Real estate contracts -2.24% in Q3’16

The National Bureau of Statistics report on GDP showed that in the third quarter of 2016, in real terms, GDP growth recorded the Real Estate sector contracted by -7.37 percent.

The decline in the growth of this sector clearly shows the impact of the economic downturn in the country which started in the last quarter of 2015.

The decline in the real estate sector’s growth and contribution to GDP, according to analysts, is an anti-climax considering that this was a sector raised much interest and expectation following the rebasing of the GDP in April 2014 where it was discovered that the sector was larger by about 30 percent than it was previously thought to be.

All that is now history as the two segments of the sector—commercial office space and retail—which were the major drivers of that growth are today struggling, more so in response to the recession.

The office space, which is struggling with oversupply, has witnessed rents drop this year such that at the end of Q3 2016 rents are down by 17 percent to at $700 per square metre in prime shopping centres in high end Ikoyi while rents in Victoria Island for the same period stand at $600 per square metre.

Erejuwa Gbadebo, CEO Cluttons Nigeria, attributes this market scenario to the situation of the global economy, noting that, apart from the fall in crude oil prices which has crippled OPEC economies globally, Nigeria is at an increased disadvantage caused by the unrest in the Niger Delta region.

The construction sector generally also witnessed growth decline and, in real terms, according to the NBS report, growth rate of construction activity stood at -6.13 percent (year on year) in the third quarter of 2016, a decline of 6.02 percent points from the rate recorded a year previous.

 

CHUKA UROKO