Nigeria: Should You Make a Real Estate Investment Prior to a General Election?
In a developing economy like Nigeria, national elections have a significant impact on the performance of all sectors of the economy, including the real estate market.
Phillip Anjorin
As the General Election in 2023 draws near, prospective investors in real estate are currently debating when is the best time to make real estate investments: before or after the elections.
Real estate industry participants are both anxious and excited to learn the verdict because of the potential impact it could have on the market.
In a developing economy like Nigeria, national elections have a significant impact on the performance of all sectors of the economy, including the real estate market.
The administration that is currently in power contributes to an environment that is fraught with uncertainty, which in turn hinders the growth of the economy.
Infrastructural projects are especially vulnerable because their outcomes are uncertain if there is a change in the administration at the center. This has an indirect influence on the real estate landscape in cities across the country.
Industry analysts are anticipating a successful turnout in the General Elections due to the fact that the real estate market has finally adjusted to the effects of the Covid-19 pandemic.
Since housing prices are likely to fall during election season, now is an excellent time to invest in real estate because this will help to boost the growth of the sector.
Consumer confidence in general during election periods
Potential investors have been observed adopting a wait-and-see strategy in anticipation of additional standard operating procedures from the administration that will be elected or re-elected following the upcoming general elections.
Investors have been observed to be refraining from investing in the real estate market during any upcoming general elections. In general, investors look forward to new rules, plans, and offers that could be beneficial to real estate investments or could be detrimental to those investments.
Not only investors are impacted by this, but everyone else as well. Even developers are facing a situation very similar to the one described, and most of them would rather focus on clearing existing inventory than launching new initiatives.
This is because, during election season, it is possible for developers to experience delays in receiving regulatory permissions for newly announced projects.
As a result, this situation has arisen. The decline in the value of homes that occurs during this time is typically followed by a rebound within a few quarters.
Should you purchase a home in a year with an upcoming election?
Every four years, general elections are held in Nigeria, and a significant amount of money is spent on promotions and other logistics related to the elections.
During this period, it is customary for stakeholders in the real estate sector to sell off their assets and withdraw any money that has been parked there. Consequently, there is a shortage of liquidity in the market, which leaves real estate developers short of cash.
It has also been brought to people's attention that certain properties are sold for less than their fair market value in order to raise money for electoral campaigns. In addition, builders restrict the number of new releases and place their entire focus on depleting the stock they already have.
Prospective homeowners should always be on the lookout for instances in which they can cut costs by purchasing a home on the secondary market, also known as the resale market.
They should also make every effort to negotiate with the builder in order to come to an agreement with them directly.
Homebuyers have the opportunity to engage in vigorous bargaining and secure significant price reductions on the property they are interested in purchasing because most real estate developers are focused on selling their unsold inventory.
As a result of the General Elections in 2023, it is expected that Nigeria's economy will go through a number of transitions; however, only time will tell whether or not the real estate market will shift or remain unchanged.
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