Infrastructure development and real estate

INFRASTRUCTURE plays a critical part in a country’s development stride. Infrastructure facilities contributes significantly to demographic movement and population growth, and accounts for why economic growth is faster in some cities and economies than others. Infrastructure is a top factor in driving real estate investment and economic development. It is, and it will continue to be an important pillar in discharging good governance to the people by the government. Infrastructure is not only a top factor in driving where real estate development happens, its upgrades is a strong priority for future investments while offering opportunities for real estate investors to participate in the positive dynamics that follow such investment cycles. The role of infrastructure in real estate development cannot be overemphasised. Infrastructure quality is always rated the top consideration when determining where real estate investments are or should be located. It is not surprising to see government intensifying efforts towards road construction and rehabilitation across the country for instance and even entering into partnership with the organized private sector for infrastructure development. Improving the quality of roads, bridges, pedestrian infrastructure and public transit is among the highest priorities of both the federal and state governments in Nigeria today.

An insight into the more developed economies of the United States of America, Europe, ant the Asian countries, particularly China reveals that several opportunities for real estate market and development arise from infrastructure development. Some of the largest infrastructural projects in the world are located located in the United States. China boast of massive infrastructural facilities, such as the high-speed railway system and the hydroelectric three gorges dam. These countries have consistently invested in infrastructure for decades. These countries massive investments in infrastructure over the years has translated into long-term benefit as seen in increase property development, productivity, improve jobs, income levels and several other benefits. Other emerging Asian economies are following suit, they are rapidly increasing infrastructure investments with the aim of catching up with the more developed world, and to make their economies more competitive and efficient.

Let’s take  the United Arab Emirate as example. The Arab country regards infrastructure construction as the basis of economic and social development; hence it attaches great importance to infrastructure construction. Since the 70s, the United Arab Emirate government has been investing heavily in infrastructures so as to create a favourable environment for local and foreign investment. Today, the economy of Dubai is the second largest in the United Arab Emirate with real estate investment providing one of the highest Return On Investment for investors who prefer to invest in real estate. No doubt, consistent investment in road, rail and other infrastructures over the years contributed immeasurably to the emergence of Dubai as the most attractive destination for investment, especially in the real estate sector. Like I stated earlier, good and efficient infrastructure is a key influencer of where real estate investment goes and where real estate investors focuses. And because real estate significantly drives the economy, government’s efforts are geared towards provision of basic infrastructure services, such as power, rail, road and bridges construction and rehabilitation with utmost intensity.

The ongoing Lagos-Calabar Coastal highway, Sokoto- Badagry super highway by the federal government and the proposed construction of the 4th Mainland Bridge by the Lagos state government is fixated within the above perspectives. Not to mention infrastructural projects going on across the states of the country. When completed, the proposed 38 km long bridge connecting Lagos Island from Lekki, Langbasa, Baiyeku towns across Lagos Lagoon to Itamagba in Ikorodu would in conjunction with existing road networks establish a primary ring road around the state, provide alternative traffic routes and relieve the 3rd Mainland Bridge particularly of its present traffic congestion and overstretched capacity. The project would not only allow direct and unhindered access from Ikorodu and its suburb to the Island and the Lekki Free Trade Zone area, but would significantly impact the real estate market in Lagos. This is because, infrastructure is a major determinant of property value, its availability leads to appreciation in property values. Worldwide, property value is an essential aspect of property markets, determined and affected by a number of factors of which infrastructure is very significant.

Lagos-Calabar Coastal highway, Sokoto- Badagry super highway  will usher in a new era of ambitious road infrastructural development projects in Nigeria and will also enter the world record books among iconic coastal routes like the Wild Atlantic Highway in Ireland and the Pacific Coastal Highway in the United States. The massive projects would alter the socio-economic narrative of the country, link up with Northern Nigeria to further integrate the north and south in terms of movement of people, goods and services and is bound to ensure our rapid transformation in all facets of economic development by driving traffic of investors and tourists. (See the rest on www.tribuneonlineng.com)

The projects would increase the population of the areas, and this would subsequently lead to increase in demand for commercial and residential accommodations, increase in property development. Rental values of residential properties would improve, land prices will skyrocket along the corridors, and real estate development shall spring up in a manner that would be as if real estate is being reinvented. Real estate investment would be allocated effectively for a long-term positive impact on GDP. As the nation’s economy becomes wealthier, real estate prices would rise and will boost the economy of the country.

In a nutshell, infrastructural projects would have a major impact on businesses and real estate in particular. The construction shall thus affect the real estate market and asset on a broad basis, an effect which would be mainly associated with the improvement of transportation infrastructure.

•Taofeek is a Lagos based estate surveyor and valuer and real estate consultant.