Uncertain economic recovery makes London attractive destination for Nigerians

The unhealthy economic condition in Nigeria in which recovery seems uncertain has made London all the more an attractive investment destination for yield-hungry investors, more so as UK property investment continues to offer minimal risk plus long term stability and appreciation.

Though it is the largest economy in Africa, Nigeria’s decades-long economic growth has faltered recently with year-on-year declines over the last two quarters of 2016.   While many Nigerians are looking to keep pace with real income growth through domestic investments, others are considering foreign options and UK comes handy here as Nigerians have had a long history with that country.

Onyx Property Consultants notes that London continues to see the impact of Nigerians in its economy, adding that  London has long been a “go to” destination, with 128,000 Nigerians travelling to the UK in 2015, spending an average of £160 per day, according to the Office of National Statistics.  London developers are seeing a growing interest from buyers in Nigeria who are looking for the high level of returns through real estate investment they cannot get from the domestic real estate market.

“Additionally, with 17,920 of Nigerians attending schools and universities in London, many start to see London as the ideal city to put down roots and set up a base. This is particularly true now that the dust has settled in Dubai and investors are returning to London – a city they know and love – spending nearly $5 million a week on London property”, said Ugo Arinze, CEO, Onyx Property, who spoke to BusinessDay on the sideline of a forum in Lagos.

London, as a capital city, has long been regarded as a major financial and commercial hub. Its reputation as a secure residential property market is particularly attractive to Nigerian investors. This is due to the free flow of capital allowed in and out of the UK, the relative ease and administration of property purchases, transparent and respected title transfer.

As a diversification strategy, a pound-based asset such as property offers investors a sensible means of managing risk by shifting reliance on naira-based investments and assets. London is also considered an easy place to do business, certainly in comparison to some of the other European countries.  Not- withstanding the current flat market, London properties have experienced significant price appreciation over time, in many cases doubling every 10 years – earning investors a solid return.

As a Commonwealth country, Nigeria enjoys a history of strong links with the UK. The well-established Nigerian community currently existing in London ensures both cultural and professional networks will thrive within a vibrantly diverse society.   The Office of National Statistics estimates that in 2013, 181,000 Nigerian-born people reside in the UK.  With so many Nigerians already living there, Nigerians travelling to the UK feel quite comfortable seeking a base in that country.

While historically Nigerian buyers have been more likely to purchase homes to live in as opposed to investment properties, that trend is changing and property vendors are often asked to secure buy-to-let properties for Nigerian clients. London’s grand period houses continue to attract many Nigerians and the exclusive areas of Knightsbridge, Belgravia and Mayfair, are highly sought after.

Security is important to buyers, with gated developments, 24-hour security or concierge services and private parking, often being must have features.  However, the new-build market is becoming more and more desirable as it offers easy maintenance and upkeep, particularly if the buyer will only be residing there part time.

While there is no crystal ball to predict the future, the fundamentals of UK and the London property market continue to be a desired destination for Nigerians, particularly with the long history and familiarity with the country.  As with any investment, it is recommend that significant research and study go into developing a strategy and careful analysis is done to secure properties that are suitable, whether as a secondary residence or a buy-to-let investment part of a portfolio.  London offers countless neighbourhoods each with a different feel, energy, housing stock and price point for consideration, which is part of the beauty of that capital city.

CHUKA UROKO