March 19, 2014

Nigerian HNWIs have 25% of their assets in real estate

Dolapo Omidire

A recent research report  has shown that real estate was the largest asset class for Nigerian High Net Worth Individuals (HNWIs). The report which evaluated asset allocation trends of Nigerian HNWIs  explained that a total of 25% of their assets were held in real estate in 2013.

However this was down 2.3% from 27.3% in 2009 arguably because more Nigerians got back into or were recently introduced to the rapidly growing domestic equity market. Equities saw an impressive allocation growth of 156% from 2009 to 2013. They are currently 18% of HNWI total assets, 2nd after real estate.

Figures: WealthInsight

In total, Nigerian HNWI assets amounted to US$45.0 billion in 2013.

The results from this report, which was produced by WealthInsight, demonstrate that real estate is consistently a preferred investment choice. However,  the report also demonstrates that it is not accessible to the entire investing public.

High acquisition and transaction costs, coupled with  expensive maintenance often act as a barrier to entry into the direct real estate sector. On the other hand, Real Estate Investment Trusts (REITs) offer a smart alternative for retail investors who are keen on investing in real estate. Unfortunately the Nigerian REIT sector is yet to gain momentum.

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