Nigeria’s economic decline throughout the years is a crucial issue that cannot be ignored any longer, particularly in current times. One of the main factors at play in this situation is the nation’s substantial reliance on oil revenue, which makes it susceptible to changes in the price of crude throughout the world. And this reliance on oil money has some important drawbacks that have become clear over time and seriously hampered economic growth.
Geopolitical tensions, supply-demand mismatches, and economic conditions all contribute to the volatility of oil prices on the global market, which has left Nigeria with unpredictably fluctuating revenue streams and consequent economic shocks.
This has caused budget deficits, decreased spending, and economic downturns that have affected other industries, resulting in job losses and lower living standards for individuals. The oil industry also does not generate as many jobs as other industries like manufacturing or agriculture, despite being a capital-intensive industry. Due to the shortage of employment prospects – social instability and migratory agendas have resulted, especially for the expanding youthful population.
The need for Nigeria’s economy to recover is a topic of increasing academic discussion, although it should be noted that the country’s strong reliance on oil money has resulted in the neglect of other crucial economic sectors that may otherwise generate more steady and long-lasting income.
To remedy these drawbacks, Nigeria must diversify its economy, enhance its governance, encourage environmentally friendly practices, and invest in other industries including agriculture, manufacturing, technology, tourism, and real estate.
Real estate can have a big impact on Nigeria’s urbanization and economic development. It is a sector that has the potential to lead to some advantageous developments, particularly following an inflationary or depressed economic period. In Nigeria as well as many other nations, real estate is frequently viewed as the most advantageous long-term investment during inflationary times.
The government should give top priority to policies that support sustainable urban growth, make it easier for developers and homebuyers to get financing, and enhance the ease of doing business in the real estate sector if it wants to fully realize real estate’s promise as a tool for Nigeria’s economic recovery.
Furthermore, initiatives to combat corruption and uphold property rights will boost investor confidence and draw both domestic and foreign investments into the sector. Even though real estate can be a key factor in the development of infrastructure, problems with funding, regulations, and poor planning may limit the sector’s influence.
A well-regulated real estate market can also contribute to the housing industry’s greater stability. Housing bubbles, which can have catastrophic implications on the whole economy if they bust, are less likely if housing demand is met
The potential rewards of investing in real estate in the nation are influenced by several factors:
1. Gross Domestic Product (GDP) contribution: The real estate industry makes a considerable contribution to Nigeria’s GDP. It includes residential, commercial, and industrial assets as well as construction work and related services. As such, every expansion or improvement in this industry has a direct effect on the nation’s overall GDP growth.
2. Urbanization and Housing Demand: People travel to cities in quest of better opportunities, which fuels real estate growth. Better transportation systems, including public transit, highways, and bridges, are required as metropolitan areas grow. As a result of this trend, demand for housing and related services is rising, creating opportunities for real estate investors and developers to fill this growing need. The government frequently spends money on enhancing transport infrastructure as a result of real estate initiatives to support the expanding population.
3. Hedge against inflation and Capital Appreciation: Real estate has typically been viewed as a relatively stable asset type with the potential for long-term growth. Renter’s income and capital growth are advantages for investors that can help them build wealth over time. Real estate holdings’ value may rise in tandem with rising prices for products and services, acting as a hedge against inflation. As a result, discussions regarding long-term investing should be taught to Nigerians using real estate as the main example and a less volatile asset or stock.
4. Tourism and Hospitality: The expansion of the Nigerian tourism industry is aided by real estate development in these fields. Included in this is the building of hotels, resorts, and recreational facilities, all of which not only generate employment but also encourage the development of local infrastructure (such as utilities and transportation) to meet the demands of visitors.
5. Population Expansion and Housing Market Stabilization: Urbanization has raised demand for residential and commercial real estate in Nigeria, which has seen significant population expansion. Real estate is a potentially profitable investment because of the potential for this demand to boost property values and rental income. A well-regulated real estate market can also contribute to the housing industry’s greater stability. Housing bubbles, which can have catastrophic implications on the whole economy if they bust, are less likely if housing demand is met.
6. Improved Mortgage and Finance Industry: The real estate industry may help Nigeria’s financial stability by providing mortgage loans, home financing, real estate investment trusts (REITs), and other financial instruments that allow individuals and institutions to participate in real estate. A more inclusive economy is promoted by the growth of a strong mortgage business, which makes it easier for people to get loans and buy homes.
7. Commercial and Industrial Development: Real estate development also concentrates on commercial and industrial properties, such as office buildings, shopping centres, and factories. As a result of these advances, the economy expands and job possibilities are created. Additionally, the development of commercial and industrial developments frequently calls for better utility and transportation systems, which encourages public and private investment in infrastructure improvements.
8. Foreign Direct Investment (FDI): A dependable and flourishing real estate industry draws overseas investors hoping to profit from the expanding real estate market. The real estate sector and related industries are further boosted by foreign direct investment, which brings capital into the nation, promotes economic expansion, and makes it easier to transfer technologies.
9. Government Revenue Generation: Property-related taxes and real estate transactions both help the government generate revenue. Tax revenue from real estate transactions and related activities rises as the real estate sector expands, funding public services and infrastructure.
Read also: Investor projects 28% growth in real estate business in 2024
10. Real Estate as an Economic Indicator: The performance of the real estate industry is frequently a key sign of a nation’s overall economic health. A booming real estate market reflects investor confidence and economic recovery, creating favourable opinions among both domestic and foreign investors. As the industry grows, the demand for services, goods, and construction materials is stimulated, having a multiplier effect on adjacent businesses.
Unplanned and unrestrained growth, however, can result in issues including environmental deterioration, housing affordability problems, and real estate speculation. To fully utilize real estate investment for the country’s economic success, a balanced and well-managed approach is essential.
Overall, a vibrant real estate industry can be extremely important to Nigeria’s economic recovery by boosting economic activity, generating jobs, raising tax revenues, and promoting national development. To promote sustainable growth and development in the nation, real estate should be a component of a larger and more diversified plan, even though it shows promise as a long-term investment choice for Nigeria’s economic recovery.
Edumoh is a real estate management executive and business development expert whose professional principles are built on the pillars of innovation, passion, and measurable impact.
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