Despite increased infrastructure investment by the Ebonyi government, the state’s real estate sector has plunged due to high taxes imposed on properties.
Practicing real estate professionals said the taxes had reduced the housing stock and affected the growth of the real estate market, which was only five to ten percent over the past five years.
The Guardian has learned that multiple taxation has created investor apathy, particularly in the residential and commercial segment, as the taxes have increased the cost of doing business and forced some businesses to relocate to other states.
The Nigerian economy continued to fall on hard times, with inflation, rising interest rates, rising cost of building materials, lack of skilled craftsmen, insufficient long-term funds and unstable government policies affecting the real estate environment.
With less investment in the real estate sector due to taxes, house prices for both new homes and rentals have skyrocketed in cities. The real estate market also recorded a high percentage in the demand for residential apartments, but a low percentage in the development of new projects.
Figures show that a two-bedroom bungalow listed for sale costs N8 million, while three bedrooms cost around N11 million. For three-bedroom and four-bedroom duplexes, the price is 30 million naira and 40 million naira; everything depends on the terrestrial space.
On the rental side, a one-bedroom apartment costs – N180,000 to N240,000; two-bedroom apartment – N250,000 to N350,000; three-bedroom apartment – N350,000 to N500.00 and duplex – N600,000 to N1.5million, while market prices for new houses, for example, one-bedroom apartments and terraces are barely found .
Before now prices are as follows: One bedroom apartments – N100,000 to N120,000; two-bedroom apartments – N130,000 to N150,000; three bedroom apartments – N180,000 to N200,000 and duplexes – N250,000 to N450,000.
Industry experts explained that multiple taxation has posed a threat to real estate development, consultancy, administration and required urgent action as it stifles investment in the sector and stifles industry players.
Chairman of the Ebonyi State branch, the Nigerian Institution of Property Surveyors and Valuers (NIESV), Henry Odigwe said the property market is not growing like in other major cities as the government has stifled the growth of this sector, albeit indirectly.
“The government forcibly acquired the property of many peoples and ended up paying very little (much less than their value) or no compensation.
“And they’re also charging an incredibly high rate in the form of property taxes, while introducing new forms of taxes on property and other assets in the state. It’s also forced many businesses to move out of state. ‘Ebonyi.
Despite the situation, some developers are still building, but compared to other states, the rental value and capital value of properties are relatively low. Residential real estate in the state enjoys higher demand as commercial buildings such as apartments are higher than commercial properties.
The former Chairperson of the Ebonyi State branch, the Nigerian Institution of Property Surveyors and Valuers (NIESV), Ms. Anthonia Akani, said “community lawyers” affect the decisions of most potential investors.
“A situation where if you want to develop or even make minor repairs to your property you will be subject to outrageous payments in the name of a community development tax or whatever they call it scares away real estate investors potential,” she revealed.
According to her, the periphery holds great potential for real estate investors. “Almost all the outskirts of the metropolis are conducive to real estate development. They could serve as service towns to the metropolis,” she said.
Incidentally, some/many areas have not been fully developed like: Obubura, Nwaezenyi, Azuebonyi, Iboko Parts of Ezza, Ikwo, Agbaja and Nwofe Down Ogbaga road. These areas with a good road network are good for real estate investors.
She said most of the city/state land is still unregistered and as such you can’t do a title search on it. “Considering that the state is more public service oriented in terms of economic activities, the ability to pay adequate rent is unrivaled when compared to neighboring states.
“There is no real estate data market. Potential investors cannot obtain knowledge of the market outside the state. You must be in the state to have a good knowledge of prices, location and other conditions.
“Well, ideally, the infrastructure is expected to have attracted more investors to the city, but incidentally, the presence of such investments is not felt in the real estate sector. We have seen higher demand for sales than for purchases in the recent past.
“Ironically, investors in the real estate sector are attracted mainly by land located in the metropolis. One could have expected an expansion towards satellite towns but the reality is not the same. This can be attributed to problems with land titles in the state.
“Developers prefer plots that have already been developed, either to demolish and rebuild or to retain existing development on the site. The reason being that they believe the owner is known and the title can be traced or even sought from the relevant government departments,” she said.
However, she suggested that the government should provide an enabling environment for investors, as land title registration is important for any property investor.
Professor of Property Management and Environmental Assessment, University of Lagos, Austin Otegbelu, said the main towns of Abakiliki and Afikpo lack a strong economic base to boost the property market.
He said a good economic base would trigger effective demand and improve the real estate market, adding that inadequate compensation for acquired land cannot lift people out of poverty but rather impoverish them.
“In absolute terms, residential and commercial real estate can be said to be growing, but when viewed against inflation and the falling value of the naira, it is not growing. In its current state , it is not a good hedge against inflation.
“It is hoped that with the massive development of infrastructure in the state, investors will be attracted to the state, if the government is strategic in choosing infrastructure, especially those that could create a value chain in investment. agricultural.
Tax policy should also be both citizen- and investor-friendly, he said. “The government should be ready to provide its own capital contribution to attract investment.
“The outskirts of the state capital are attractive to developers because land values there are low and investors can create new neighborhoods with high value and high growth potential.”