The focus of this week’s edition of our blog post is on the effect of exchange rate on real estate appreciation in Nigeria.
Exchange rate volatility can impact the returns on real estate investments. Investors may be hesitant to invest in the market due to the uncertainty.
Many investors have concluded that real estate investment in Nigeria is not appreciating because the amount that was invested in real estate a few years ago still remains the same due to the devaluation of Naira.
A ten thousand dollars invested when Naira to Dollar was N500 still remains ten thousand dollars when dollar to a Naira is now N1500.
While for example and in the real sense, the property has appreciated from 100% to 300% and is worth N15M from N5M at the moment, the investor will not see it as any appreciation because it is still the same ten thousand dollars.
Also, if the real estate product has not appreciated well, the investor may have more or less than the amount invested, the ten thousand dollars may have come down to may be seven thousand dollars.
As professionals, we advise that appreciation should be forecasted and calculated based on the currency of the investment country. Appreciation may and may not be in favour of diasporians.
Despite these challenges, there are still opportunities in the Nigerian real estate market and the effect of exchange rate on real estate in Nigeria does not prevent real estate investors from taking advantage of the opportunities, especially in areas like mixed-use developments and affordable housing.
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