Surge in kidnapping and terror attacks poses big threat to Real Estate Sector

Amidst macroeconomic challenges, there are growing concerns among stakeholders that insecurity could exacerbate the housing deficit and impede investments in real estate.

They acknowledge that the increasing insecurity stems from dissatisfaction among unemployed youth, the activities of “insurgents, bandits, and herdsmen,” resulting in loss of lives and property destruction. Many individuals, already housed, have seen their homes destroyed, while those displaced are left without shelter, worsening the overall deficit.

Presently, insecurity has spread to other regions, including Benue, Adamawa, Kaduna, Katsina, Sokoto, Plateau States, and Abuja, as well as the South-West, particularly Ekiti, Ogun, Ondo, Oyo, Lagos, and Osun, where kidnappings have resurged. Similar incidents have occurred in the South-South and Southeast regions.

An investigation reveals that some professional service providers, such as “estate surveyors, town planners, land surveyors, developers,” and investors, fear traveling to certain parts of Nigeria due to the rising wave of kidnapping and banditry. Reports abound of kidnappings and terror attacks targeting travelers on highways. For example, in the Federal Capital Territory (FCT), prominent developers, investors, and professionals have had to withdraw from sites.

According to the United Nations High Commissioner for Refugees (UNHCR), the number of people forced to flee their homes has increased annually over the past decade, reaching the highest level on record. By the end of 2021, the displaced population due to “war, violence, persecution, and human rights abuses” stood at 89.3 million, up eight percent from the previous year and more than double the figure from a decade ago, according to UNHCR’s annual Global Trends report.

The report indicates that over 3.2 million people, including about 2.9 million internally displaced persons (IDPs) in northeastern Nigeria, require assistance. UNHCR estimates that $848 million (N259,488,000,000) is needed to provide basic amenities such as water and shelter to the most vulnerable individuals within Nigeria.

The Housing Development Advocacy Network (HDAN), a housing development advocacy group, has cautioned that if the federal government does not address the insecurity plaguing the country, the real estate sector’s operations could soon grind to a halt.

Festus Adebayo, Executive Director of HDAN, expressed concerns about insecurity and its adverse effects on the real estate sector, which is the largest employer of labor and a significant contributor to the Gross Domestic Product (GDP).

HDAN emphasizes the importance of addressing security concerns, especially given the increasing incidents of kidnapping and other security threats within the FCT and across Nigeria. The network argues that a secure FCT is crucial for the continued expansion of the real estate sector, which is a major contributor to employment.

Adebayo highlighted the growing apprehension among homeowners and real estate investors due to the perceived high risk posed by escalating insecurity in the country, emphasizing the need for a swift and effective security response. “As the nation grapples with these multifaceted challenges, the call from HDAN serves as a reminder that security remains a linchpin for sustainable economic development, particularly in sectors vital for job creation and investment,” he said.

He urged the Minister of the Federal Capital Territory (FCT), Nyesom Wike, to enhance security measures in the nation’s capital and take decisive steps to strengthen security in the FCT. By addressing these security challenges, the government can ensure a conducive environment for the sustained growth of the real estate sector, ultimately contributing to Nigeria’s economic development.

“We strongly believe that the Federal Government, elder statesmen, and state governments should unite to tackle security challenges facing Nigeria. We urge that issues be addressed in the interest of real estate development and the economy as a whole,” he said.

HDAN noted that insecurity may exacerbate the housing deficit in the country. “We believe that with the perpetuation of the security challenges, the housing deficit of 22 million may worsen as real estate investment may drop.”

According to the group, the safety of dwelling places remains a key consideration for home seekers when making decisions on purchasing or leasing properties. “No home seeker will rent or purchase property in an area where the earlier-mentioned atrocities are rampant for fear of their homes being burgled or invaded and destroyed.

Adebayo said the lack of safety measures in certain areas will put pressure on existing properties in areas perceived to be safe by people fleeing from unsafe areas. The result is that there will be an increase in the cost of purchasing or leasing properties in these “safe” areas.

“The downside is that the pressure may result in sporadic construction of unsafe and unhygienic structures, which may eventually collapse or lead to break-out of epidemics; an experience not befitting of ideal real estate development decisions,” he said.