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REAL ESTATE AS AN HEDGE AGAINST INFLATION

Inflation rate in Nigeria is on the Rise

Inflation rate keeps rising due to the lingering effects of the global pandemic and Nigeria like every other country continues to deal with the economic implication of the COVID-19 pandemic.

 

The latest inflation figure (12.40%) indicates the highest in over two years.This is detailed in the latest inflation report released by the National Bureau of Statistics (NBS).

 

 

Inflation is a natural occurrence to the market economy that decreases buying power and in Nigeria it is stubbornly high.

 

Margaret Thatcher once defined inflation as the “unseen robber” that devalues savings and lives. For instance, 1000 Naira saved today will not buy the same value of goods in 10 years due to inflation.

 

The Way Out

The only way to beat inflation is by investing in an asset that is expected to maintain or increase its value over a period of time. As such, real estate is the best of both worlds.

 

Real estate has proven to be an asset that retains its intrinsic value and can also produce income in form of rent during inflation period.

 

In fact according to investopidia, real estate equity can hedge against inflation by as much as 69% unlike every other asset.

 

Investment in Real Estate is a store of value that is hedged from rising inflation.