Nigeria’s magic middle class

Interesting article from Reuters about Nigeria’s booming (and treacherous) property market advises selling to the “middle-class”.

But as far as I can tell, the numbers just don’t add up:

the top-end range is dominated by well established players and developers should target middle-income workers in major cities, such Lagos, Abuja and the oil-hub Port Harcourt. The most popular units fall in a price bracket of 20-35 million naira ($123,000-$214,100), developers and estate agents say.

Nigeria’s middle class make up around 23 percent of the population and earn around 80,000- 100,000 naira ($490-$610) per month, according to report by investment bank Renaissance Capital.

“If you know the market, the people, focus on middle class and cherry pick your deals, you can clean out,”

Is Reuters trolling us? Or are they victims of yet another Nigerian scam? Let’s break it down.

$600 / month = $7200 / year, so a $140,000 house would be 20 times annual income and a 214,000 house would be 30 times annual income.


So a 10% downpayment would be two years income at the least? For this to work, mortgages must be cheap and easy, right?

there remains a problem with that huge latent demand. No mortgages. Unless you are willing to pay a 25 percent interest rate.

The mortgage debt-to-GDP ratio in Nigeria is under 0.5 percent, compared with 72 percent in the U.S. and over 30 percent in Malaysia and South Africa, government figures show.  

Never mind.

So developers can get rich by selling to people who can amass 20-30 years of annual income in personal savings? Good luck with that strategy. I’d hazard a guess that selling to the rich, to foreigners, to government, and to foreign firms is still the path to big money in the Nigerian property market.

PS: there is another great line in the piece: Nigerian banks don’t like giving out mortgages, which for clarity I think should have “to Nigerians” appended at the end.



One thought on “Nigeria’s magic middle class

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