The build-to-let property market in Nigeria is facing a significant downturn as investors increasingly shy away from this sector. A surge in rent defaults, driven by the nation’s economic challenges, has eroded investor confidence and prompted a shift towards other real estate segments.
According to a recent report by the Nigerian Real Estate Investment Trust (NREIT) Association, rent defaults across the country have risen by 25% in the past year. This trend is particularly pronounced in urban areas like Lagos and Abuja, where the cost of living is high, and many tenants are struggling to meet their financial obligations.
“The economic downturn has put a strain on many households, and as disposable incomes dwindle, rent payments become a significant burden,” said Olajide Owoyemi, President of the NREIT Association. “This has led to a growing number of tenants defaulting on their rent, making it increasingly risky for investors to invest in build-to-let properties.”
Investors who had previously viewed build-to-let as a lucrative investment opportunity are now seeking safer and more profitable alternatives. Some are turning to commercial real estate, such as office spaces and retail properties, while others are exploring opportunities in the agricultural and industrial sectors.
The decline in the build-to-let market is also having a ripple effect on the broader economy. Developers are scaling back their projects, and construction activity has slowed down. This, in turn, is affecting jobs in the building and construction industries.
To address the challenges facing the build-to-let market, experts are calling for a range of measures, including government incentives to encourage investment, reforms to tenancy laws, and initiatives to improve affordability for renters. Without these interventions, the downward trend in the build-to-let sector is likely to continue.