The past two phases of my Civil Engineering career has found me working with two of Nigeria's top Real Estate companies.

I have planned, designed and also supervised projects. By virtue of working with the big boys of Real Estate in Nigeria, I have met and interacted with a lot of Real Estate agents and other upcoming Real Estate companies in Nigeria.

An Ongoing Real Estate Development

It is a common saying here, that Real Estate never depreciates, and I used to believe it was true, until the question was asked by one of my twitter followers, and I had to do a lot of critical analysis before answering his question.

Real Estate remains a very reliable investment, but like all other investments, there is a risk of depreciation associated with Real Estate.

Considering the first component of Real Estate: buildings, In Civil Engineering, all buildings have a design life. They are designed to last a certain number of years, usually between thirty and fifty years, depending on the budget of the owner. Consequently, as every cubic meter of concrete is poured, as every Kilogram of reinforcement is placed, the design life starts counting. Over a few months, several components starts losing value, some begin to call for repair, depreciation sets in.

If you purchase a piece of land and you have been asked to expect a certain Return on Investment, could anything possibly go wrong and reduce your ROI? Yes, a lot could go wrong!

Flooding could be an issue, as it takes a little increase in the level of adjoining land areas or an increase in the road level to get your land flooded. A bad drainage in the neighbourhood or the rechanneling of a river or some unfavourable incident at a nearby dam could get your property flooded. If you were to sell that property, no one will be willing to pay good money for it, and will definitely bargain lesser for the land. No one will even want to buy a flooded piece of land in the first, except there are no other available options.

Bad roads could also cause the value of a piece of land to depreciate. If the road(s) leading to your piece of land becomes bad, investors and prospective home owners will be discouraged and the demand for land in that neighbourhood will reduce. It is basic Economics that whenever there is low demand for any commodity, the price drops in an attempt to encourage demand.

Security could also be a major factor. If any expensive neighbourhood becomes notorious, either because of armed robbery, kidnapping, bombing or any other crime, the value of that neighbourhood will drop, and your piece of land will definitely lose its value.

Natural disasters or environmental disasters could also deal a fatal blow on your piece of land. Oil spillage, erosion, collapsed bridges, collapsed power supply structures can all lead to a fall in the value of your piece of land.

When next you intend to purchase a property, please consider the above factors, and if you are spending a lot on the piece of land, I will strongly advise that a Soil investigation and topographical investigation be carried out. It is better to be safe than to be sorry.

http://michaelakinpelu..com/2019/06/real-estate-never-depreciates-how-true.html?m=1

Real estates is just like Football transfer windows..

Recession no dey near them

Hmm. Let me learn

Good..I wan enter that business

True. It never depreciates.

helinues:
Real estates is just like Football transfer windows..

Recession no dey near them

Only in Nigeria, where politicians who stole the nations wealth build estates which average income earners cannot afford.

Oga, of every investment there is, real estate remains a solid investment.

Your points are valid but at what percentage does real estate depreciate?
Lets take flood as a disaster that could affect land appreciation, it is wise not to buy lands in a flood prone areas. If I have a land in Lekki, it would just be one or two and I shall wait for a few years and sell.

Lekki is flood prone (some areas) but in 2003, a land there costs around N2m but in 2017 or so, it costs a whooping N100,000,000.

In the long run, real estate beats shares/stocks/bonds, business investment etc.


The rule is, never buy properties in one location only, spread the investment in several localities.

I want to go into real estate... Any instructor here?

Of course real estate can depreciate but in Nigeria, due to double digit inflation, it rarely will

[s]

helinues:
Ok

[/s]

Lol

That's not true please... real estate can depreciate and turn into a bad investment overnight especially in a country like Nigeria that lacks development.

People can purchase a landed property with hope that the location will be developed, but at the end things might even get worse.


Example is Satellite Town that used to be a high brow area, but since an Oil Depot was situated there, it has suddenly become an eyesore due to the bad roads and tankers blocking every access for homeowners to enter their homes peacefully and the local government care less about it because of the money they collect from the fuel tankers. Now people are selling off their houses over there for a cheap price and house rents now have become so cheap with lots of vacant houses around, because everybody is moving out and nobody seems to be moving in.

Real estate is good but invest in it wisely, especially in this yeye country that lacks vision, projections and development.

I have a land in Benin. The area no gree appreciate cos of bad road...

Next year I will just fence it, put gate and leave it there. Not interested in staying in Benin for now.

How do i get loan to fund a charity

But u can loose all to natural disasters.

Sure now

Very true


Meanwhile if you need properties(house or lands) somewhere in ikorodu. Hit me up

There is something unattural about real estate prices here. One day the bubble will burst. It happened in the us

One of the few countries where real estate depreciates is Nigeria.
When I say depreciates, I mean very very badly. Excessive urbanization, planlessness, un enforced regulations, advancing slumnization all are contributing to this depreciation in value. I have real life examples from neighborhoods in Surulere, Opening, Abuja, Ilorin and Port harcourt.
Only those who dont have property think real estates always appreciate.
Better choose your neighborhood carefully before investing

Nice analysis, but note that all the possibilities you mentioned do happen and affect value of some properties, but in Nigeria as it is in this generation(of massive housing deficit of desastrous proportion), this factors affect value less than 10% of the time. Look at things with a longer time view, not short term. Real estate value in naija is on the rise all the time so long as housing needs are in comatose. People desperately need houses even in bushes, hills, Riversides, swamps, slums etc. Don't use prime real estate futures to mistake general real estate.

Good. Well-written and very logical.

Mecoy:
The past two phases of my Civil Engineering career has found me working with two of Nigeria's top Real Estate companies.

I have planned, designed and also supervised projects. By virtue of working with the big boys of Real Estate in Nigeria, I have met and interacted with a lot of Real Estate agents and other upcoming Real Estate companies in Nigeria.

An Ongoing Real Estate Development

It is a common saying here, that Real Estate never depreciates, and I used to believe it was true, until the question was asked by one of my twitter followers, and I had to do a lot of critical analysis before answering his question.

Real Estate remains a very reliable investment, but like all other investments, there is a risk of depreciation associated with Real Estate.

Considering the first component of Real Estate: buildings, In Civil Engineering, all buildings have a design life. They are designed to last a certain number of years, usually between thirty and fifty years, depending on the budget of the owner. Consequently, as every cubic meter of concrete is poured, as every Kilogram of reinforcement is placed, the design life starts counting. Over a few months, several components starts losing value, some begin to call for repair, depreciation sets in.

If you purchase a piece of land and you have been asked to expect a certain Return on Investment, could anything possibly go wrong and reduce your ROI? Yes, a lot could go wrong!

Flooding could be an issue, as it takes a little increase in the level of adjoining land areas or an increase in the road level to get your land flooded. A bad drainage in the neighbourhood or the rechanneling of a river or some unfavourable incident at a nearby dam could get your property flooded. If you were to sell that property, no one will be willing to pay good money for it, and will definitely bargain lesser for the land. No one will even want to buy a flooded piece of land in the first, except there are no other available options.

Bad roads could also cause the value of a piece of land to depreciate. If the road(s) leading to your piece of land becomes bad, investors and prospective home owners will be discouraged and the demand for land in that neighbourhood will reduce. It is basic Economics that whenever there is low demand for any commodity, the price drops in an attempt to encourage demand.

Security could also be a major factor. If any expensive neighbourhood becomes notorious, either because of armed robbery, kidnapping, bombing or any other crime, the value of that neighbourhood will drop, and your piece of land will definitely lose its value.

Natural disasters or environmental disasters could also deal a fatal blow on your piece of land. Oil spillage, erosion, collapsed bridges, collapsed power supply structures can all lead to a fall in the value of your piece of land.

When next you intend to purchase a property, please consider the above factors, and if you are spending a lot on the piece of land, I will strongly advise that a Soil investigation and topographical investigation be carried out. It is better to be safe than to be sorry.

http://michaelakinpelu..com/2019/06/real-estate-never-depreciates-how-true.html?m=1

This statement is a fallacy, demand and supply is at play here...

Because of poverty and harsh economic conditions we have more sellers of lands than buyers so it's a buyers market, buyers offer very low prices until a desperate seller is forced to sell below cost price.

Very truth am a Realtor I have a property that was bought 23 years ago for just less than 100k and it's going for 10m mow it appreciated now the same car or bike or clothes that was bought at the same time can it be found nope Landed property is a very long term investment for wise investors every billionaire in the world has or have investment in real estate

Ok

There is an issue with value in nigeria. If u have a 8 mini flats in ikotun giving u 200k each. Its a nice investment. But if u buy a 70m house in chevron for 3.5m annual rent it may be a bad investment. So many empty house where i live on the island. Rent and sell. Its a saturated market and pple prefer new houses

The economy has affected real estate business

It can depreciate for a number of reasons:
if a mortuary is located close by,
insecurity,
poor drainage,
power failure,
land fill/dump site,
power plant,
If nobody is willing to pay or continue paying the high rates the realtors will be forced to give it for much lower or just watch the house lay fallow and rot away bringing in 0 naira 0 kobo etc.

But what i notice in Nigeria we no get sense most houses are over valued and way over priced ask yourself what banana island has that makes it so expensive nothing, no state of the art security system, no subway station, no world class health facilities just big houses even the houses have nothing special about them no underground cinemas, no infinity pools, no rooftop tennis court, no nothing just big square empty block houses that's all. They are not even furnished but they cost so much
Ordinarily houses in Lagos should be much cheaper because in reality much of Lagos is a giant slum and life there is short and brutish

True

ornicus:
There is something unattural about real estate prices here. One day the bubble will burst. It happened in the us

it cannot burst because many in the high brow areas are proceeds of looting . The owner dont mind it wasting away. No mortgage or serious tax to be paid

If you bought a property before 2016, even though it has appreciated nairawise, it may have depreciated dollarwise.