Looks like a nice house except that it hasn't been kept up at all. There are a lot of half-finished buildings around. I found out that one of the drivers is that you can’t really get a construction loan; rates on loans here are so high (25-40%) that they are all short term. It really seems to be restricted to working capital needs and import/export companies – things where you can use the money to buy a tangible asset that will quickly be flipped for a profit to pay off the loan. This means that if someone runs out of money, that’s the end of it. What I still can’t figure out is why they remain empty – I would expect someone else to buy them at a discount and complete the building – but there are half-completed ghosts of buildings, frequently with scaffolding still in place and grass growing inside the walls, right next to thriving areas. I fly over an area going into Benin City that has a lot of these. It looks like ruins of an old civilization, except they are probably only a couple of years old and were never used.
I’m trying to untangle how these property prices can exist in a country like Nigeria. I haven’t put everything in its place, but here are a few reasons:
-Infrastructure is bad, meaning more people are looking for places within a smaller radius.
>Phone/internet/mail are all iffy, which puts a premium on face-to-face dealings. I think culture adds to this.
>Roads are bad; if you drew a circle around downtown Houston that represented a 15 min max commute, it might be several miles. Here that same distance might represent a 1 hr commute. (One guy has a friend who works in Lagos; he leaves for work every day at 0530 and drives an hour, sleeps in his car outside the office, and then works. If he leaves any later than 0630 it is a 4 hr drive.)
-In the words of a Nigerian, “95% of houses here are things you wouldn’t think about living in. That means there is a big price separation between the 95% and the 5%, and you’ll only see the 5%.” Even the 5% isn’t all luxury as defined by Western standards.
-There are a lot of expats here who are on expat housing packages, meaning they have a fair bit to spend and aren’t price conscious up to a certain point.
-International companies could build a compound outside the expensive area, expats want to be able to interact/have a life and the same traffic issues affecting commutes mean that if you live in a compound elsewhere it either needs to be of “critical mass” size or it.
I saw an ad on the TV the other day for a community outside Lagos. The ad started by lamenting the fact that Nigerian comforts lag behind other countries, then touting a new community specifically supplying “the Western lifestyle you’ve become accustomed to in the Nigeria that you love.”
Contrary to expectations, lots of things are on par or more expensive here than in the U.S. It’s because they import almost everything. I scanned prices at a grocery store in Abuja; everyone told me it is one of the most expensive in Abuja, but I was still blown away by prices like N4000 ($27) for a half gallon tub of ice cream, or N1750 ($12) for a 900g bag of frozen veggies. At a local grocery in Abuja, local brand ice cream is still about $12/tub.
For an idea of income, my Abuja driver probably makes about $200/month. He lives 1.5 hrs outside of the city and commutes in by “public” transit (meaning taxi bus) every day to pick up the car and drive.
Side note: I learned about the approximate driver’s salary when I learned about “phone flashing.” Calling uses minutes, but receiving calls doesn’t. I told one of my drivers to call me when he arrived. I thought the cell network was down because every time he would call and I would answer, the line would be empty. My Nigerian colleague laughed and explained that the driver wanted me to call him back so he wouldn’t get charged for the minutes; it’s like going back to the time of pagers. Now I don’t even bother to pick up. I just send him to voicemail and he knows that there is the mutual understanding that he has arrived.
No comments:
Post a Comment