-By David Chukwu
Operators in the real estate market are reporting improvements in demand for real estate products and services in the country with Abuja being at the centre of the potential boom.
The reports of improvements in the off-take for estate properties comes as a respite for developers from the turmoil the sector went through between 2016 and 2018.
The fall in the value of the naira occasioned partly by the drop in global oil price and crude oil production as well as double digit inflation saw the country fall into negative growth consequently leading to economic recession in 2016. These weighed heavily on investor confidence.
The devaluation of the Naira meant higher import cost and corresponding increase in local prices of building and construction materials which are mostly imported. A slowdown in new constructions was expected, likewise reduction in the demand and supply of properties.
There were increasing number of uncompleted estate projects across the major cities of Abuja, Lagos and Port Harcourt. Those which manage to get completed remain unoccupied.
The sector was generally sluggish between 2016 and early 2018 because of the lull in the nation’s economy.
The real estate sector’s contribution to GDP in 2016 suffered a decline compared to the preceding year just as lending to the sector also dropped.
The glut in the property market due to low purchasing power, interest rate, was a major clog in the wheel of real estate funding.
But recent reports of an upsurge in demand by developers tallies with forecast by experts of a potential boom in the sector this year.
In its 2019 Nigeria Real Estate Market Outlook published in January, Northcourt, a real estate investment and research company, said the industry would see more supply across the various sub-sectors.
According to the report, the developments will be driven by new technologies, and both the government and private developers will be more innovative in products delivery.
“2019 will see a boom for the savvy real estate investor,” the report added.
Expert and Managing Director and Chief Executive Officer of Propertygate Development & Investment Plc, a real estate development firm, Mr. Adetokunbo Ajayi, also said at the beginning of the year that the improvement in the nation’s micro environment was a pointer to the positive future outlook for real estate sector of the nation for 2019.
He said the sector will experience better performance this year because of signs of improvement in the economy and the expected political and economic stability in the country after the general elections.
Valuechain analysis shows that the real estate sectors picked up massively from the economic meltdown that hit the country in 2016 and became a key contributor to the country’s economic recovery.
Among the sectors that led the expansion in real terms were the construction and slightly real estate sectors, including cement and wood product manufacturing.
The growth in the real sector could be attributed partly to the availability of foreign exchange and the improving economic climate which has encouraged investment in the country generally.
Others linked the boom to the billions of Naira severance package paid out to the outgoing politicians at the federal, state and local government levels. Nigeria is one of the countries in the world that politicians earn huge allowances.
Also, there has been a flurry of road construction and rehabilitation, rail, infrastructure and other capital projects that have been sustained up to this year which have seen both federal and state governments as well as the private sector pumping billions into them.
The federal government last year said around N1 trillion capital vote was, the highest ever budgetary release in Nigeria’s annual funding, for capital projects, with a promise to do more this year based on the current stability in oil price and the return of normalcy in the Niger Delta.
The capital city of Abuja seems to be the lead in the anticipated boom with economic and political stability returning to the country’s capital after the elections.
A survey of some new estates at major parts of the city showed that subscription for homes in Abuja have improved with developers reportedly selling out most of their housing units.
For instance, Aso Savings and Loans Plc, the developers of the Karsana Project, a serene community of exquisite homes on a 22 hectare site, located just after Gwarinpa, along Kubwa Express Road, said on its website that it had sold out units in the estate.
The Estate is located within the Karsana East District which is part of Abuja Phase IV. The Estate consists of 1, 2 and 3 Bedroom Apartments, 2 Bedroom Terrace Duplexes and 4 Bedroom Terrace Duplexes.
Hall 7 Real Estate, the firm behind the construction of the apartments, named The Bridge Peridot, which sits on four hectares of prime real estate in Mbora district of Abuja and unveiled recently said all the apartments were sold out even before they were formally opened.
The Bridge Peridot consists of some 47 duplexes and six apartment units are meant to be fully residential, with a common area on the rooftop and down in the basement of the six-unit apartment.
Another Abuja-based developer Cosgrove Investment Limited also reported that all of its estate developments have already been sold out even before construction on some of them started.
Umar Abdullahi the Chief Executive Officer (CEO) of the company in a media interview said their Smart Estate at Wuye/Utako, Mabushi and Guzape were also fully sold out under two months before the firm mobilised to site.
The story is the same for lesser known estate developers. Trendy Homes Limited developers of Graceland Estate, Sabon Lugbe, Abuja reports that its ten semi-detached bungalows each of 3 bedrooms in its mini estate were sold out.
Developers and experts are even more optimistic that the real sector will experience boom with more development take-offs and delivery witnessed in recent times.
For instance, following the resolution of all political Issues and hiccups that hampered the smooth progress of the massive Abuja Centenary city project, developers of the famous Centenary City, Front Range Developers and Centenary City Plc, jointly known as Centenary City Developers FZE, recently commenced construction of the city, with the launch of their first co-development effort, tagged ‘The Grove’.