Estate developers are facing mounting challenges in meeting project deadlines as exchange rates soar, impacting the entire real estate sector.
Those with contracts featuring variation clauses find themselves grappling with substantial losses due to escalating costs of building materials, including cement.
The ripple effects of this economic strain extend nationwide, with building material prices skyrocketing. For instance, cement prices have surged to over N9,000 per bag in recent months, significantly impacting project economics.
In conversations with developers, speaking anonymously, they lamented the dire consequences of rising material costs. Some have been forced to halt projects indefinitely due to financial constraints, despite contract provisions for price adjustments.
The repercussions of these economic conditions are also felt by homeowners. In completed estates, new property owners struggle with additional costs for finishing and furnishing their homes. Some, like Mr. Wale, opt to sell their properties due to the prohibitive costs of completion.
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Property sellers are adapting by pegging their assets to the fluctuating dollar rate, but this strategy has not necessarily boosted sales amid a scarcity of potential buyers.
The FX crisis has also impacted diaspora Nigerians’ investment sentiments. The depreciating exchange rate has made investments in Nigeria less attractive, prompting some to seek opportunities in more stable economies like Dubai.
Moreover, estate residents face challenges beyond investment returns. Prolonged power outages, fueled by surging diesel prices, have disrupted daily life in serviced estates like MIGB Gardens in Lekki, exacerbating security concerns and leading to tensions over rising estate dues.
As the cost of goods and services continues to rise, Nigerians may face ongoing challenges, potentially compromising the quality and standards of building materials as developers seek solutions to deliver projects on time and within budget.