Real Estate Experts Bullish on Underperforming Nigerian Sector

After the COVID-19 pandemic disrupted real estate activities, industry players noted that inflation and 2021 exchange rates hampered business.

The National Bureau of Statistics (NBS) reports that Nigeria’s GDP grew 4% year-on-year in the third quarter of 2021, following a 5% expansion in the previous period, the strongest since the fourth quarter of 2014.

Nigerian real estate sector grew by 3.85% in 2021 quota two and 10% in 2021 quota three and has seen significant QoY growth since 2021 quota one.

Despite the increased economic activity in the quarter, real estate and construction remained low as operations continued to rely on imported building materials and domestic resource inflation increased construction costs.

During COVID-19, industry players expected 2021 to rebuild on the previous year.

According to Olutoyin Ayinde, president of the Nigerian Institute of Town Planners (NITP), housing accounts for around 70% of real estate deals.

Ayinde said the housing is not affordable but “better than 2021.” He said economic drivers, especially in real estate, need to look inward.

All of our “diversification efforts” have been just hot air. We are still dependent on oil for the supply of some building components that can be sourced locally and sustainably. Improving security would increase housing.

He suggested using wood for partitions and floors to build lighter and cheaper structures.

Ayinde urged the government to fund research to develop local building solutions.

He called on the government to focus on land management and planning to create well-regulated cities.

Enyi Ben-Eboh, president of the Nigerian Institute of Architects (NIA), said the year under review was not a positive one for housing as the dismal economy of 2020 slips into 2021.

Ben-Eboh said that during economic downturns, the construction industry suffers the most because homes are such a luxury.

He stressed that the measures that should have been implemented to face the challenges of the sector in the year were overlooked and many things went wrong.

The economy faltered after the lockdown due to the COVID-19 pandemic. That affected the costs of construction materials. Due to the lockdown, inflation for building materials skyrocketed.

The recent depreciation of the Naira has increased the cost of various imported construction goods. Depending on the region, cement prices have risen this year.

States must tame code requirements so professionals have a defined role in project development and government can quickly assess compliance to curb persistent building collapse.

Many jobs were lost in the industry and elsewhere due to the economic downturn; many offices are unable to maintain the staff they had before COVID-19.

The NIA chief asked government and business professionals to define a suitable direction. He added that the government should work with expert groups to handle surveillance.

He commented: “Professional bodies should be the government’s watchdogs, and the administration should involve them in all endeavors.” Let state development control agencies work to tame building codes.

Babagana Mohammed, president of the Nigerian Association of Engineers (NSE), said that the public is not satisfied with the performance of the sector and there is still work to be done.

According to Muhammed: “Engineers and the business sector must be actively involved in housing.” The government cannot do it alone due to conflicting demands and limited funds.

To attract investors because the banks are short of funds, we must take considerable measures. “Integrity is needed to grow the sector. Government must increase vocations. Government must follow the example of engineers. Government cannot lead; professionals must.”

He stressed that houses are still expensive and that affordable housing plans no longer exist.

Private sector specialists must plan and implement housing initiatives. We don’t want houses to collapse, so not everyone cares. We need a strong commitment from professional organizations and engineers, as each build is based on their design and calculations, Muhammed commented.

Sir Emmanuel Wike, president of the Nigerian Institution of Surveyors and Property Appraisers (NIESV), said government policies have not helped the sector.

After limits and palliatives for various sectors, he said that a fiscal and monetary strategy is needed to boost the real estate sector and the economy.

Wike said the government needs to get more involved in real estate and infrastructure for housing to recover. He said that the sector generates menial and professional jobs.