Climate Change, Flooding And Property Value: The risk Nigerian investors can no longer ignore by ESV Toluwalase Oluwole

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For many years, property buyers in Nigeria focused primarily on location, title, size, accessibility and price when making investment decisions. Today, however, another factor deserves equal attention: What environmental risks affect the property?

Climate change and the increasing incidence of flooding are gradually changing the way properties should be assessed. Flooding has become a major concern in many Nigerian cities, particularly in rapidly developing urban centres where drainage infrastructure has failed to keep pace with population growth and physical development.

For property investors, this is no longer simply an environmental issue. It is a property value issue.

FLOODING CAN AFFECT PROPERTY VALUE

A property located in a flood-prone area may experience repeated physical damage, higher maintenance and repair costs, reduced rental demand and difficulties attracting buyers.

Flooding can also affect the accessibility and overall desirability of a neighbourhood. Where roads become regularly impassable during periods of heavy rainfall, residents and businesses may begin to look elsewhere.

Over time, these factors can influence rental income, investment returns, marketability and ultimately property value.

This means that the traditional assumption that “land is land” is no longer sufficient.

Two plots of identical size in the same broad geographical area can have significantly different values because of differences in drainage, elevation, accessibility, surrounding development, environmental conditions and exposure to flooding.

LOCATION IS NO LONGER ENOUGH

Location remains one of the most important principles in real estate.  But investors now need to look beyond the name of the neighbourhood.

A property may be situated in a prestigious or rapidly developing area and still carry significant environmental risks. Proximity to major roads, commercial centres and other amenities does not automatically eliminate the risks associated with poor drainage, waterlogging or flooding.

Investors therefore need to ask more questions.

Is the property located in a flood-prone area? How does the neighbourhood perform during heavy rainfall? Is there adequate drainage? What is the elevation of the site? Has the property experienced flooding in the past? How resilient is the surrounding infrastructure?

These questions can be just as important as the purchase price.

THE ROLE OF PROFESSIONAL VALUATION

Professional property valuation must increasingly take relevant environmental and market risks into consideration.

This does not mean that every property located in a flood-prone area has little or no value.

Rather, the issue is whether the risk has been properly identified, assessed and reflected in the investment decision.

An Estate Surveyor and Valuer can assist in analysing factors such as location, physical characteristics, neighbourhood conditions, accessibility, rental demand, market evidence and other risks that may influence the property’s present and future performance.

A property that produces high rental income today may not necessarily remain a strong investment if environmental risks continue to increase.

DEVELOPERS HAVE A RESPONSIBILITY

Developers also have an important role to play in reducing climate-related property risks.

Proper site planning, effective drainage systems, appropriate building orientation, landscaping, adequate storm-water management and suitable construction standards can significantly improve the resilience of developments.

Developers must therefore look beyond aesthetics and immediate profitability.

A beautifully designed property with inadequate drainage or poor environmental planning may become a costly liability for both the owner and occupiers.

Good development should anticipate future environmental conditions rather than merely respond to today’s realities.

GOVERNMENT MUST DO MORE

The responsibility cannot rest entirely with individual property owners and developers.  Government has an equally important role to play through effective urban planning, drainage infrastructure, environmental regulation, development control and enforcement of planning standards.

Rapid urbanisation without corresponding investment in infrastructure can increase the vulnerability of entire communities.

Where natural waterways are blocked, drainage channels are poorly maintained or developments take place without adequate environmental assessment, flooding can become a recurring problem.

Effective urban planning must therefore become a central part of Nigeria’s response to climate-related property risks.

PROPERTY OWNERS MUST THINK ABOUT RESILIENCE

Property owners also need to become more proactive.  Preventive maintenance, proper drainage around buildings, regular inspection of roofs and gutters, appropriate landscaping and other risk-reduction measures can help protect property from avoidable damage.

Where appropriate, property owners should also consider suitable insurance protection.

The objective should be to move from a culture of repairing damage after flooding to one of preventing and managing risk before disaster occurs.

CLIMATE RISK CAN BECOME AN INVESTMENT RISK

Climate-related risks are increasingly relevant to long-term property investment.

A building that looks attractive and commands a good price today may become less desirable tomorrow if environmental conditions deteriorate significantly.

This is why investors should consider not only current market value but also future resilience.

The real question is no longer simply:

“How much is this property worth today?”

It should also be:

“How well will this property continue to perform in the future?”

That is a fundamentally different way of looking at real estate investment.

THE FUTURE OF PROPERTY INVESTMENT

Nigeria’s real estate market is evolving. Investors can no longer afford to evaluate properties solely based on location, title, size and purchase price.

Environmental risk must increasingly form part of the investment equation.

Estate Surveyors and Valuers have an important role to play in helping investors understand how location, physical condition, neighbourhood characteristics, market conditions and relevant environmental risks can influence property performance and value.

Climate change may not make every vulnerable property worthless, but it can change the economics of owning, developing and occupying that property.

The future of Nigerian real estate will therefore not be determined solely by where a property is located, how beautiful it looks or how much it costs.

It will also depend on how resilient that property is to the environmental realities of the future. For today’s property investor, ignoring climate and flooding risks may ultimately prove to be one of the most expensive mistakes to make.

ESV Toluwalase Oluwole – M04518