Josephine Ogundeji discusses the uncertainties in Nigeria’s real estate sector, which are heightened by the upcoming general elections and the trend of politicians liquidating their assets to fund their campaigns. In a developing nation like Nigeria, national elections significantly influence the performance of various economic sectors, including real estate. The current regime’s actions and inactions have fostered uncertainty and anxiety among property developers and buyers. Key economic indicators affecting the sector include soaring interest rates, which render mortgages inaccessible for many, and double-digit inflation, particularly in the building materials market, making real property unaffordable for a large segment of the population. Consequently, the economic and housing policies of the incoming administration, especially at the federal level, will be crucial for the growth of the real estate sector over the next four years. Experts predict that the general elections may exacerbate existing challenges in the construction and building industry, emphasizing the significant role that the policies of the new administration will play.
One recurring issue in the real estate market leading up to the elections is the trend of politically exposed individuals and their associates selling off assets to finance their campaigns. This trend is not surprising given the substantial financial resources required for campaigning. The Electoral Act of 2022 has set maximum spending limits for various electoral positions, with presidential campaigns capped at N5 billion and governorship campaigns at N1 billion. Despite these limits, the financial demands of campaigning remain immense, particularly for presidential candidates who must travel extensively across the country. This reality often leads candidates to sell their assets, sometimes at prices below their capital value, in a desperate attempt to raise funds. Kunle Awobodu, the immediate past President of the Nigerian Institute of Building, highlighted that the need for sufficient funds drives politicians to sell their properties, hoping to recoup their investments after winning the election. However, this trend can lead to a glut in the market, forcing property prices down due to increased competition.
Despite the challenges posed by these sales, Awobodu noted that such activities could stimulate the real estate sector by increasing the volume of property transactions. However, many individuals are reluctant to sell their properties, particularly if they did not acquire them with the intention of disposing of them under such circumstances. Festus Adebayo, CEO of the Africa International Housing Show, pointed out that election periods often create buyer indecision due to uncertainty about the election outcomes. The impact of the elections on the real estate sector will largely depend on the election results, and the fear surrounding property sales will dissipate once the presidential election concludes. Adebayo also emphasized that while the sale of personal property is difficult to curb, it is essential for the Economic and Financial Crimes Commission to investigate the sources of funds used for acquiring these assets.
Damilola Ajomale, CEO of Hilltrust Limited, highlighted that the uncertainty surrounding the elections has deterred many from entering joint ventures, as potential policy changes could affect partnerships between investors and property owners. The prospect of a new government often brings about new policies that can either benefit or hinder property developers, leading many to adopt a wait-and-see approach until after the elections. Sam Akanbi, a former Publicity Secretary of the Association of Professional Bodies of Nigeria, noted that the period of politicking typically sees a spike in property sales as individuals seek to raise funds for election campaigns. This creates a buyers’ market, where the number of sellers far exceeds the number of buyers, resulting in distressed sales. Politicians often buy properties in anticipation of selling them at a profit when election time approaches, knowing that real estate typically appreciates in value.
Chudi Ubosi, Managing Partner of Ubosi Eleh & Co, expressed skepticism about reports that politicians are selling their properties at significantly reduced prices, suggesting that such transactions often occur quietly among friends and associates rather than through public channels. He noted that the Nigerian property market remains conservative, with many property sales viewed as indicators of distress. Estate agent Jokotade Williams confirmed that property sales by politicians are evident across various states, as they often acquire real estate before elections to sell later for campaign financing. He has assisted in selling properties for politicians in Ibadan, Oyo State, and noted that these transactions typically involve buying undervalued properties in less desirable locations.
A well-known politician from the ruling party in the South-South region revealed plans to sell his estate in Abuja due to insufficient funds for his campaign. Reports from previous election cycles indicate that electioneering has historically contributed to declines in property values, as politicians sell assets at reduced prices to raise campaign funds. Real estate consultant Ade Adenigbo confirmed that there is usually an increase in property listings by politicians six months prior to elections, as they seek to liquidate assets for campaign financing. He observed that a significant portion of properties for sale in high-demand areas often belong to politicians, many of whom struggle to find buyers amid a cash crunch. As Nigeria approaches the elections, the real estate market faces a period of uncertainty, with the potential for significant transitions depending on the outcomes of the electoral process.
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