Welcome to the 2nd Edition of REMNs – Nigerian Real Estate: X Files.
In this edition, you will get the highlight of major events that have taken place in the Nigerian real estate market spanning the first half of 2023.
So strap in, get your popcorn, and let’s get into this exciting edition of REMNs – Nigerian Real Estate: X Files.
Let’s go…
Highlights from the Nigerian real estate market in the first half of 2023:
The real estate sector contributes ₦8.33 trillion to Nigeria’s GDP in Q1, 2023
According to the report released by the Nigeria Bureau of Statistics, construction contributed 11.79 per cent to nominal GDP in the first quarter of 2023, higher than the 9.68 per cent it contributed a year earlier and higher than the 10.16 per cent contributed to the fourth quarter of 2022.
The real growth rate of the construction sector in the first quarter of 2023 was recorded at 3.27 per cent (year-on-year), lower by 1.56 per cent points from the rate recorded in the previous year.
Relative to the preceding quarter, there was a decrease of 0.53 per cent points. Quarter-on-quarter, the sector grew by 2.78 per cent in real terms. Its contribution to total real GDP was 4.22 per cent in the first quarter of 2023.
Real Estate Services contributed 4.46 per cent to the nominal GDP in the first quarter of 2023 relative to 4.92 per cent recorded in the first quarter of 2022 and 5.62 per cent in the fourth quarter of 2022.
The real growth rate of the sector in the first quarter of 2023 was recorded at 1.70 per cent, lower than the growth recorded in the first quarter of 2022 by 2.74 per cent points, and lower by 1.08 per cent points relative to the fourth quarter of 2022.
On a quarter-on-quarter, the sector grew by -27.52 per cent in the first quarter of 2023. It contributed 5.31 per cent to real GDP in Q1 2023, lower than the 5.34 per cent it recorded in the corresponding quarter of 2022.
From the report provided by the Bureau the reason for the decline in the contribution to the GDP from the Real estate sector can be traced to the negative effects of the cash crunch experienced during the quarter.
Dangote Refinery set to boost the growth of the real estate sector
Inaugurated on the 22nd of May 2023, the Dangote oil refinery situated in Lekki, is expected to boost the growth of real estate along the Lekki-Epe area.
This can already be seen as the number of projects by real estate companies and developers have increased over the past months in the area. And early real estate investors in the area have seen an astronomical increase in the value of their properties.
The oil refinery owned by Africa’s richest man Aliko Dangote, set to be the largest single-train refinery in the world, is projected to process over 650,000 barrels of crude oil at full capacity per day.
Bola Ahmed Tinubu’s Presidency gives renewed hope to real estate stakeholders
Signing the ELECTRICITY ACT, in his first weeks in office. H.E Bola Ahmed Tinubu signed the bill which empowers states, companies, and individuals to generate, transmit, and distribute electricity. This act would bring about development geared towards a constant power supply. Inadequate electricity supply is a major issue affecting the growth of the real estate sector in Nigeria.
President Tinubu has also spoken about the importance of developing the real estate sector in Nigeria. He has said that the real estate sector has the potential to create jobs and boost economic growth. He has also said that the government will work to create a more conducive environment for investment in the real estate sector.
The rising cost of construction materials
The Nigerian economy is facing several challenges, including high inflation, a depreciating currency culminating in the rising cost of construction materials.
This has led to higher prices for homes and commercial properties, which makes them less affordable for some buyers.
Frequent building collapse
Following the frequent collapse of high-rise buildings in the country which has become a cause for concern, a luxury real estate company called Sujimoto has gone the extra mile to construct residential buildings capable of lasting over 200 years.
Watch this video below to find out how they use state-of-the-art technology and experienced technocrats to achieve this feat.
Lagos, Abuja, and Rivers rank high as the most sought-after locations for real estate investment
MLS, Nigerian Property Centre reports Lagos, Abuja, Rivers, Ogun and Oyo as the most in-demand locations for real estate in Nigeria.
Lekki, Ajah, Ikeja, Ikoyi, and Victoria Island (VI) ranked high as the most searched localities.
The top search categories were Rentals, Sales, Short Lets, and Joint Ventures.
While most searched property types were Flats/Apartments, Houses, Lands and Commercial Properties.
Highlights
These major events in the first half of 2023 reveal the following trends in the Nigerian real estate market. These include:
- The demand for affordable housing remains strong.
- The market for luxury homes is also growing.
- There is an increasing demand for commercial real estate.
- The government is taking steps to support the real estate sector.
In summary
The outlook for the Nigerian real estate market in the second half of 2023 is positive. The market is expected to continue to grow, driven by the factors mentioned above, and with more investors coming to the fray and a supportive government facilitating an enabling environment, the future is looking bright.
Moses Oyong is a luxury real estate advisor with a passion for arts and culture, music, fashion, and all things luxurious. With a keen eye for beauty and attention to detail. I strive to help my clients find their dream homes that reflect their unique sense of style and taste whilst providing them with the right information to ease the stress of the decision-making process.
