The real estate sector of economy appears to be the worst hit by the undying spate of insecurity in Nigeria, going by the claim of Housing Development Advocacy Network (HDAN), a foremost housing development advocacy group.
Alarmed by the security situation, the group is warning that the sector will soon be grounded if nothing is urgently done to tackle the menace by the Federal Government. Executive Director of the group, Festus Adebayo, a lawyer said in Abuja that ”all is not well with our country’s economy. At the moment, foreign investors are shunning our real estate sector because of the level of insecurity.”
According to the housing development advocate and owner of the popular Housing Development programme on AIT and TVC , ”Twitter took its regional headquarters to Ghana, ignoring Nigeria with the largest Twitter community in Africa because of insecurity.
”As you are most aware, the United States has warned its nationals against traveling to Nigeria. As an organization, we are worried that insecurity is adversely affecting the real estate sector, the highest employer of labour and contributor to the GDP in the industrialized countries like Canada and USA
”We are strongly of the view that the Federal Government, elder statesmen, and state governments should come together and tackle the serious security challenges facing Nigeria. We are urging that in the interest of real estate development, and the economy as a whole should be addressed overtime.”
Going by the HDAN testimony, the festering insecurity in the country is threatening the real estate sector of Nigeria’s economy. The investment climate to attract investors does not appear to be quite clement.
The level of insecurity in different parts of the country, according to the group, has negative effects on real estate development in Nigeria. Amidst the security challenges is the persistent housing deficit Nigeria currently experiences.
”We are of the view that with the perpetuation of the security challenges, the housing deficit of 22 million as at 2019, may worsen as real estate investment dropping due to the crisis”, the HDAN chief says.
HDAN made references to earlier issues by some interest groups on the security problem in Nigeria. For instance, in Northern Nigeria, Chairman of the Northern Elders’ Forum, Professor Ango Abdulahi, said in April 2019 that the region lives under horrendous Boko Haram threats, banditry, kidnappings, armed robbery, marauding youth gangs, herders and farmers mini-wars.
During the Second Republic administration of President Shehu Shagari, the Mataisine sect terrorised Northern Nigeria. It is taking a very damaging dimension under the Boko Haram since its commencement in 2009.
A World Bank report in 2016 says since commencement of the Boko Haram scourge in 2009, fighting between Jihadists and the military destroyed or damaged 956,453 (nearly 30 per cent) out of 3,232,308 private houses; 5,335 classrooms and school buildings in 512 primary, 38 secondary and two tertiary institutions; 1,205 municipal, local government or ministry buildings; 76 police stations;
Borno State Permanent Secretary of Ministry of Reconstruction, Rehabilitation and Resettlement was quoted to have stated in 2017 that in the past six years, Boko Haram has destroyed properties worth N1 trillion, pointing out that the insurgents have razed down 986, 453 residential homes; 5,335 classrooms, 201 health facilities, 1, 630 water facilities and 726 power distribution stations and transformers, 800 public structures such as offices, prisons, police posts and other structures.
Banditry is another threat that is ravaging the North, and extending to other parts of the country. Their modus operandi is to carry out armed attack on residents in their villages or travellers along the road and cart away their belongings. In the course of this attack, victims can be killed or kidnapped for ransom.
This leaves villagers and travellers in constant fear of attack, thereby leading to the abandonment of residential properties in the areas of attack.
Zamfara State is at the mercy of armed bandits. Also in parts of Katsina State, the home state of President Muhammadu Buhari, bandits are said to be destroying lives and property at will while kidnapping is ravaging the country.
Another security threat is the rampaging Fulani herdsmen. They have been attacking across Benue State, Adamawa State, Kaduna, Sokoto and Plateau. Typically, they attack residents, break into their homes, take lives and set houses ablaze among other atrocities they commit.
Undoubtedly, shelter is one of humanity’s basic needs. a common denominator of the above attacks is attack on houses or real estate in general. Real estate is one of the most, if not the most, valued assets around the world.
In Western Nigeria, there is a rise in kidnap for ransom in Lagos, Ekiti, Ondo, Oyo and Osun. Fulani herdsmen have also carried out their nefarious attacks of killing and destruction of farmlands in parts of Ekiti, Oyo, Ondo, and Osun. Armed robbery and mysterious deaths suspected to be ritual-related are also not left out.
In the oil and gas region of Nigeria, there is the recurrent issue of militancy which the Nigerian government continues to manage. On the list also is proliferation of arms, illegal oil bunkering, armed robbery, political violence, cultism, pipeline vandalism, kidnappings, etc.
In Eastern Nigeria, the hotbed of Biafra agitation, there exist threats such as armed robbery, kidnapping, the proliferation of arms, communal crisis, cultism, herdsmen-farmers clashes and the continuous activities of MASSOB and IPOB.
Areas prone to attacks from Boko Haram, Fulani herders, bandits, cultism, regular ethno-religious crisis and other insecurity challenges tend to witness serious decrease as a residence choice for home seekers.
Safety of dwelling environment remains a key consideration when home seekers are making decisions on purchase or leasing of dwelling places. No home seeker will rent or purchase a piece of property in an area where the earlier-mentioned atrocities are rampant for fear of their homes being burgled or invaded and killed. In addition, the luxury of moving around the environment to sort out daily needs is also key.
When a home-seeker fears that his or her desire and need to move freely within the neighborhood will be hampered by constant curfew, ethno-religious crisis, cult clash, kidnapping, etc, he or she will be unwilling to settle within such neighborhood.
To drive the message home, the level of real estate investment in Borno has dropped drastically in the last four years. Another effect of this is the abandonment of property and gradual dilapidation of same.
Due to lack of safety in certain areas, there is likely to pressure on existing properties in areas perceived to be safe by people fleeing from unsafe areas. The result is that there will be a hike in the cost of purchasing or leasing properties in these “safe” areas and developers and or property owners will make more profit.
The downside is that the pressure may result in sporadic construction of unsafe and unhygienic structures which may eventually collapse or lead to break-out of epidemics; an experience not befitting of ideal real estate development.
From the commercial side, business owners are unwilling to buy or lease property to carry out their businesses in areas prone to looting by bandits, cultistism, kidnapping, robbery, etc for fear of the safety of their investments
Records available to HDAN, according to Adebayo, ”indicate a decrease in demand for existing residential and commercial property and loss of investment for the developers who have spent personal and borrowed funds for developments in volatile parts of the country. This trend is putting some real estate developers out of business except they are able to manage the situation properly.”
Some real estate players closed to HDAN are saying that no investor will invest funds in areas prone to insecurity when he or she is aware that there will be no patronage and the structure put up can be burnt or destroyed in few minutes of a raid by Fulani herders, ethnic bigots, cultists or bomb blast from Boko Haram or grenade from armed robbers.
Financial institutions are allegedly not granting investors credit facilities to put up commercial structures in some parts of Nigeria where safety of the investment is an issue or where the project is not viable because of envisaged zero demand for such bankrolled structures when put up.
In spite of the escalating security challenges, President Buhari is still wooing foreign investors to come and invest in Nigeria. But, some of the pre-investment studies of the Nigerian environment do not seem to be favourable for positive investment decisions.