The National Bureau of Statistics (NBS) has announced that it is going to rebase Nigeria’s gross domestic product (GDP) and inflation data, and the rebased figures are expected to be released anytime from now.
The last GDP rebasing was done in 2014, and another rebasing has been long overdue.
The new rebasing will reflect the current realties of how various sectors contribute to the Nigerian economy. According to the NBS, in 2023, the real estate sector contributed a total of N10.5trn to the GDP and N5.2trn, N3.4trn, N3.9trn in Q1 2024, Q2 2024 and Q3 2024, respectively, at current basic price.
The real estate sector contributed 5.59% and 5.43% to Nigeria’s real GDP in 2023 and Q3 2024, respectively. The real estate sector is the fifth largest contributing sector to the GDP as of Q3 2024, with the leading sectors contributing as follows: Crop Production 26.51%, Trade 14.78%, Telecommunications & Information Services 13.94%, Crude Petroleum and Natural Gas 5.57% and Real Estate 5.43%.
Furthermore, the sector is projected to have grown by 7% when the data for full year 2024 is released. It is expected that the GDP rebasing will lead to the real estate sector overtaking the oil and gas sector to become the fourth largest contributor to GDP. This clearly shows that the real estate sector is critical to Nigeria and its economic growth. However, the sector is burdened with the problem of title and land registration.
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The total estimated value of Nigeria’s real estate market is expected to reach $2.25trn in 2025, and only about 10% of these properties have proper legal titles. The reasons for this include the following: cumbersome property registration process, prohibitive cost, lack of awareness, long processing times and corruption. This means the real estate sector holds a lot of ‘dead capital’ that can be unlocked to facilitate faster economic growth for the country.
It is important that the central and sub-national governments streamline the process of obtaining land titles as the benefits are enormous. The solutions to the problem are clear, and they include: sensitising the public on the importance of title registration, removing red tapes, reducing costs, preventing and punishing corrupt practices and speeding up processing time.
Governments might want to argue that they make a lot of revenue from title registration so they cannot reduce the price they charge. A counter to that is that when more people are able to obtain legal title, they can unlock capital to further invest in real estate and other areas of the economy which will lead to the growth of the real estate sector and the economy as a whole, thereby increasing the ‘pie’ from which government can generate revenue.
Neo-classical economic growth model states that labour, capital, and total factor productivity are needed to achieve economic growth. Nigeria is blessed with a massive population that is young (55% between the ages of 15-64 years), and we can optimise growth and productivity by accessing the huge capital tied in our real estate stock. This can only be achieved by granting legal titles to these properties so they can be used as collateral to obtain loans from banks and creditors.
In conclusion, the simplification of the process of obtaining legal property titles and reduction in cost will improve access to capital; encourage more investments in real estate and other sectors of the economy, thereby leading to increased GDP growth; and it will boost revenue generation for the government.
Temitayo Saheed Olayinka is a real estate and finance specialist.
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