Business Trends | By Olufikayo Owoeye
Insights on Africa’s Real Estate Market According to the World Bank, Africa’s median age was 19.7 years in 2012, and it is expected to increase to 25.4 in 2050, making Africa the continent with the youngest population.
T
he global megatrend relating to the ageing population and the consequent increase in the demand for retirement homes is therefore not expected to have a significant impact in Africa. This young population on the continent will drive growth in the demand for housing.
In response, African governments have continued to promote new urban development through the creation of satellite cities, to offset pressure on existing urban centres. Ambitious plan to bridge housing deficit in Nigeria
The Nigerian real estate market presents substantial opportunities as well as several specific risks for property investors. There are existing
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problems with access to finance; with a lack of long-term debt financing and an underdeveloped mortgage market (mortgage loans represent less than 1% of the nation’s GDP).
urban migration, strong economic growth, and a growing middle class. It is estimated that Nigeria has a housing deficit of 17 million houses estimated at US$363 billion. This number is expected to increase by two Cumbersome and time-consuming million houses per year at the current processes for land acquisition and population growth of 2.5% per year. ownership documentation can make acquiring land difficult, while land The World Bank estimates that 44, in urban areas is astronomically 000 mortgage loans were granted expensive. Building materials and in Nigeria between 2004 and 2010, construction costs are high in addition with an average size of US$31,500, to the huge reliance on expatriate amounting to a ratio of home loans to workers, resulting from a shortage GDP of 0.6%. Interest charges on prime of expertise in the local construction mortgage rates among commercial industry. Security considerations as a banks ranged between 15% and 25% result of local unrest should also be with maximum mortgage rates being factored into investment decisions. between 16% and 30% which, when combined with equity requirements The residential real estate market is of 10% to 20%, heavily restricts driven by the growing population in market access for low- and middleNigeria, as well as the increasing rural- income families. Lagos is considered
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