Diaspora funds have been a major factor in the growth of Nigeria’s real estate sector. Nigerians living abroad are increasingly investing in the country’s real estate and construction industries due to the depreciation of the Naira and favorable lending rates in their countries of residence.
According to data from the World Bank, more than one-third of the total diaspora remittance inflows to Sub-Saharan Africa, an estimated $5.1 billion in the first quarter of 2022, came to Nigeria. Remittances of Nigerians living abroad accounted for 6.1% of Nigeria’s GDP in 2021, four times higher than Nigeria’s foreign direct investments in the same year. As migration numbers continue to climb, an upward trend in diaspora remittance can be expected.
This influx of diaspora funds has had a positive impact on Nigeria’s real estate and construction sectors. It has helped to ease the current finance gap plaguing both sectors. With many resident Nigerians struggling to cope with macroeconomic headwinds, Nigerians in the diaspora have seen an opportunity to invest in real estate assets in Nigeria. They have recognized the potential of the market and are taking advantage of the capital appreciation potential of real estate assets in Nigeria’s major cities.
The residential, retail, hospitality, and industrial markets have all been identified as beneficiaries of ‘fresh’ diaspora capital. Diaspora-led investments in Nigeria’s real estate and construction sectors have boosted job creation, stimulated economic growth, and improved living standards.
To further encourage diaspora investments in Nigeria’s real estate sector, the Nigerians in Diaspora Commission has partnered with the Federal Mortgage Bank to launch a housing scheme that promotes loan accessibility, mortgage discounts, and transparency for the diaspora population interested in buying or building their homes. The scheme aims to provide affordable and accessible housing for Nigerians in the diaspora, while also boosting the country’s real estate and construction sectors.
Despite the low rental return associated with the fallen Naira, the capital appreciation potential of real estate assets in prime locations remains a driving force for savvy diaspora investors and developers. The real estate market in Nigeria’s major cities has shown steady growth over the years, and this trend is expected to continue in the coming years.
In conclusion, diaspora funds have played a vital role in the growth of Nigeria’s real estate and construction sectors. With the potential for further growth, the sector is set to attract even more diaspora investments in the coming years. The housing scheme launched by the Nigerians in Diaspora Commission and the Federal Mortgage Bank is a step in the right direction, and further efforts should be made to create an enabling environment for diaspora investments in Nigeria’s real estate sector.