NIGERIA COMMERCIAL REAL ESTATE DISCOUNT RATES
Despite the energy cost crisis and its attendant repercussions, professional valuers and investment experts in Nigeria remain positive about real estate operational performance and market fundamentals; few months into the first half-year valuations.
Based on positive sentiments and higher real estate returns in 2021, a lower real estate risk premium (compared to 2021 rates) was combined with other risk and return variables to arrive at the discount rates used in 2021 retail valuations.
This confidence translates into favorable growth forecasts in the short term, allowing discount rates to remain reasonably steady until the end of June 2022. However, due to rising inflation, the prospect of an increase in real estate risk premium, and the country default risk levels, there is less optimism in the long run.
Aside from the constraints imposed by rising energy costs and other market anomalies, the Nigerian commercial real estate market is likely to beat pre-Covid levels, which is excellent news for growth, cash flows, and overall asset values.
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