SAVING IN DOLLARS VS INVESTING IN LAGOS REAL ESTATE


One factor that leads to a persistent increase in the prices of properties – lands and buildings in Lagos is the steady devaluation of the Naira. Over the years, the exchange rate has been increasing, leading to rising prices of these raw materials used in building construction, taxes at various stages of construction and workforce in general. All investors’ primary aim is to make the highest possible profit over a given period. Now, concerned investors are in a dilemma whether to invest in real estate or save in dollars. Will investing in the Lagos Real Estate market or Saving in foreign currency bring about the right Investment decision? What are the factors that should be considered before making such a decision?

Well, consider this scenario when it comes to savings: when you save, your money can be accessed anytime, but how “profitable” is it to save in dollars for a long time, and the interest it earns doesn’t keep up with inflation? Even if the devaluation of the naira against dollars is the primary cause of inflation in Nigeria, it is not the only determinant of her inflation rate. In Lagos real estate, the rise in property prices is also partly a consequence of demand-pull due to an influx of people – population growth – and a surge in investment in the mega city.

In the last five years, the dollar-naira rate has risen to about 75%, while the property prices in some areas of Lagos have appreciated above 200% (still in some axis more than 200%). Suppose you had saved a particular sum of money in dollars five years ago when it could buy a plot of land in any of those areas. In that case, that money with the interest it has accumulated can only be used to purchase, at most, half a plot of that particular piece of land.

From the above analysis, it could be deduced that the rise in property prices in Lagos is far more significant than the rate at which the naira is devalued against dollar, and this is one of the major reasons investors opt for investment in Real Estate more than saving in dollars. Investment is a risk resulting in either losses or profits. Although various research reports have proven that diversification is a major way of mitigating the risk factors. What then can be considered the best Investment?

Consider yet another scenario and assume that you have $50k at the moment. The bank promises to pay you a certain percentage when you save it with them for a period of 5years. The following questions arise: What will be your profit potential? What is your risk margin? What internal business does the bank do with your money? Rest assured that your money would be safe in the bank. Also, be assured that your money wont lie dormant in the bank, as the bank will either loan it out for a higher percentage or invest with it

Real Estate investment should be on top of one’s scale of preference when one is thinking of diversifying investments. If the above question depends on when the money is needed, there are both short-term and long-term real estate investments. In mitigating the investment risk, the prices of real estate properties always grow exponentially. Nigerians in diaspora, foreign investors, top businessmen, CEOs, and Managers of various companies have seen the need to invest in Real Estate. These individuals convert dollars to naira, and they acquire property cheaper. They consider the effect of demand and the current dollar value when making sales.

In conclusion, it is apparent that there are advantages to saving in dollars in Nigeria. Still, it would be of more benefit when one invests in Lagos real estate because the prices of properties also depend on the exchange rate. QLB LUXURY HOME advises all potential investors to consider these points to make a well-informed decision regarding investments and Savings. Reach out directly to any of these contacts below for real estate investment advice and Acquiring properties in Lagos.

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