Evidently, the Nigerian economy is at crossroads, virtually all macroeconomic indicators are on the reds. According to the National Bureau of Statistics (NBS), the government owned, and one of the Nigeria’s leading data generating organizations, the Nigerian inflation rate is currently put at 16.82%. One United States Dollar is being officially exchanged for N416.00 in the foreign exchange market. As at today, the current price of 50Kg bag of cement is N4, 500 at a retail price to consumers of the product who are majorly real estate players and property developers as well.
With the disturbing economic scenario in Nigeria at the moment, businesses in all sectors of the Nigerian ailing economy, including the property market have suffered a significant setback and staggering to meet up with the ever increasing operating cost.
In today’s Nigerian economy, one of the major factors affecting the real estate cum property market is the rising cost of maintaining the existing properties, with little or no attention being paid to maintenance of properties by some players in the industry, especially private practice professionals who are saddled with the responsibility of managing properties on behalf of their clients and property investors.
Most of these properties are in sorry states due to a number of factors occasioned by the Nigerian ailingeconomy. The disposable income of most property consumers are on the decline which affects their economic ability to pay or renew their rent as at when due and this has a direct effect on the bottom line of the property managers to carry regular maintenance on the properties which ought to be the normal practice in the property law.
Taxes being levied on properties are on the rise in most state of the federation. With a very lean and irregular federal revenue allocation, state governments across the country are now adopting tax payers’ unfriendly strategies as a method of improving their Internally Generated Revenue (IGR). In their collective new strategies, the property market is one of the most hit as most properties are heavily and double taxed. And with this new development, the property managers will be left with a very lean income or budget for the properties that are generating the monies for the property owners and the government.
High cost of charges by estate developers on properties owners in the estates is another rising cost of maintaining a property in Nigeria today. Some developers charged so much on service charge, estate maintenance, and other fees that the landlords are left with very lean resources to keep the properties in good shape and maintain its market value over time. In most estates in Lagos, Abuja and other developed cities in Nigeria, the properties have over time lost the value of the rent being paid by the tenants due to continuous tear and ware with little or no maintenance.
Commercial Banks and most mortgage lenders require the property owners to have insurance on the property. This is one factor that has over the years hindered the chances of accessing capital for development and maintenance of properties by real estate professionals. Most mortgage institutions and money lending banks hardly transacts big ticket businesses with property clients who have no insurance cover on their properties.
In a bid to regulating and maintaining stable cost of property maintenance in Nigeria, the government has a very big role to play. The current spate of insecurity in the country should be addressed at the earliest possible time to give room for a congenial operating business environment; the overall macroeconomic policies should be overhauled in line with the current reality of things. Even in a highly deregulated market, prices of building maintenance materials like cement should be regulated by the government.
ESV Adebayo Adeyemo is a registered Estate Surveyor and Valuer, Head of Practice and Lead Consultant at Bayo Adeyemo & Associates. He wrote from Abuja, Nigeria.