How oil prices could affect Nigerian Real Estate.

In an article originally posted on huffingtonpost.com, Kian Mioni, co-founder at Lamudi – an online real estate marketplace with operations in 32 countries, has expressed his fear in the real estate business in Nigeria considering the changes in oil prices.

He stated that Changes in oil prices and the devaluation of the Naira have had a significant impact on the Nigerian economy and that with a 70 percent dependency on crude oil for external revenue, the drop in world oil prices is now affecting the Nigerian business space.

He also added that the majority of real estate projects in Nigeria are being funded by the government, which could mean that the devaluation of the Naira results in less available funding for property development.

In his opinion, commercial hubs and larger cities like Lagos, Abuja and Port Harcourt are less likely to suffer, as they have more diversified economies. However, we may see that the development of new properties across Nigeria slows down.

He also stated that the problem now for both foreign and domestic real estate investors is how long this currency devaluation will last. Reiterating that it is currently too early to tell whether the low prices are here to stay or if they will increase again in 12months. He also mentioned that this will determine how the real estate industry is affected in the long term. However, if low oil prices become a long-term consideration, we may see some much-needed pragmatism entering the real estate sector in terms of prices.

“The slide in the value of the Naira means that foreign investors are now able to purchase more than they could previously afford. Furthermore, the costs of foreign components for construction have gone up, which is impacting local investors. As the value of the dollar increases, more Nigerian construction companies will turn to locally-sourced products, to keep property prices as stable as possible. This will result in a positive shift for the Nigerian economy,” he said.