Construction, transaction activities in real estate sector seen improving post-election

The last six months or more has seen a slowdown in activities including construction and transaction, in the real estate sector owing to investor-apathy as well as wait-and-see attitude adopted by developers as a response to the on-going general elections whose outcome would potentially impact the sector.

But relying on the performance of the sector in 2022, especially in the first three quarters of the year, when the sector along with construction contributed N20 trillion to GDP, close watchers of the sector say its performance in 2023 will improved when the elections are over.

Besides policy changes which are expected to alter the current narratives in the economy, the sector watchers note that each of the three top political parties has a relatively robust blue print for housing and infrastructure and so, whichever one that wins is expected to sustain growth of the sector.

“No matter the party that wins the election in 2023, there will be a change in policies and programmes; there may be a slowdown in the first half of the year, but the sector will pick up in the second half of the year, based on who wins the election and what his policies are,” they said.

Earlier in the year, Financial Derivatives Company (FDC), which serves as an economic barometer in Nigeria, had predicted a bright and positive outlook for the sector in 2023, saying that it would expand by 5.2 percent in the year.

The company added that the contribution of real estate to the Gross Domestic Product (GDP) would increase to 6.5 per cent in 2023, hinging that assumption on high population and urbanisation growth.

It, however, identified some risks which could impact that growth negatively and these include high interest rate environment, increase in the cost of building materials, poor land acquisition policy, and forfeiture orders on properties owned by politically exposed persons (PEPs).

The company sees opportunities in the construction sector, predicting that the sector’s contribution to GDP will hit 9.2 per cent due to increased spending and investment on road infrastructure, more so as the federal government has concessioned 12 federal highways under its highway development and management initiative (HDMI).

It is expected that the Central Bank of Nigeria’s (CBN) new Naira Policy will have positive effect on real estate going into the future. Having mopped up all the money that were hitherto outside the banking system, the banks now have more than enough to lend to developers and home buyers.

“We now see adequate cash in banks which will make them to have adequate balance and money to give out as loans. More people will be interested in housing products as investment forms as the era of keeping cash at home and in the offices is gone,” Femi Oyedele, managing director/CEO of Fame Oyster and Co, was quoted as saying.

Johnson Chukwuma, a civil engineering and estate consultant, reasons that if the ruling All Progressives Congress (APC) fails to return to power, it is not out of place to expect sweeping changes in both people and policies, especially at ministries, departments and agencies (MDA) level which, according to him, will have ripple effect on regulatory authorities.

Chukwuma canvassed establishment of new agencies within existing government structures that will focus on homelessness and rural housing.

Because of the new government that will soon be in place, he raised expectations on the creation of enabling environments to drive the expected improvement in construction, market transactions, housing demand and supply mostly in the emerging urban communities.

“We expect the new government to provide critical infrastructure especially roads which, for me, should not be about widening or expanding existing road networks, but starting and completing new ones that have the double advantages of opening up new communities and attracting new investments.

Government should create new towns in line with what is now known as ‘new urbanism’ in emerging economies like Nigeria that has issues of population and urbanization to deal with. That should happen as a deliberate policy and it is time government’s spend on projects should be seen as a duty and not a favour or ‘dividend of democracy’, ” he said.

Though he shares the view that post-election, the sector will improve in terms of performance, Chudi Ubosi, the Principal Partner at Ubosi Eleh and Co, said that whatever is expected can only happen if the environment is safe and secure.

“The level of development to expect in the real estate sector in the rest of the year will depend on the level of security in the country and the quality of the next managers of the economy,” he said, noting that the greatest challenge Nigerians have always had is smooth transition of government and the quality and the sincerity of a new government.

“This is more or less from the political sector. Remember that we run a system where the government virtually controls everything. If we don’t get good leadership this year, then we may just have a continuation of what we have now, and further deterioration in the national economy and security of life and property. Very few nations have achieved any reasonable growth with high level of insecurity,” he said.

According to him, capital and investment go to where they are safe, explaining that not even citizens invest in their own country if there are high levels of insecurity and poor governance.