"In spite of ongoing developments in upscale areas, the desire for luxury housing is dwindling, primarily due to shifts in government tax policies, concerns about investigations into money laundering by security agencies, and a government crackdown on unlawful property developments in the nation, as highlighted by Chinedum Uwaegbulam.

 

The luxury real estate market in Nigeria has faced significant challenges recently, including stricter government regulations and economic factors. Highly coveted locations such as Banana Island, Ikoyi, Victoria Island, and Lekki in Lagos have traditionally been the top choices for luxury real estate, offering modern high-rise apartments, extravagant mansions, luxury condominiums, and high-end retail establishments, catering to high net worth individuals and expatriates.

 

According to reports by The Guardian, a combination of overzealous developers and government measures against illicit property developments and money laundering has resulted in a downturn in sales. This has led to high vacancy rates and a general dampening of the market.

 

Presently, Nigeria's housing markets are grappling with the impact of rising interest rates, inflation, and a shortage of new building projects due to disruptions. However, the devaluation of the naira against the dollar has made property purchases more accessible to those in the diaspora.

 

This shift in the luxury property market is most noticeable in Lagos, Abuja, and Port Harcourt, primarily driven by changes in government tax policies and concerns about harassment by security agencies. The demand for high-end homes has also been affected by the Economic and Financial Crime Commission (EFCC) requiring estate surveyors and valuers to disclose large transactions, which has deterred potential investors.

 

Chudi Ubosi, Chairman of the Association of Capital Market Valuers (ACMV), suggests that what the property market needs to rebound is a stable and enabling economic environment. He emphasizes that the high-end market is closely tied to the overall economy, and stability is key to its revival.

 

While demand for luxury homes remains relatively stable for now, several factors contribute to its challenges, including the rising cost of property acquisition, the absence of mortgage options, a sluggish economy, and the rapid depreciation of the local currency. The lack of a clear policy direction from the new administration also plays a role.

 

Ubosi notes that the clampdown on developers following the collapse of a 21-storey building in Ikoyi, increased government oversight of high-rise developments, and the necessity of vertical development to maximize potential and value have made potential buyers more cautious about choosing developers with strong track records.

Sam Eboigbe, a fellow of the Nigerian Institution of Estate Surveyors and Valuers (NIESV), emphasizes that the performance of the luxury real estate market is closely tied to the overall economic climate, including inflation rates, GDP growth, and the foreign exchange market. Escalating prices of building materials and land acquisition costs also impact the market.

 

Eboigbe notes that despite challenges, luxury properties in prime locations still command high values, with the price per square meter of land in their immediate vicinity rising. This has led prospective buyers to exercise caution and engage experienced professionals for due diligence.

 

According to a former Chairman of NIESV's Faculty of Estate Agency and Marketing, during periods of economic stability and growth, the demand for high-end luxury properties rises. Factors such as infrastructure development, transportation networks, and security services in the neighborhood influence the choices of luxury home buyers.

 

Austin Otegbelu, a Professor of Estate Management at the University of Lagos, attributes the decline in demand for luxury homes to falling incomes and high exchange rates, particularly for properties with rents denominated in dollars. He urges government agencies to work towards revitalizing the economy to stimulate property demand.

 

In conclusion, prospective tenants and buyers are advised to seek professional advice from estate surveyors and valuers to avoid falling victim to illegal modifications in high-rise buildings."

 

Source: TheGuardianNg