According to the recent World Bank’s Nigerian Economic Report, Nigeria’s real estate industry is responsible for 11% of GDP growth, making it the third largest contributor to GDP growth. As such, there are very few industries that can offer the latitude of investment opportunities available in Nigeria’s real estate industry. From scalability to a rich variety of stock options, the real estate business in Nigeria flies high in terms of numerous criteria that make real markets attractive to investors. The relatively larger size of Nigeria’s market is highly supportive to economies of scale.
As such, the industry is experiencing a robust growth rate, with new developments sprawling across cities on various tiers. And with the great support for scalability in the market, the industry offers all shapes and sizes of opportunities to everyone, including people with limited cash.
The following is an overview of the two most attractive sectors of the Nigerian real estate market.
Land and Property Sales
This is the section of the market where savvy buyers pinpoint and buy real estate properties -virgin lands and buildings- from buyers, and then use veritable marketing strategies, including refurbishments, remodeling, and marketing to high-end buyers, to resell the properties at much higher prices. This section of the market is one of the most attractive due to its relatively low entry point. Sometimes, the property flippers do not make much improvements or refurbishments to the property before reintroducing it into the markets at a higher price. In these cases, the investors only need sound knowledge, highly effective marketing strategies, and seed money for purchasing the properties to turn in high profits.
However, in other cases, the investment might be highly capital intensive, with the investors pouring in huge amounts of funds to develop the properties into much better properties or change its intended purpose to ones that are best suited to particular locations. I these cases, investors acquire properties in strategic locations, convert them into high-end residential spaces, well-furnished and equipped rental/office spaces, and then sell the properties at highly profitable price points.
Rentals and Leasing
This is another section of Nigeria’s real estate market is flourishing exceedingly. From virgin open spaces to well-developed properties, this section of the market offers investors a very rich variety of stock options, making it one of the two most attractive section of the market. In this section, investors buy open spaces and bare lands and then lease them out for makeshift purposes and other outdoor use such as church service, car wash, mechanic workshop, storage spaces, etc. Investors also buy and develop properties, then put it up for rent.
They normally collect rent for these spaces either on a daily or monthly basis, and only a yearly basis on the developed project. While this generates short-term profits for the investors, the overall value of the property continues to rise with time, so the investors get to win on both the short-term and the long term.