Nigeria Behind Botswana In Real Estate Market FDI Flow

A recent analysis by Estate Intel found that while FDIs into the real estate sector are increasing in African nations, Nigeria lags behind Botswana and Morocco due to high manufacturing costs, depreciating currency, and skyrocketing inflation.

In essence, it showed that, with an official rate fall of 83%, the Naira in Nigeria saw the largest rate of depreciation in 2023. Investors are reportedly hesitant to put money into Nigerian real estate because of the country’s high default rate on real estate deals and ongoing inflation, which affects the cost of building supplies.

Interestingly, Nigeria was also ranked as the third due to heightened currency changes (83.66 per cent YTD), high inflation rate (28.92 per cent) as of last December and high construction costs estimated at $1,700 per square metre,” it noted.

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The report added: “Notably, Botswana and Morocco ranked at the top of the real estate market attractiveness ranking. Relative currency stability, low inflation rates, and lower construction costs have underpinned this.”

It further underscores the potential impact of currency performance on leasing activity in the commercial real estate sector and financing for greenfield investments. The depreciation of local currencies is expected to elevate the cost of financing real estate projects on the continent, potentially leading to a limited development pipeline in most markets.