I was discussing with real estate agent recently about why there were so many unoccupied houses in lekki and in some parts of Lagos Island. His answer was that the landlords were unwilling to let down on the rent price and would rather have the houses unoccupied than occupied for a rental amount considered too small.
Curiously I wondered who is loosing in that regard as an owner of an unoccupied building
surely must be finding hard to repay the cost of construction. At the moment of asking the reason became mutually obvious. These guys have no cost of borrowing. Neither do they face any form of loss of value on their property. It was a win win situation for them. The funds were simply unlevered and unencumbered. It was corruption money. Money belonging to the people of Nigeria basically ‘housed’ in grandiose properties all over Lagos and indeed Nigeria.
It’s no wonder house rents never seem to go down. It’s probably how some of our parents also built those mansions in the village that can’t ever be monetized as no one ever lived in them all year long.
So that explains it. The sad truth is that most of the housing units in Nigeria are funded from corruption money. Money looted from both the public and private sector at a pandemic level.
As Lagosians bask in the euphoria of the new Tenancy law, be reminded it is just a short term respite, till housing become low cost and funded via mortgage, it will continue to be a shelter for looted funds.
– Posted using nBlogPress from my iPhone
I think it's wrong to assume that anyone who would build a house without renting it out must have built it with corruption money; you can only say that they must be very rich people. I think real estate can be used as a means of protecting your legitimate savings from inflation. If you build or buy a house for that purpose, then you would not want to rent it out at a cheap rate, because the cheap rent may not adequately compensate the owner for damages due to usage and the stress of collecting rent every month. I don't think you can fairly conclude that the owners must be corrupt because they didn't take any tenants.
I didnt mean to generalize but its quite inconceivable not to think those houses were funded dubiously. Just take a ride around lekki or banana estate with an agent and get their views. There are honest people in Nigeria, but please how many earn over N50m a year? And even if they do, just how can they afford to own a house that probably cost N150m. Not just own them but to leave them empty.The rule of thumb here really is that, if you finance the purchase of a house through legitimate means there is every likelihood that you will not leave it unoccupied for a lengthy period of time. Ugo