n contemporary times, Land banking has gained popularity as a legitimate and successful investment strategy among Nigerian real estate investment firms and private investors. The industry is still thriving in major Nigerian cities, despite the fact that most citizen’s disposable income is declining due to the country’s current economic situation. This economic activity comes with its corresponding challenges and risk factors.
There are many problems associated with land banking which makes it one of the riskiest real estate investments. Some of the most common challenges and problems associated with land banking include but are not limited to:Land prices do fluctuate, even though raw land is becoming scarce. The investor is banking on the hope that the value of the Land would appreciate.
In the Nigerian real estate market, It is not atypical to see prices of Properties: Buildings, Plots of Land running into several millions or billions of naira especially in highbrow areas in Abuja , Lagos . For instance, the asking price of an undeveloped less than full plot of land in Allen Avenue in Ikeja is priced at 250 million naira. N250 million can fix an estate somewhere in Ikorodu , Abakiliki , Okigwe , Umuahia amongst others, with high returns on investment as well.
The major problem is not lack of housing, rather it is lack of affordable housing as there is an oversupply of housing with exorbitant sales or rental prices.When tackling affordability, little to nothing can be done about the cost of construction, leaving us with the valuation of the land as the only mode of tackling the issue of affordability.
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