in exchange rate has negative effect on rental values — ESV Nwachukwu

By Mashe Umaru Gwamna

An Estate surveyor and Valuer ESV Ikechukwu Henry Nwachukwu said hike in exchange rate has negative effects on rental values. ESV Nwachukwu stated this yesterday in Abuja.

He said “Within 6 months there has been a hike in the dollar to Naira exchange rate which moved from about N635 to 1 dollar to about N1300 to 1 dollar; which is over 100% increase.

He emphasized that the implication of this is that, the costs of building materials and the costs of living will triple without any foreseable commiserate increase in minimum wage.

“It is normal that every investor invests with the aim of making a profit. “Therefore, property/rental value increases as a result of an increase in prices of goods and services”, he said.

He explained that, the purpose of a rent review is to adjust the rent to reflect changes in the value of money and the value of the property. “These often cause disputes between landlords and tenants, with the former seeking the highest increase at rent review and the latter the lowest.

“If the increase in exchange rate continues unchecked, it simply mean that we are seated on a keg of gunpowder.

Hence, the need to articulate exchange rate/monetary policy that will be targeted towards preserving the value of the domestic currency, maintain favourable external reserves, position and ensure external balance without compromising the need for internal balance and the overall goal of macroeconomic stability.

“When that is done, prices of goods and services will reduce; and it will also trickle down to every expect of the economy, including the real estate sector”, Nwachukwu stated.

He maintained that estate surveyors and Valuers are key players in the property sector, which is not just an important sector of any country’s economy, but it is the economic engine of the world, and is in charge of driving economic growth.