On the 28th day of February, 2024. Real estate developer, Ichechi Okonkwo, the CEO of Victoria Crest Homes, popularly known as _CEOofLagos, shared some price stats on her Instagram page showing the massive changes in the price of construction materials.
If you remember, February was the height of the price inflation especially in the construction sector as the price of a bag of cement rose from about ₦4,500 to ₦11,000.
Please don’t get me wrong. The inflation has not subsided, on the other hand it is still on a continuous uptick, however then in February the changes was massive and quick, hence the outcry.
It was just like being in a car going at 40 miles per hour and all of a sudden, within minutes the driver accelerates to 120 miles per hour.
You would become terrified because you feel like you are about to crash, but when the car maintains that speed for 3 hours, 6 hours, 12 hours.
You become used to it. You no longer notice anything because your senses has become used to the current speed. Even as the driver takes the car to 130 miles per hour, you don’t react.
That is the best analogy for what the Nigerian economy has been doing.
So during that February period, we went from 40 miles/hour to 120 miles/hour and that was when _CEOofLagos posted the price stats lamenting the new prices of building materials and the pressure on developers and real estate companies.
Millions of things are posted daily on Instagram so to many this was just another Instagram post, this time from a real estate developer with billions and billions of funds behind her, just lamenting. You know, nothing serious.
Why is she even talking in the first place? If a multi-billionaire real estate developer like her with assets which give or take will be running into hundreds of billions is talking and complaining about Nigeria’s inflation, then what will a poor man do?
Hang themselves? Oh please, don’t mind her. Next post please.
This was the majority of reactions to the post. It was dismissed as a wealthy real estate developer complaining unnecessarily when she should shut up and be grateful.
That is why am here, couple months down the line. Writing this article because that Instagram post was not just a ‘wealthy real estate developer complaining unnecessarily’.
That was a handwriting on the wall.
Maybe you are not familiar with the story of a handwriting on the wall so permit me to recount it here briefly.
King Belshazzar, the son and immediate successor to king Nebuchadnezzar threw a great banquet for his nobles and concubines.
He was so intoxicated by wine and his vast wealth that he asked that the gold cups his father, Nebuchadnezzar had looted from the house of God when he conquered Jerusalem be brought in and used to serve and wait on them.
In the midst of their merri-making, out of nowhere, a hand started writing on the wall in a foreign language that no one in the king’s courts could read.
The king called all his magicians, sorcerers, astronomers, wise men. He called them all but no one could read it. The mood went from uninhabited merri-making to sheer terror of what the mysterious hand on the wall had written, on the wall.
Like wildfire the news spread everywhere and The queen, the mother of the king heard about it so she rushed into the banquet hall and told the king, “I know a man who can read this. He served your father and he has the wisdom and spirit of God. He is Daniel, call him in and he can read and translate this strange thing to you”
The king asked for Daniel. That was how Daniel was brought it and he read the handwriting on the wall. It was a judgment and a condemnation of the king.
More than that, It was a death sentence from God. That same night King Belshazzar was killed by Darius the Mede who took over the kingdom of Babylon, one of the biggest empires in recorded history.
While Belshazzar was wining, and drinking. Feeling prosperous, secure and safe, an army was camped at his gate and the handwriting on the wall came and announced his fate.
So like I said earlier that Instagram post was not just another Instagram post, it was not just a ‘wealthy real estate developer complaining unnecessarily’.
That was a hand-writing on the wall.
On the wall of the Nigerian real estate market. Lagos real estate market to be specific because that is where I operate and it is by far the best performing real estate market in Nigeria.
If you are a real estate investor but you have not invested in Lagos, you are still playing but let’s not digress.
One of the major complaints over the years from people has been that Lagos houses are ‘overpriced’. That has been the main criticism against Lagos real estate floated mostly by people who are not even in the real estate business, not in the construction industry and have no idea how things work.
If you asked them why they thought a house is overpriced, the only reply you would most likely get from them is, ‘there is just no way that house is worth ₦300 million’.
If you think that Lagos real estate was overpriced, then you aren’t prepared for what is coming. You aren’t, which is why I said that the post from real estate developer, _CEOofLagos is a hand writing on the wall but perhaps just like the magicians, wise men and astronomers in the time of Belshazzar couldn’t read the handwriting on the wall, you also can’t read the CEO’s Instagram post so permit me to be your Daniel.
Prices of houses in Nigeria especially Lagos are about to double. I repeat for emphasis, prices of houses is about to double. There is no two ways about that.
When the CEO posted that price stats, she wasn’t complaining for herself, she was complaining on behalf of the off takers, the homebuyers. She is a real estate developer, she is not going to bear these rising costs, no!
She will transfer it to the off takers. The homebuyers.
When the cost of production rises, it will reflect on the prices offered to the consumers in the market. The producer doesn’t bear the rising costs. Come on, this is business not charity.
So the rising prices of construction materials will be borne by you. Yes, you.
As at 2023 ending and early 2024, a bag of cement was between ₦3,500 to ₦4,500 but Since February a bag of cement has not been cheaper than ₦8,000 here in Lagos. I can’t really talk for other states. A 100% increase.
I have only mentioned cement. You and I know that a house is not built on cement alone. Who builds on cement alone?
So what about other things like sharp sand? Granite? Iron rods? Cables and the rest?
Some have increased by as much as 300%.
This massive increase in the price of materials have already claimed one victim. The off plan real estate market. As much as 80% to 90% of real estate developers who have off plan developments are in trouble.
What they saw when they were starting is no longer what they are seeing. The cost overrun has become too much for them. Most are abandoning their projects. Sadly. A really sad development. Unlike us, who are about to finish our last off plan project, 78 Residence by God’s grace and are already starting a new one.
That aside, What does this mean for you as an investor looking to acquire houses or apartments for cashflow income?
What does this mean for you as a luxury home seeker who wants to buy a new house for you and your family to live in?
One thing and one thing only.
Buy now! Buy now!
Conclusion for Real Estate Developers
Right now in the market there are still many houses that were built with cement at ₦4,500 per bag. That is why you should buy now. Buy the houses in the market now, because take it from me. They are cheap, very cheap compared to what is coming.
Soon the houses that were built with cement at ₦8,000, ₦10,000 per bag will enter the market and saturate it. Then it will be too late.
Why wait and spend more, why delay and pay more when you could be decisive and take action early?
Good real estate investors are aggressive and decisive. They don’t delay and shuffle their feet. Time is money, which is why delay is expensive.
The handwriting is already on the wall and everyone is seeing it but no one is understanding it. It is being dismissed and disregarded as just a ‘wealthy real estate developer complaining unnecessarily’.
This is a big mistake!
Which is why like Daniel did for king Belshazzar, I have translated the handwriting on the wall for you. I have even done more than Daniel and told you how to respond.
Daniel sounded the warning and passed the Judgement of God, but he couldn’t provide a solution because that was an Act of God. Nigerian real estate isn’t. It is just a normal market. You can still take the right actions and be on the safe side. So I have analyzed the market for you and told you what to do.
The ball is now in your court.
The handwriting is on the wall. Take the right actions so you won’t be tried and found wanting.
Buy now before it is too late. Buy now when the prices are still reasonable and resell when the new houses built at ₦10,000/bag of cement hits the market with their high prices.
Lucky are those who subscribed to our off plan project at 78 Residence, they will reap rewards that they hadn’t even anticipated when they subscribed.
I am Ugochukwu.
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