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Real estate is a crucial part of Nigeria’s economy, providing employment opportunities, generating revenue, and contributing to the growth of our cities. However, fluctuations in the US dollar’s value can harm Nigeria’s real estate industry. When the value of the dollar increases, it can cause significant problems for the real estate sector in the country. As known, dollar inflation occurs when the value of the US dollar rises, which means it can purchase less than before. As a result, if you need to buy goods from other countries, such as construction materials for homes, they become more expensive. And when the prices of goods increase, it has a ripple effect on everything in the real estate industry.
How? Walk with me.
When constructing a house using expensive building materials, the cost of the property increases, which is then passed on to the buyer or tenant. In turn, this may hinder people from being able to afford them, ultimately slowing down the real estate market as a whole. Let’s say a developer intends to construct a new apartment complex in Lagos. If the value of the US dollar increases, the cost of materials like cement and steel also goes up. Consequently, the developer may have to increase the rent for the apartments, making it difficult for people to afford them. Also, if the developer has borrowed money in dollars, they will need to repay more in Nigerian currency, which could lead to significant financial difficulties.
International investors, in particular, may become wary of investing in Nigeria, as the value of the Nigerian currency is subject to change, and they do not want to risk losing any money.
Furthermore, suppose the value of the dollar increases. In that case, it becomes more difficult for builders to borrow money, as banks may be hesitant to lend due to the potential inability of builders to repay their debts. All of these fluctuations can make the real estate market unpredictable, causing uncertainty for those who invest their hard-earned money.
Meanwhile, when the value of the US dollar increases to the Nigerian Naira, Nigerian citizens living abroad with income or savings in dollars can take advantage of the situation. This is because the rise in dollar prices gives them more purchasing power, meaning they can afford to buy more real estate or invest in higher-value properties in Nigeria compared to when the exchange rate is lower. However, the important thing for the country is to stabilise the Naira and find ways to make building materials cheaper or produce them locally.
The increase in the value of the dollar can create problems for the real estate market in Nigeria. It leads to an increase in housing prices, discourages potential investors, and makes obtaining loans more difficult. However, if we all work together and find solutions to these challenges, we can maintain growth in the real estate sector and create better living conditions for everyone in our cities. So, when you hear about the dollar going up, remember it also affects the real estate market in Nigeria. It’s not just about food.
Reiteratively, the rise in dollar prices can offer good opportunities for Nigerians living abroad to invest in real estate in Nigeria. They can take advantage of their stronger purchasing power, benefit from better exchange rates, and make long-term investments to build wealth, diversify their portfolio, and stay connected with their home country.
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The post Dennis Isong: Is the Value of the Dollar Affecting Real Estate Investment in Nigeria appeared first on BellaNaija – Showcasing Africa to the world. Read today!.
