Charles Ighalo Written by Charles Ighalo · 1 min read >

How do you measure the success of real estate, is it by the number of houses you own, or cash derived from doing property business (rent, lease, sale)? Most of us, came from the background where house ownership means wealth even when it is obvious that the landlord cannot afford proper meals. For example, my father 35 years of working with Government did not seem successful to him until he completed a house in Lagos and his village. He did not even think of an investment that will cater for him on retirement, his target was build, stop paying rent and manage on the pension salary that comes at month end.  What comfort do you think one can get on pension salary considering inflation growth in Nigeria. This is a common mentality in Lagos especially, the strategy behind owning a house should go beyond getting a home. I will be talking about how to achieve real success in real estate in Nigeria.

For case study, I will be focusing on real estate in Lekki, Lagos. There are multiple players with undefined roles in the business, the assumption for success is designed around sales value and not turnover. On the average, a house irrespective of the nature (bungalow, duplex, terrace etc.) is 180 million naira only. The rent value of such house is 6 million per annum, so, there is 30 years return on investment, all things being equal. Those that can afford and have appetite this kind of investment are few and constitute 1% of the society. Nigerian Banks do not give mortgage loans and the reason is very clear, housing valuation does not match reality on ground, it is delusional to value property thrice as high all because a few corrupt Nigerians hide stolen money by buying houses at ridiculous rates. Additionally, there is a culture that supports house ownership for keeps. The business of housing is misunderstood in Nigeria. Real estate practitioners should create awareness and education that will match the reality on ground and how houses should be price especially in Lekki phase 1. This will reduce the numerous vacant houses in that area and investor will get value in good time. The courage to give mortgage loans will be built in Banks as return of investments time will be shorter and achievable.

So many people have lost their houses due to buying property at loans collected using commercial rates. What business or job can you have that yield 300% profit for straight 15 years? It is mostly impossible, people can keep their houses while in service but immediately they leave or are fired, problem starts. This is one of the reasons why Nigerians steal and commit fraud. The culture supports house ownership, but economy status is lower that the assumptions of people, you can only steal to meet up. Until we start valuing labor and building capacities in arithmetic ways, thing will keep going bad. My next blog will continue this subject matter. #EMBA27

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