THE REAL ESTATE SECTOR AND THE NIGERIA ECONOMY
Real estate has to do with property consisting of land and the buildings on it, along with its natural resources such as crops, minerals or water; immovable property of this nature; an item of real property, (more generally) buildings or housing in general. The real estate industry, just like every other sector, contributes greatly to the growth of any nation’s economy. Realtors in their own ways have also done much in adding value to the growth of economy and livelihood of any nation. In Nigeria today, it will not be out place to say that the real estate sector had brightened the future of the country’s economy despite the economy melt-down in the nation. The real estate sector has been growing in leaps and bounds with high rise buildings, hotels and shopping malls springing up everywhere in Lagos, Port Harcourt, Abuja and several other cities in Nigeria. The International Monetary Fund (IMF) recently made a prediction in the area of strong developments in the real estate and technology sectors in developing countries like Nigeria which has brought about huge achievement in spite of the tough challenge in the world economy and financial periods in recent times. There are also predictions that these up-coming countries will account for about 70% of world growth over the next decade. Nigeria at the moment, is forecasted as one of the developing countries with higher potentials and returns in real estate investment and one of the competitive players in the world-wide real estate market which is attracting various foreign investors.
The National Bureau of Statistics recently put real estate’s contribution to Nigeria’s Gross Domestic Products (GDP) at about 8%, this rate is actually a great feat compared to what it used to be prior now. Despite the fact that the real estate sector is still an up-coming and a small contributor to the country’s Gross Domestic Products (G.D.P.), its importance however cannot be over-emphasized. The growth and the contribution of the sector to Nigeria’s economy is not unconnected to the decline in crude oil production due to a global down trend in the world oil prices. The PricewaterhouseCoopers (PwC) as well as the Centre for Affordable Housing Finance (CAHF) in 2018 revealed that the real estate sector has been on the win-win situation, even when other sectors were going upside-down, hence growing faster than the average G.D.P rate of about 9.0%. They further forecasted the increment in growth in the nearest future. The PwC predicted that Nigeria’s real estate investment will rise by 48% in 2019, that is, from $9.20 billion in 2018 to $13.70 billion this accounting year. Hence, it generates growth and it is feasible because it is the middle class that are driving demand for residential property development, commercial property development, either indirectly or directly by the forces of demand and supply. In the same vein, the Minister for Power, Works and Housing, Mr Raji Fashola, recently described Real Estate sector as one of the major contributors of employment and also to the Gross Domestic Product (GDP) in Nigeria. Realtors however believed that despite the growth the sector had attained, it could still do better because as it is, the sector still remains a small contributor in the country’s Gross Domestic Products, at least when comparing load with other up-coming and developed countries like United States of America, South Africa, China, Australia, Great Britain, Brazil etc.
That being said, the sector is still lacking in some areas, this I feel is as a result of many challenges attacking the sector. One of them as highlighted by the PwC report is access to finance. There are existing problems with access to finance; with a lack of long-term debt financing and an underdeveloped mortgage market, with mortgage loans representing less than 1 percent of the nation’s GDP. Most importantly, the report says, land verification of the title documents is the cumbersome and time-consuming process for land acquisition and ownership documentation which makes land acquisition difficult, even though land is very cheap in some part of the country. Also minimizing the input of the sector towards economic growth is the menace of infrastructure, which had remained a major headache for the sector as the non-availability of basic services such as treated water, drainage, tarred roads and energy had made developers to provide most of these facilities, which in turns, resulted into inflation in the sector. These deficiencies in the real estate sector have notwithstanding led to recording inadequacy almost every year, with the situations not showing any sign of improvement. Most Africa countries are facing the same problem of inadequate supply of good infrastructures, especially when it comes to high-quality commercial space. Since Real Estate is one of the viable sectors of Nigeria’s economy, as it provides accommodation for the people, the Federal and State Governments should ensure that adequate supply of both long-term and short-term sources of fund for its development is made available from capital market.