24/07/2022
THE WIN-WIN SITUATION FOR REAL ESTATE INVESTORS.
I had a heated argument with a friend earlier this week and I'm here on this table now to address some miss conception among us, as so many are willing to venture into the Real Estate industry but not understanding the place of inflation on the sector.
The real estate is a win-win business in all economy.
The Real Estate market has the ability to increase at any economy because it's a product that will always beat inflation and still stay up with value after inflation because it's a limited products that will always have multiple demand, if there is no elasticity of supply then the demand is going to be unmet and that can lead to increase in price tag.
The Real Estate space will always appreciate and not depreciate because of its high value and the limited nature.
Land is a fixed supply, in the sense that it cannot be reproduce, duplicate or photo copy. A plot will equal to a plot and not two plots magically, which tells that it's a limited products.
A friend said the land bought at 10m(Ten million) today will drop to 2m(Two million) when the economy get better with the new government.
Questions: Is that true?
Answer: No, only in a case of deflation and not a stable economy because the Real Estate is not a commodity that are produced from raw materials, but a limited Fixed supply Asset that don't undergo processes to be form, and human only demand for the livable environment.
When the economy becomes better every other products price will be stabilized and the economy gives opportunity to individual/organizational high income earnings which savings becomes a possible adventure.
When an individual or organization have enough savings he can think of having a property (generational wealth Transfer) every man will want it, with available savings, demands for property can increase because feeding is easy and savings is possible for everyone.
Let's have a little analysis here.
INFLATED ECONOMY:
10 (TEN) INVESTORS:
with different earnings rate, but just 4(four) has savings because of inflation and only 2 (two)can go extra to aquire properties because there are so many bills to pay all thinking now is how to survive and not to purchase properties.
7(SEVEN) PLOTS:
but sold just two, because is just those individuals that can afford to purchase it at the rate it selling.
Note: you are not loosing as an investor because the price you are selling is still beating inflation but turnover is limited ( limited demand).
Having land not to be a perishable goods, I keep having the hope that it will always appreciate.
STABLE ECONOMY:
10 (TEN)INVESTORS:
With different earnings rate, but they all have savings and boths are living comfortably.
And 8(eight) can purchase some properties.
7 (SEVEN) PLOTS:
12 (twelve)plots is in demand by investors because some are ready to take more than a portion.
NOTE: I have just 7(seven) plots and demand is 12 (twelve) as a business person I will increase the price because I'm having a limited supply, now the investors will still buy at the selling price.
As a real estate investor is always a win- win situation in all economy.
There are factors that will always make land to appreciate such as
• Demography (Development and infrastructure, determine the individuals that lives around)
• Population (if birth rate is high which automatically there will be increased in population)
• Economic growth and real income.( Rising incomes means that people are able to afford to spend more on properties.
If you have the opportunity to invest in real estate business, don't hesitate to start building your portfolios now, because the Real Estate market is always a win-win situation in all economy.
We are going to be looking at why those earnings in foreign currency have huge advantage now to invest into Real Estate in Nigeria.
Consult a professional Realtor.
I just say some pinch of what I learnt, more to come, stay tuned and don't go nowhere.
Pendrop.
Pconnect Real Estate Consult.
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