Worries as insecurity heightens, takes toll on real estate market
Among Nigerians, individuals and groups, the worry about the heightening insecurity in the country is deep-seated. One of such groups is a housing development advocacy outfit which is all the more worried as the government seems clueless on the frightening situation.
The group, known as Housing Development Advocacy Network (HDAN), says it is deeply concerned about the impact of the security situation on the real estate market and the economy.
Apart from reducing the sector’s contribution to national GDP, which is relatively significant, insecurity discourages fresh investment in the country, and a case in point is Twitter which took its regional headquarters to Ghana, ignoring Nigeria with its large-size market.
“Twitter is just one out of many foreign investors that have avoided Nigeria for security reasons. Real estate benefits much from new investments because it provides both commercial and residential properties for the investors. That opportunity has now gone to Ghana in the case of Twitter,” Festus Adebayo, HDAN’S executive director, noted.
Any fresh investment in real estate and other sectors of the economy comes with a positive impact on the economy because of the jobs such investment will create. In real estate, for instance, experts say that everyone square metre of real estate activity creates jobs for three people.
The rental market is not left out as there is a significant drop in demand for existing residential and commercial property which means loss of rental income for developers who have spent personal or borrowed funds to develop in volatile parts of the country.
HDAN recalls that recently, United States warned its nationals against travelling to Nigeria. Similar travel advice has been given to nationals of other countries of the world. The implication of this is loss of revenue by the hospitality industry which would have provided hotel accommodation for them.
In a very significant manner, insecurity is adding to Nigeria’s housing deficit, especially in the northern part of the country where, in some instances, no new real estate investment has taken place in the last four years, and available residential and commercial properties are destroyed by insurgents.
“We are afraid that as these security challenges continue, Nigeria’s housing deficit, estimated at 22 million, may worsen as real estate investment continues to drop in some parts of the country,’’ Adebayo said.
He cited a World Bank report in 2016 which notes that since the Boko Haram scourge began in 2009, fighting between the sect and the military has destroyed 956,453 out of 3,232,308 private houses; 5,335 classrooms and school buildings in 512 primary, 38 secondary and two tertiary institutions; 1,205 municipal, local government or ministry buildings, and 76 police stations;
He also quoted the Borno State Permanent Secretary in the Ministry of Reconstruction, Rehabilitation and Resettlement as saying that from 2017 till date, Boko Haram has destroyed properties worth N1 trillion.
The permanent secretary pointed out that the insurgents had razed down 986, 453 residential homes; 5,335 classrooms, 201 health facilities, 1, 630 water facilities and 726 power distribution stations and transformers, 800 public structures such as offices, prisons, police posts among others.