The real estate sector of the Nigerian economy has seen growth in the past four to five years, even though concerns are still there that the sector remains largely immature in almost all segments.
The recent GDP rebasing exercise in the country made interesting revelations about this sector. The highpoint of this revelation borders on the size of the sector being currently 40 percent larger than it was previously estimated. The sector is also the sixth-largest after crop production and distribution, crude petroleum and natural gas, information and communication, and telecommunication.
In terms of growth, it is faster than average GDP growth and it grew 8.7 percent in 2013, compared with GDP growth of 7.4 percent. Its average growth was 6.9 percent between 2011 and 2013, while GDP average growth was 6.4 percent.
Private equity investment in this sector has been quite considerable and in retail alone, which has seen what could be likened to a revolution, over N200 billion has been invested in the past two years providing real estate space for shopping malls at various locations in the country.
Quite a good number of investors, local and foreign, have made considerable investment in this sector, creating jobs for a large army of artisans, builders, technicians and other building professionals majority of who, unfortunately, are not Nigerians.
Lack of skilled manpower in the country explains the employment of ‘foreigners’ for as simple jobs as bricklaying, tiling, plumbing and other building and construction work that require artisanal knowledge and expertise. A lot of money that comes from investing in the sector goes into foreign hands which, we are pained to note, would have contributed to national growth.
Institutional investors including Actis, FirstRand Limited, International Finance Corporation (IFC), The Artee Group, Capital Alliance Nigeria, etc have raised and invested millions of naira in retail and commercial property in Africa with Nigeria as their top target. Actis particularly has been bullish in its investment in retail development, especially with the success it recorded in the $100 million Ikeja City Mall development. IFC, a member of the World Bank Group, along with IFC African, Latin American and Caribbean (IFC-ALAC) Fund, a private equity fund managed by IFC Asset Management Company (IFC-AMC), has made $124 million investment in the Persianas Group, an indigenous real estate development firm, for the growth and promotion of commercial real estate in Nigeria.
In the same vein, The Artee Group, which already runs SPAR and Park & Shop in Nigeria, says it has plans to open 100 shopping outlets in the country in the next six years and the proposed outlets will come as hyper-format units comprising between 400-500 shops located within the outlets.
It is lamentable that these multi-billion naira investments don’t translate to opportunities for the growth of the economy but rather lead to the sector’s low contribution to GDP estimated to be less than 5 percent.
We are pained that dearth of skilled manpower has shut out Nigerians from the opportunities in this sector and opened same to foreign firms and artisans from neighbouring countries, notably Ghana and Togo, who do most of the artisan work for both investors and private home builders.
Investors say that doing business in Nigeria is a huge task and we can’t agree less, as delivering projects here costs more because of ‘importing’ these artisans from neighbouring countries to do jobs which Nigeria artisans are largely unskilled to do.
We recommend the setting up of skills acquisition centres by private enterprises or through joint venture partnerships that would ‘import’ trainers from these neighbouring countries to train and retrain local artisans. We believe that it is only through this that Nigerians can tap from the fabulous opportunities that the growing interest in the sector offers.
The realisation that this sector is not only as large as previously imagined, but also one of the fastest growing in the economy is reason enough for government to rejuvenate or start setting up new technical colleges and building technology institutes to produce the needed technicians.
The dwindling oil revenue and the need to create jobs for Nigerians make this not only important but also imperative. In our candid opinion, only here lies the magic wand for President Jonathan to create his eight million jobs for Nigerians in four years.
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