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Relying on the performances recorded in the first three quarters of last year, experts/ analysts are of the opinion that outlook for the real estate sector in 2023 is bright. DAYO AYEYEMI reports
HAVING contributed over N7 trillion to the nation’s Gross Domestic Product (GDP), coupled with the improved investors’ trust in the industry, no thanks to the the number of housing schemes initiated in the third and fourth quarters of 2022, experts say there will be sustained growth in the real estate sector in 2023.
According to them, no matter which party wins the forthcoming elections, real estate sector would witness an improved performance over 2022.
Predicting sustained growth in the industry, experts/analysts from the Bismarck Rewane-led Financial Derivatives Company (FDC), in their report, said that real estate would expand by 5.2 per cent in 2023
They added that contribution of real estate to the Gross Domestic Product (GDP) would increase to 6.5 per cent in the New Year, no thanks to high population and urbanisation growth
The analysts identified 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 as major risks in the sector in 2023.
Talking about opportunities in the construction sector, they said the sector’s contribution to GDP would hit 9.2 per cent due to increased spending and investment on road infrastructure, noting that Nigeria’s government had already concessioned 12 federal highways.
However, they said the projects initiated by the previous administration may be abandoned.
Managing Director/CEO of Fame Oyster and Co, Mr Femi Oyedele, said that real estate’s outlook in the new year is bright, citing the Central Bank of Nigeria (CBN)’s new cash policy and naira notes.
According to him, as an election year, and with the CBN change of the colour of the naira notes and the maximum cash withdrawal policy, Nigerians in the habit of stacking money in the house and who made more money to be redundant than being in circulation have been boxed to a corner.
“We would now see adequate cash in banks which will make them to have adequate balances and money to issue 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,” he said.
Oyedele, who is a practising estate surveyor and valuer, said the expectations in the real estate sector for 2023 is an improved performance over 2022, pointing out that election year in Nigeria is usually the best performing year, adding that the sector would witness a tremendous growth.
On major reforms that should happen in the sector in the New Year, Oyedele urged President Mohammadu Buhari to assent to the National Building Code (NBC), adding that the nation would need a committee on the formulation of “National Affordable Housing Policy.”
He said that time had come for the reduction of the usage of foreign materials in the building construction in order to reduce cost.
“We need to reduce the use of cement especially for walls and paving and we need to standardise our sandcrete blocks and encourage the use of bricks.
“Our houses are not economically distributed as there are numerous abandoned properties,” he said.
For this reason, Oyedele said there would be need for laws to reduce the number of vacant and abandoned properties in Nigeria.
“We need a think-tank in order to give housing direction in Nigeria as it is more a global political statement,” he said.
Change of policy
United States of America- based Affordable Housing Advocate, Mr Kunle Faleti, argued that no matter the party that wins the election in 2023, there would be a change to policy and programmes.
He predicted a slowdown in the first half of the year but that the industry would react in the second half of the year, based on who wins the election and what the policy is.
“If the incumbent party does not win, I expect an overhaul in people and policy at all agencies and MDAs involved in housing. This will also have a ripple effect on regulatory authorities,” he said.
Faleti enjoined government and its agencies to focus on housing affordability and supply in 2023 rather than homeownership.
According to him, there will be need to establish two agencies within existing government structures that will focus on homelessness and rural housing.
He said:”Local governments should be empowered to participate more in housing delivery.
“Mortgage banks should invest in technology and human capital development.”
According to the former chairman, Nigerian Institution of Estate Surveyors and Valuers, Lagos chapter, Mr. Samuel Effiong Ukpong, Nigerians hope to have a new set of leaders who would appreciate professionalism and respect that things could actually be done orderly.
“We expect to have thinkers and builders in government and not grabbers,” he said.
Expectations
He stated that expectations in 2023 are huge; pointing out that road construction shouldn’t be about road widening or expansion but alternative routes because of the increasing population.
According to him, new towns should be created as a deliberate policy, adding that government’s spending on projects and compensation should not be seen as a favour to the citizens rather a duty to service.
He said “Government and politicians should reduce their arrogance in governance.”
Ukpong urged that the Office of Valuer General should be created at the federal and all states government to take custody of the real estate assets of government, decides on yields and real estate ratios.
Security
Principal Partner, Ubosi Eleh and Co, Mr Chudi Ubosi, said that major development in the real estate sector in 2023 would stem from the level of security in the country and the quality of the next managers of the economy.
According to him, the greatest challenges Nigerians will have in the New Year will be a smooth transition of government and the quality and the sincerity of the next 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 in good leadership in 2023 then we may just have a continuation of what we have now, and further deterioration in the national economy and, even further deterioration of security of life and property.
“Very few nations have achieved any reasonable growth with high levels of insecurity, snapping at their heels.
“It’s basic. Capital and investment go to where they are safe. Not even the citizens of the country invest in their own nations where there are high levels of insecurity and poor governance,” he said
He explained that every other development and growth Nigerians desire or need in 2023 would flow from the honorable intentions of the next set of rulers.
“As we mentioned earlier that even with the poor economy and political leadership, real estate performed well, it is clear that the trajectory will continue more so with the enormous demand for property over supply.
“If we have a sincere government in 2023, surely things will only get better,” he said.
On expected reforms in the sector, Ubosi urged practitioners to continue to ask for the amendment of the Land Use Act to reflect modern realities concerning real estate, titling, ownership, development, sale and purchase.
“If this is done, the explosion of the sector will virtually tripple its annual contribution to the GDP of Nigeria,” he said.
Another estate survey and valuation practitioner, Mr Kunle Awolaja, said that all markets have continued to adjust to the pandemic, but that as each market has had to adjust in its own way, adding that the real estate market was not an exception.
Over the next 20 years, according to him, analysts expected that the value of global investable real estate will grow by an average of 5.2 per cent annually to exceed $85 trillion.
According to Awolaja, real estate sector is expected to continue its upward turn of events in 2023, pointing out that more investors would be looking into the prospect of venturing into the sector thereby harnessing the rate of return on investments that are available, given considerations to the indices it recorded in the past years.
Reforms
On expected reforms in 2023, he said there should be speedy registration and issuance of permits to real estate professionals nationwide.
Other reforms, he said should encompass the receiving and investigating petitions and complaints against registered real estate professionals; registration of real estate transactions nationwide; collation of data on real estate transactions; registration of tenancy transactions above five years; and formulation of real estate policies in line with global best practices, among others.
Awolaja said:” The importance of real estate in Nigeria cannot be overstated. It is a major economic driver and has generated wealth for the country. However, despite being Africa’s largest sector, it has faced a number of critical challenges over the years.
“Incessant building collapse, for example, has increased the number of human casualties, instilling fear in the majority of residents. These concerns have made the country’s real estate sector’s prospects less promising and likely to drive away potential property investors if not corrected,” he said.
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