Founder of Nairametrics, Mr. Ugodre Obi-Chukwu has stated that like other developed economies, the real estate sector should be the foundation of Nigeria’s economic growth rather than crude oil or technology.
Mr. Ugodre stated this as one of the guest speakers during the Real Estate Nexus Conference (1.0) while speaking on the topic “Forecast for real-estate financing in Nigeria”.
In his words,
- “There is no Western economy today that real estate is not the foundation of capital formation, there is none. If you want to mess up the American economy or the UK economy, just kill their real estate sector, they’ll just die because that is the bedrock of that economy.”
- “It just shows that for Nigeria to grow, for us to have the kind of economy that we all anticipate, we need to have a very vibrant real estate sector.
- It’s just the way you build a house and have a very strong foundation, real estate should be the strong foundation for Nigeria’s economic growth, not crude oil as a lot of people tend to think not even technology. It has to be real estate.”
Weak growth in the real estate sector
While highlighting the contribution of Nigeria’s real estate industry to the overall economy in the last quarter, Mr Ugodre stated that the under 2% growth rate in the last three quarters is too meagre for a critical sector with so much potential like real estate.
He further alluded to the probable causes of the slow growth in the sector to the current macroeconomic realities in Nigeria concerning high inflation, high-interest rates, cost of building materials, etc.
He stated,
- “In terms of GDP, Nigeria’s real estate sector is about N10.3 trillion GDP-wise just about 5% of the country’s combined GDP not too much but significant albeit. The real GDP growth rate for the real estate sector is 1.7% in Q1, and 1.87% in Q2 not large enough, I’m sure you’ll all agree”
- “What that means is that the real estate sector over the last three quarters is very close to getting into negative growth. So less than 2% is very small for a sector that you expect to see a lot of rapid growth. Maybe that’s because of high inflation, the cost of building materials, and people’s ability to afford real estate or housing but growth in the real estate sector has sort of slowed down. In 2022, it was 3.9%”
He further explained that inflation and interest rates are the major factors affecting growth in Nigeria’s real estate sector and if they continue to increase, it is not going to be good for the industry.
As for real estate is good but if government focus on that we shall loss nature in the process because there’s no house shortage in Nigeria but vegetations are already missing like go to some of our villages oil palm trees are what they use to pour decking now a days in few years to come you can hardly find original palm oil because artificial made types can’t be the same,with the one’s nature planted,I think that was like crude oil to Nigeria before crude was discovered.
That aside the adverse effect on climate will be much, that’s why I as an author focus on unemployment by means of highest potential this will bring diversity.
Seriously, it has not been this bad. The Real Estate subsector has taken the hit in the face of the current spiral inflation and dwindling economic fortune..
Where cost of capital is as high as 40 percent and purchasing power is at all time low, real estate growth take a helpless downward trend. Something drastic needs to be done urgently.