Tilden: Effect Naira Exchange Rate Unification May Have on Nigerian Real Estate Industry

Fadekemi Ajakaiye

In line with the newly introduced directive by the Central Bank of Nigeria (CBN) to unify the exchange rates, the economy is expecting a devaluation. This move by the new administration, is among the positive steps being taken in the first 14 days in office by President Asiwaju Bola Ahmed Tinubu. 

However, these are the possible effects of the devaluation of the Naira on the Real Estate Industry in Nigeria. Devaluation of the Naira can have both positive and negative effects on the real estate industry. It is important to note that the impacts can vary depending on several factors, including the overall economic conditions, market dynamics, and government policies. Here are some potential pros and cons of Naira devaluation on the Nigerian real estate industry: Pros:  Foreign investment: Devaluation can make real estate assets more affordable for foreign investors, potentially attracting increased foreign investment in the sector. This influx of foreign capital can stimulate development, boost construction activities, and drive market growth. Export competitiveness: A devalued currency can make Nigerian goods and services, including real estate, more competitively priced in the global market. This can potentially increase demand for Nigerian real estate from international buyers or investors.

Diaspora remitances: Devaluation can lead to an increase in remitances from Nigerians living abroad. Diaspora individuals may take advantage of the devalued currency to invest in real estate properties in Nigeria, boosting the sector. Cons:  Inflationary pressure: Devaluation can contribute to inflationary pressures in the economy, leading to higher costs of construction materials, labor, and general living expenses. This can increase the overall cost of real estate development, impacƟng profitability and affordability. Rising construcƟon costs: With devaluation, imported construction materials, equipment, and machinery become more expensive. This can increase the cost of construction projects, potentially reducing the pace of development and affecting the profitability of real estate investments. Reduced purchasing power: Devaluation can lead to a decline in the purchasing power of individuals and businesses. This may result in reduced demand for real estate, as potential buyers or renters may face financial constraints or opt for more affordable housing opƟons.

Financing challenges: Devaluation can make it more difficult for developers and individuals to access affordable financing options, as lenders may become cautious due to currency risks. This can limit the availability of credit for real estate projects, impacting market growth and investment opportunities. Uncertainty and investor caution: Devaluation can introduce uncertainty into the market, causing investors to adopt a cautious approach. Investors may delay or reconsider real estate investments due to concerns about currency stability, leading to a slowdown in the industry. It’s important to note that these pros and cons are general considerations and the specific impacts of Naira devaluation on the Nigerian real estate industry can vary depending on various factors. It’s advisable to consult with industry experts, “Tilden Development Limited is well positioned to advise investors based on Industry Analysis and Experience. Tilden Development Limited is aimed at harnessing investment in the real estate sector through innovative residential, hospitality and commercial development. Tilden places special emphasis on providing transparency, customer satisfaction and timely service delivery to our investors.”