By Eddy Ochigbo
The real estate sector offers great potential for the growth of Nigeria’s struggling economy. Globally, real estate is one of the most profitable economic ventures and also serves as one of the most useful indicators for measuring economic growth and stability.
This is due to the fact that it mirrors the viability and sustainability of household incomes and liquidity flows in markets.
However, despite the seemingly steady growth of the sector in Nigeria in recent decades, available data put housing deficit in the country at over 17 million units.
This is regardless of efforts made by successive administrations to provide more shelter for the citizenry.
Some commentators say that lack of political will for effective implementation of housing policies remains among the factors militating against the growth and sustainability of the property sector in Nigeria. This setback, no doubt, is also responsible for the dearth of shelter in the country, as millions of Nigerians are still far away from their dream of home ownership.
Yet, the challenging scenario, as seen by some experts, is presenting market opportunities.
According to them, with the unprecedented inflation currently ravaging Nigeria and affecting all economic sectors of the nation, there is no better time to invest in real estate than now.
They also pointed out that every investment in the sector can only appreciate because it cannot depreciate. This means that although inflation is at a record high currently, investment in the real estate sector could still be regarded as a win-win effort, as this guarantees a bountiful return on investment for investors within the shortest possible time.
According to Tersange David Ikyobo, a Nigerian Architect based in Abuja, “property investors can take advantage of foreign exchange fluctuations to invest with a long-term focus on assets around the Lagos and Abuja axis, particularly for those with access to forex. It is a venture worth considering for the long-term. The volatility in the foreign exchange regime means that with smaller dollar sums, you can buy significant assets below value, especially in the middle market sector with massive unmet demand.”
Real estate investment is good protection against the high inflation rate and has proven to be resistant to erosion of value.
Therefore, in this sector, a smart investment made at the right time would always appreciate in value.
Nigeria’s inflation rate rose to its highest level in the past one year, from 16.82% recorded in April 2022 to 18.52% in July. This is according to the latest figures of Consumer Price Index report released by the National Bureau of Statistics (NBS).
The CPI, which measures the rate of inflation, rose by 17.71% year-on-year in May 2022, which is 0.89% points higher than the 16.82% recorded in the previous month (April 2022). On a month-on-month basis, the headline index increased by 1.78% in May 2022, compared to the 1.76% increase recorded in the previous month.
Similarly, the urban inflation rate increased to 18.24% (year-on-year); this is a 0.27% decline compared to 18.51% recorded in May 2021. On the other hand, the rural inflation rate increased to 17.21% in May 2022 (year-on-year) basis; this is a 0.15% decline compared to 17.36% recorded in the corresponding month of 2021.
To this end, Nigerians have every opportunity to tap into the wealth potentials in the real estate segment of the national economy in order to alleviate the nation’s growing poverty level by boosting liquidity flows and stimulating further employment generation.
It is instructive to note that even though Nigeria is branded as the poverty capital of the world, human and natural resources still abound in the country.
“And apart from agriculture, oil and gas, and digital technology, real estate is a good investment because it is historically a veritable store of wealth that continues to appreciate even during economic downturns,” said the architect.
Market analysts believe that sustainable growth in the property sector can only be truly guaranteed if government at both national and sub-national levels take concrete steps to repeal obsolete laws thwarting genuine investment in the sector.
Prospective investors and the Nigerian public need protection and not policies that impinge on their rights to own property.
A stakeholder who spoke with Valuechain on condition of anonymity, said that “private property rights in the country have more or less become a farce due to the draconian processes people go through to obtain C of O. Since real estate investment has a robust economic prospect, Nigerians need protection from the government by way of strengthening and reforming the Land Use Act for the good of all.”
