Rising Material Costs Threaten Nigeria's Real Estate Viability

Real estate developers in Nigeria are increasingly concerned about the rising costs of building materials, which are altering the viability of their projects. Victor Ameh, managing director of Legendary Foreshore, stated that the challenges have shifted from securing land and finance to managing soaring construction costs.

The prices of essential materials such as cement, steel, aluminium, and labour have surged, with a 50kg bag of cement now costing between N12,500 and N15,000 in various locations. This inflation in construction costs is outpacing household incomes and purchasing power, creating a significant gap between the cost of building houses and what potential buyers can afford.

Ameh noted that feasibility studies and project budgets quickly become outdated due to these rising costs, forcing developers to reconsider their plans. They face three difficult options: absorb additional costs, increase property prices, or suspend projects until market conditions improve.

The uncertainty in the property market is leading to hesitance in further investments.