By Nehi Igbinijesu
It is no longer news that Lagos will be the most populated city in Africa by June this year, surpassing Cairo for the first time. This development could spell incalculable benefits for investors in the area of housing. Lagos’ teeming population could soar as high as 30 million people by 2016, from current estimates of 22 million.
Despite the Land Use Act of 1976 which prohibits foreign ownership of land, international developers looking to circumvent this law without breaking it, may simply set up subsidiary companies to study and take advantage of the potential market. The key to winning in this potentially viable market will be the ability to understand and provide housing that is both enticing and affordable.
Here are a few reasons to invest in Lagos;
Cash is King. The Nigerian economy is largely cash based. Most people looking to either rent or buy property usually pay cash (in full or by agreed installments). Grappling with problems like payment defaults and foreclosures are a rarity in this part of the world.
Steady Influx of Expatriate Workers: Due to insecurity in other parts of Nigeria and the nascence of Nigeria as an emerging business destination, a lot of expatriates have had to settle in Lagos, giving rise to a demand for high-end commercial property.
Government Will: Both Federal and State Governments have set the ball rolling in parts of Lagos that would encourage housing projects. The Lekki Free Trade Zone, a new International Airport under construction and road projects in Lekki and Agbara are already courting investor funds.
Influx of Fresh Graduates: About 1,500 graduates get churned into society each year from around the country. Most of them come to Lagos in search of jobs and steadily swell the city’s population. Most of these graduates take up entry-level positions or start up their own enterprises. As their livelihood improves, these graduates get married and need housing.
Huge Capital Outlay: Renting or buying property in Lagos traditionally involves one-off bulk payments. However, most new job holders can hardly afford such expenses so they end up squatting with parents or relatives until they can afford to move out. Recent legislation in Lagos mandating landlords to collect rent on a monthly basis has been passed, but adherence is still a problem. However, offering the monthly rent option to this demographic of fresh graduates/new job holders could be a huge cash spinner for investors. Direct surcharges from their salaries would guarantee convenience for renters and steady income for developers.
Nigeria’s new billionaires may very well be those who flow with this population boom in Lagos and meet the yawning housing gaps that it will create.