For players in Nigeria’s real estate sector, it’s been half a decade in the winter. Hit hard by the recession of 2016 which caused a 6.86% decline in the sector compared with the growth of 2.11% recorded in 2015, the post-recession fragile convalescing period was dealt a further blow by the Covid-19 pandemic. Post Covid, the sector is confronting another monster in the free fall of the naira and the accompanying inflation.
Sources in the industry say the sale of some of the high-end properties have also been put on hold since the naira began its more recent free fall. Historically, some of the biggest challenges in the sector have been high interest rates and forex volatility. Recent spike in inflation have prompted the Monetary Policy Committee of the Central Bank of Nigeria to raise rate to 14 percent in bid to contain it. But such measures work better when the inflation trigger is excessive demand due to too much money in circulation.
Oshogwe who highlighted the effects of the volatility of the dollar on projects, said, “the private sector, federal government and all relevant regulatory agencies need to come together to develop a framework that will hedge against these challenges and agree on key measures that will promote cheaper constructions and drive infrastructural development in the country.”
The National Bureau of Statistics GDP report Q1 2022 report showed that quarter on quarter, GDP of the real estate services came at -26.75% in the first quarter of 2022, an indication of the struggle it is facing. “Also, existing projects may suffer some setbacks including delays because of the naira depreciation. Similarly, new housing projects will be impacted depending on source of funds.