By Kingsley Adegboye with Agency report
Without a doubt, the real estate sector has continued to be one of the most important sectors in the Nigerian economy. Figures have shown that the sector contributed immensely to Nigeria’s gross domestic product (GDP). For instance, in 2018, it contributed ?1.26 trillion to the country’s national income. Moreover, the sector grew by 38% between the first and last quarter of 2018.
However, the percentage contribution of real estate to GDP declined to 6.41% in 2018 from 6.85% in 2017. Notwithstanding, the real estate sector is engulfed with big potentials, according to Nairametrics, an agency report.
The report said “In developed climes, the mortgage sub-sector plays an important role in stimulating the real estate sector. But while there have been several mortgage schemes and initiatives in Nigeria , the impact has remained somewhat unfelt.
In the meantime, investment analysts have expressed different views on the outlook of the real estate sector. Executive Director and Co-founder of Pertinence Limited, an investment firm, Mr. Sunday Olorunsheyi, said earlier in January: “It will be difficult to project the the fortunes of the real estate sector, owing to factors such as lack of clear and consistent policies from regulators and a high degree of uncertainty”, Olorunsheyi stated.
On the other hand, the Chief Executive Officer of Lifepage Group, an investment holding firm, Oladipupo Clement, scored the industry high.
According to him, “More landed properties were sold and bought in 2018 than apartments and houses, due to high capital requirement and cost of fund.
Despite uncertainties, such as a decline in oil prices, political instability, inflation and the rising cost of funding, the real estate sector will still thrive”.
Windfall for investors and the growth potentials
The experts were of the view that investors in the real estate sector are likely to smile to the banks soon, as they get returns on their investments.
They argued that generally, Nigeria’s real estate sector was sluggish in 2018 because of the lull in the nation’s economy, pointing out however, that real estate investors will likely experience better performance this year because of improvements in the economy, and the anticipated political and economic stability in the country after the just concluded general elections.
According to them, “There was excess liquidity in the economy during the election period. Recall that the President recently expressed concerns over the huge amount of foreign currency flooding the country, intended to influence the general elections.
“With the conclusion of the general elections, the movements of both foreign and domestic currencies for electioneering processes will likely spread and drive patronage in the residential and commercial angles of the real estate sector. Eventually, what this does sometimes is to pressure the price of estate properties to increase, which implies higher revenue for investors.
“Similarly, 2019 will spark the beginning of new governments in some states across the federation. These states will have either consolidated or new policies, which may drive economic activities uniquely away from past administrations. Again, contracts and appointments lobbying will also form a block on its own. “All these interplays are likely to redistribute income in some ways, and the real estate sector is likely to benefit in no small measure. How the economy reacts- Growth in the real estate sector in Nigeria will have impact on the economy significantly, from the jobs it creates to revenue generation.
“Specifically, the real estate’s multiplier effect in terms of job creation is significant. Also, real estate activity stimulates the economy indirectly through the value-added impacts of the purchase of goods and services that stem from real estate-related businesses and transactions”, they opined.