Estate developers in Nigeria are in dire straits especially for those who had previously entered into contracts with variation clauses; they are confronted with significant losses owing to rising cost in building materials and cements among others.
The ripple effect of this economic strain is felt across the nation’s real estate development sector, where the cost of building materials has experienced an unprecedented surge.
For instance, the price of cement has soared to over N9,000 per bag in the past few months.
The fallout from these economic conditions is not limited to unfinished projects. In estates where construction has been completed, new homeowners are struggling with the additional costs of finishing and furnishing their properties.
Estate agents and valuers are not finding things easy either with flactuation exchange rates which has seen the Naira loose value daily.
They are reported to adapting what in local parlance is known as “dollarization” where cost or value of asset is pegged in US currency, the dollar.
Nigerians leaving abroad are not also exempted from the ripple effects of the the depreciating exchange rate, which has rendered their prospect of investing in real estate as returns on capital appear unattractive.
They are migrating their hard-earned dollar to a more stable economies with predictable investment returns, such as Dubai, where the stability and predictability of the market contrasts to what obtains in Nigerian
The situation is likely to continue to be challenging for most Nigerians if the rising cost of goods and services persists in the coming weeks and months. There is also a potential threat to the quality and standards of building materials sold as more developers look for options to deliver their projects on time and at cost.