In its 2023 Nigeria Real Estate Market Outlook, Northcourt, a real estate investment company, predicted a drastic rebound in the real estate market after the 2023 elections.
It said the demand for residential homes in particular would remain high in the low and middle-income categories.
According to the report, “The time may have come to fully exploit the opportunities in the low to mid-income markets. This is where potential capital/rental values are in volumes high enough to generate margins for the developers with attuned financing models.
“This also mirrors growing investor interest in this market segment and is in lockstep with increasing building costs and high demand for housing in urban centres. There are questions around funding and Nigeria’s financial markets may be a good (although picky) source.”
Daily Trust reports that investment in real estate has been hampered by the existing economic straits worsened by the devaluation of the naira against the dollar.
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But with a new government in place, there is cautious optimism across the federal and state levels as 28 new governors are sworn-in today.
According to Northcourt, real estate will continue to expand as local developers capitalise on mid-income markets and emphasise smaller-sized projects but broad tenant mixes.
“With the further establishment of e-commerce and foreign investor interest, the growth of industrial real estate has remained consistent. There is still a demand for inner city last-mile warehousing as this report observed a few editions ago and the ratio of the total population to market size remains a strong predictor of the need for more industrial real estate.
“The demand for industrial real estate, last mile logistics and warehousing is expected to grow in urban areas and in second-tier cities. The market for small to mid-sized healthcare real estate is seeing more supply. Demand still remains.
“Outside gated communities, residential sales slowed down locally as diaspora investment for sales remain the mainstay even though rental markets have remained robust. The growth in new towns and senior living centres supported by strong infrastructure currently provided by private developers has continued.
“Certain nodes in Lagos, Abuja and PH have shown signs of ageing infrastructure with examples being Yaba and Surulere.”
Experts say the growth of the sector would be largely dependent on the policies of the new president and other governments across the states.
Given that the real estate sector contributed 5.64 per cent to the country’s Gross Domestic Product (GDP) in 2022, experts say with the right policy and tinkering with some “anti-investment” legislations in the sector, the industry would record a rebound under the new administration given the incoming president’s performance as governor in the real estate sector of Lagos between 1999 and 2007.
In his first term, the moribund Michael Otedola Low Income Housing was completed. The Jubilee Housing Scheme comprising 1,300 units of low-income housing designated as Abraham Adesanya Housing Estate was completed.
Also delivered at the time were the Lekki Scheme 1, named after the late Eleko of Lagos, Oba Adeyinka Oyekan, the Oko Oba units, Oregun Estate, Ikeja, Femi Okunnu Housing Estate, Lekki and the Mile 2 Housing Estate, among others.
With this in mind, stakeholders are of the opinion that the government must deliberately engineer an affordable real estate market capable of bridging the housing deficit in Nigeria.
The Principal Partner, Ubosi Eleh and Co, Mr Chudi Ubosi, tasked the president to stabilise the economy and improve unstructured security and infrastructure to encourage investors to the country.
According to him, the incoming president has a lot to do, pointing out that real estate development would need a stable economy, security and infrastructure to promote growth.
He specifically raised the issue of land administration in Nigeria, saying the 1979 Land Administration is no longer tenable if the country is desirous of growing its real estate market.
According to him, “Land purchase–Government Consent is not needed. Compensation should be fair value.
“Access to land title and requirements should be to enable Nigerians to have access to the registered title for their lands.”
He also said lack of title on land results in dead capital.
According to him, titled land could be collateralised and the funds used for production, adding that it also “reduces fraud.”
A real estate stakeholder, Dr. MKO Balogun, said he has high hopes in the incoming administration to engender growth in the sector and increase the contribution to GDP.
He said the new government would build on the success of the Buhari administration.
“A lot has already been done by the outgoing government to lay a good foundation for the incoming administration, so I am positive.
“Real estate has a major role to play in catalyzing the economy due to its multiple effects, for the new government. I am sure they will leverage all the good work done leverage outgoing government in this sector.
“The recently released 10-year strategic direction/framework is a document that I believe will also come in handy – a private sector-led, incentified sector – I have always said that real estate’s problem is not for government to invest or participate – create the environment, create the control mechanism so it does not become a money laundering avenue, there will be growth.
“The demand is there and just like the outgoing minister said, the census will help determine our actual housing demand and help stimulate growth,” he said.
On his part, the founder/CEO, SmallSmall, a property technology company, Mr Tunde Balogun, believes government regulations and economic stability are two of the major factors that can influence growth in the sector.
He said, “Real estate markets are influenced by numerous factors, including government regulations, economic stability, infrastructure development, and investor confidence.
“The sector has long been considered an attractive investment opportunity due to factors such as population growth, urbanisation, and the potential for high returns.
“It is important to note that with a growing middle class and the high urbanization trends, demand for housing continues to provide potential opportunities for investment in the Nigerian real estate market.”
He noted that there is little investment in the market which should be encouraged by the new government through a deliberate policy of removing impediments to investment.
Balogun added, “Investment in Nigerian real estate is still at the infancy stage. We are yet to have real estate companies in Nigeria that are doing mega projects in the billion dollars range, the type that you see in other developing countries in Asia.
“But we have the potential to do it and a large market that can consume it. If the new administration implements policies that promote economic growth, infrastructure development, and a favourable business environment, it could potentially have a positive impact on the Nigerian real estate market. Such measures will attract local and foreign investments, stimulate demand, and contribute to a rebound in the real estate sector.
“The Eko Atlantic City which dazzled us was a project initiated by our incoming president when he was the governor of Lagos State. This goes to show the passion he has for the real estate sector and how he sought to decongest an urban city by creating a new modern city within an existing city; you can see this in the United Arab Emirates.
“I think we can achieve a similar feat in Nigeria with proper planning and investment. Having said all this, the most important thing is still affordability and only the government can engineer this into the real estate market through policies.
“We need to create what people can afford and what we can sustain.”