($3.6billion) for the housing industry, that would be a far cry from other advanced developing economies like South Africa for instance has a mortgage market equivalent to roughly 15% of GDP, for Nigeria to achieve this experts belive that Nigerian banks would need to find more than 3 times that amount roughly 1.5 trillion naira. The Nigerian government has a role to play in making sure that its people are decently housed, but its the private sector that will ultimately bring about greater ownership through afordable financing schemes. These finance schemes are at their pilot stages as majority of the banks are providing loans to the middle class to purchase their dream homes. Nigeria aiming to become one of the world's largest economies by the end of the next decade. ongoing reform and an inflow of foreign direct investment are taking it there.
The number of real estate transactions is on the high, according to a clear leader in a real estate print media business says advertisers have increased from 200 agents to 500 a ....% increase and each previous advertiser increased the number of properties listed from an average of 5 previously to 8 presently.(source: Catsles Weekly Magazine) Also the prices of these properties have followed the same trend too as property prices went up 150%
Despite an overall increase in property prices and transactions, there is a huge increase in offline and old media(print) transactions of selling real estate. The online internet usage in Nigeria is growing, according to Internet World stats in June 2008, Nigeria has the largest internet users in the Middle East and Africa with a user base of 10million nigerians and a 16.9% of the total african population, a 100% increase from its 5miilion users in 2006.
The act and process of advertising real estate online is at an early stage in Nigeria, and for an emerging market as that of nigeria compared to other emerging markets, there is a huge potential for growth with the way real estate is advertised online, especially with the total reliance and dependece by most estate agents on the use of print media to market their properties and listings, the cost of marketing properties on print media is relatively high. There are a number of property portals, these portals just exist and lack the potential to survive due to inadequate marketing and advertising campaigns. Nigerian internet savvy users have started searching the internet to buy,sell and rent properties, but are disappointed at the results they get from these property portals who largely lack embracement from agents in the country due to lack of fucntionalities on their website, marketing and advertising strategies and campaigns. Estate agents are yet to fully embrace the use of property portals, even as the rate of internet savvy users grows.
Market Structure
There are several big nationwide estate agents (Jide Taiwo and Co., Diya Fatimilehin, Dipo Fakorede, Ubosi Eleh and Co., Paul Osaji and Co., ARM Properties, to mention a few) but overall the market is fragmented. Small and very local estate agents are very important in the industry, these players form the vast majority, with the big names recognised nationwide, the exception to this rule are banks, mortgage institutions/building societies, many of whom also operate as estate agents.
Property advertising in Nigeria is dominated by a print media company Castles Weekly Magazine covering 4 major cities in the country(Lagos,Abuja,Port-Harcout & Ibadan) although they have a portal www.castlesweekly.com the technology, desgin and platform the portal is being run is out-dated and not appealing, also they lack the promoting of their portal and don't lure and educate their advertisers and readers on the use and importance of advertising real estate online. But they are still the clear leader overall in Real estate advertising in terms of useage,readership and number of listings
The Second clear leader is www.ip4properties.com A property portal who have been a key player and in existence since 2005, they are the clear leader becuase their business model focuses only on the website/property portal and they lead in terms of usage and majority of the estate agents list their businesses in the directoty, but a little amount of properties are listed on the website. They also lack the technology, desgin and platform the portal is being run and this due to the fact that the platfotm is out-dated and not appealing, they also lack innovations and versatility.
The Third leader is propertyinnigeria.com a website being run and managed by Nigerians in the Uk and USA with an office here in Nigeria, they have a site with a relatively good design, but lacks functionality and stickyness, a fist time home buyer can't get his/her hands on property facts and guides on the site, also the control panel for agents is relatively complex and complicated.
By these 3 listed, there are a few more smaller or unknown portals like naijaproperties.com, nethomesng.com run by various web solution companies.
By and Large all these property portals offer a similar palette of tools and features for consumers and agents, often copying eachother relatively with new features, castles weekly magazine the clear leader only dominates because of the print publication, so they are NOT a property portal.
The General problem facing these portals is the fact that they lack modern technology, lack innovations, versatility and poor,little or no marketing and advertising campaigns.
The most notable feature of the Nigerian market is the fact that estate agents advertise and list their properties in classifieds sections in traditional newspapers, dailies and bulletins. Like in Europe, there is a well executed combination of print and online property advertising business models, and the print advertising worldwide is deteriorating, as most publishers are closing down their print operations and focusing solely on online advertising.
Other Facts about The Nigerian Market
- Relatively all property sellers go through an agent to sell their property.
- There is no background check or data on history of a property
- Agent listings are average to poor quality,meaning their advertisements often lack photos and better description of the properties listed.
- The market is only slowly opening its eyes to the new technical possibilities of property portal platforms
For Further Reading, visit these links:
Sources and References:
http://www.globalpropertyguide.com/Africa/Nigeria,
http://www.businessdayonline.com/index.php?option=com_content&view=article&id=1022:property-prices-rise-150-despite-stock-market-meltdown-&catid=1:latest-news&Itemid=18, http://www.businessdayonline.com/Businesslife/index.php?option=com_content&view=article&id=251:why-nigerian-property-market-wont-benefit-from-financial-crisis&Itemid=13,
http://www.tradeinvestnigeria.com/feature_articles/895420.html, http://www.nytimes.com/global/nigeria/eleven.html, http://www.ip4properties.com/viewarticle.php?ArticleID=47, http://www.internetworldstats.com/af/ng.html, https://www.cia.gov/library/publications/the-world-factbook/geos/ni.html
About Author
This article is written by Taiwo Oluwafemi, CEO of PNG Interactive Solutions, he can be contacted on 01-8726046
