Bennett Oghifo
A new report by Ubosi Eleh & company, an estate and valuer firm, says the nation’s economy grew at 3.4% to beat the 3% figure projected by the International Monetary Fund (IMF).
The Ubosi Eleh & company annual report, now in its third edition, having debuted in 2019, reviewed the real estate situation in 2021.
The 3.4% economic growth was a significant highlight of the 128–page report that described the rate as the fastest and strongest annual rate since 2014 and that it was uncharacteristically driven by the non-oil sector. The report added that Nigeria’s GDP grew by 5.01% year on year in the second quarter of 2021.
Quoting the National Bureau of statistics (NBE), the report in its macroeconomic review section, noted that 20% of workers in Nigeria lost their jobs due to covid-19 while the country’s unemployment rate rose to an alarming 33.3%, translating to about 23.2 million persons which it described as the highest in about 13 years and the second highest in the world. One positive index the report noted was that total capital inflow into the country rose in the fourth quarter of 2021 by 26 percent on a quarterly basis to $2.2 billion.
It narrated how the general state of insecurity and harsh socio – political situation impacted real estate in 2021. In its political review, the report noted that in the efforts to ameliorate housing shortage in the country, 2000 hectares of land were given by 24 states for the federal government’s social housing programme. It was expected that the programme would produce 17,584 housing units in 16 locations in the country. In the same vein, 17 states indicated interest to participate in the solar power programme. To address the high cost of cement, the FG reached an agreement with the major cement manufacturers namely Dangote Cement, BUA Cement and Lafarge Cement to sell a bag of cement for as low as N2,600 for the social housing programme.
Noting that the country’s foreign reserve declined from $35.31 billion as at December 2020 to $33.32 billion as at June 2021, indicating a dips of $2.1 billion and 5.8 percent which the report emphasized was its lowest level in about 4 years. On the other hand, crude oil enjoyed a bullish first half of the year, gaining 45% year end to trade at $75 per barrel.
According to the UbosiEleh report, residential real estate got more boost as the coronavirus pandemic continued to create concerns, and consequently many organizations adopted work-from-home policy. Residential demand was mainly for family housing units, pocket friendly and small sized accommodations. In its market review, the real estate market grew by 2.81% in the last quarter of 2020 which marked an exit from recession it had been for several quarters and maintained that the sector sustained growth stride into 2021. It however described the growth as fragile because of many threats to the sector including insecurity, escalating cost of building materials which rose to 50%, amongst other factors.
Similarly, in its review of commercial real estate, the report noted that prime office rents in Nigeria’s big cities recorded marginal increase in the first quarter of 2021. This showed that working from-home (WFH) triggered by the covid-19 pandemic failed to reduce the cost of renting such properties. In all, the real estate sector expanded modestly from 1.77 percent increase in Q1 2021, to 3.55 percent in Q2 2021, describing it as the highest in six years.
The report projects a positive outlook for residential real estate for 2022 now in the eighth month, basing it on the face of a couple of developments leading into 2021. It also projects a spike in rents and land values and reiterated that the 2-3 bedroom flats will remain in high demand much higher than terraces or detached houses.
Rental demand is expected to move upwards by as much as 25%. In Lagos, the report projects that rental values for existing commercial buildings will rise between 10 – 20% while they would not be much change in demand is expected on real estate values in the north and the nation’s capital, Abuja. In the central business district of Abuja, report projects that commercial real estate rental and demand value will continue to rise at between 15 –20%.
