By ‘Dotun Akintomide
Regardless of the decline in the real estate contribution to GDP by 4.1% (NBS) during the last quarter of 2017, an off-shoot of the worst recession witnessed in Nigeria after 29 years, industry experts believed business outlook is brighter in 2018, postulating that the sector will find its way out of doldrums to real recovery.
At the real estate outlook conference organized by Alphacrux Limited to set the tone for real estate industry in 2018, experts opined that beyond sheer optimism, strategic planning and pragmatic solutions will ensure the sector shake-off the shackles of recent economic slowdown which had stifled growth across the built spectrum.
In his address, Managing Director, Alphacrux, Tobi Adama said having the 2nd edition of the conference themed: “The aftermath of recession; where do we go from here” was apt, stating that, “the recession had an impact we were not quite ready for but we got out of it as swiftly as we got in.” He said it is important to sustain deliberations on how to do business in a more efficient manner to forestall another downward trend.
For a sector that serves as catalyst for economic growth and development, the nation’s recession nightmare saw Africa’s largest economy staying inside waters for five consecutive quarters, thereby, hampering directly on activities leading to businesses closing shops; construction companies moving out of sites, thus putting a halt to pipelines of development; high vacancy rates; and headline inflation visa vis cash crunch.
The statistician General of the federation and CEO, National Bureau of Statistics (NBS), Dr Yemi Kale, who was represented at the event by his technical adviser, Mrs Lola Talabi-Oni, while making remarks on the economic outlook for Nigeria in 2018 said the Nigerian economy, despite being susceptible to internal shocks such as insecurity; external shocks like fluctuating global oil prices, as well as the build-up to the 2019 elections, “the global investor market still expects positive economic growth” in the country.
He continued: “The World Bank forecasts a modest growth of the Nigerian economy of 2.5% in 2018, while the IMF is more conservative with a projected growth of 2.1% in 2018, both figures are higher than the projected GDP growth figures for more advanced economies.
“From a low of -2.34% recorded in the second quarter of 2016, the GDP grew to 1.4% in 2017. The main drivers of growth recorded during this period were crude, petroleum electricity, metal ores, forestry, and crop production.”
Trying to bolster confidence in the economic recovery process, Dr Kale said: “The latest inflation figures also show a continued weakening of inflation, with CPI recorded at 15.13% in January, making it the twelfth consecutive reduction in headline inflation.”
The NBS boss added, that the strong oil prices and steady local oil production have contributed to a significant growth in external reserves from $27 billion dollars at the beginning of 2017 to the $42.8 billion dollars reported on Wednesday.
Bemoaning the sharp drop in real estate contribution to GDP, he said it came as a surprise that the sector “which contributes 6.79% to real GDP, also declined by 4.12% in the third quarter of 2017. I should note however that the sector performed better during that same quarter than it did in the same period last year.”
However, he stressed that with the interest rates which have remained steady within the lower double-digits, and the monetary policy keeping a keen eye on inflation trends and minimizing inflationary pressure “the continued disinflation within the economy should therefore be good news to stakeholders within the real estate sector.”
CEO Northcourt, Tayo Odunsi said as the real estate follows the economic circle, the sector cannot be said to be in growth, rather it is still recovering from the economic woes of previous quarters, urging industry players to conceptualize innovative concepts necessary to deepen it and fast track economic boom.
Highlighting key considerations that could shape the property market this year, Odunsi noted that the vacancy rate is declining across cities and the office market is shifting towards co-working space due to its flexibility. He also said malls as small as 8000sqm are becoming preferable ahead of bigger retail malls.
Speaking on housing affordability, he said millennials gulping 70% of Nigeria’s population should ordinarily force developers to come up with innovative developments like students’ housing and other affordable schemes as young people now develop preference for smaller apartments rather than investors building sprawling apartments with no occupants.
“The mortgage refinancing scheme has been schemed in such a way that it has become difficult to finance development,” Managing Director/CEO, Uraga Real Estate Limited, Dr. G.S Yakubu Fatimilehin observed.
He said governments across levels should start thinking in tune with the sector players to bring about the desired change. “Government’s plan towards affordability is key and it must start from land allocation to ease access to lands.”
In his contribution, the President Nigerian-British Chamber of Commerce, Akinola Olawore argued that “as Nigerians attitude continues to change towards house ownership, we have to seek innovative and ingenious ways of funding rather than rely on government’s spending, especially now that young people dominate the population.”
For Real Estate Investment Trusts (REITs) as an alternative source of property funding to succeed, a management consultant, Wale Gomez averred that “it’s important to create special mortgage REITs to finance mortgages and assist people at the lower end of the market.”
Stating the role of technology in solving housing challenge in Nigeria, Director of Operations, Andela, Anthonio Pinhiero, said effective collection of data is important in using technology to drive decision making process at the property market.
Pinhiero maintained that since technology has come to stay, it will continue to disrupt the market from the demand end to the supply end, making it a lot more easy for consumers to participate within the property market space.
