A report by a real estate company, Ubosi Eleh and Co, has predicted that the housing sector will witness slow growth throughout the rest of 2023.
In the Nigeria Real Estate Report, the firm expressed optimism that the sector would in 2024.
According to the report, the sector’s slow growth is linked to high inflation, poor regulations, and macroeconomic challenges facing the country’s economy.
It said, “Lagos and Abuja had benefitted most in terms of real estate investment driven by the high level of insecurity in the country and that this trend would continue.
“Amongst its projections is that the demand for medium-sized retail space for shopping complexes, shopping centres, corner and neighbourhood shops would be positive and high.
“The real estate market would witness slow growth all year with a chance of a rebound in 2024, depending on the state of the economy.”
The report also stated that the country’s underdeveloped Real Estate Investment Trusts Industry had caused the low rate of homeownership in Nigeria.
It said the Nigerian REITs began in 2007, about six years before REITs began in South Africa in 2013 and about five years after REITS began in Singapore in 2002.
According to market experts, Nigeria’s REIT is worth $0.2bn, compared to the UK’s $73bn, Singapore’s $34bn, and South Africa’s $19bn.
They added Nigeria had a seven per cent return on investment compared to Singapore’s 16 per cent. South Africa’s 15 per cent, and Kenya’s nine per cent.
“The low rate of homeownership in Nigeria is also attributed to the country’s underdeveloped Real Estate Investment Trusts (REITS) Industry, which tags in terms of investment volume, market capitalisation, and returns on investment.”
Despite this outlook, it maintained that the industry remained the “asset class of choice in Nigeria.”
“The outlook of the report for real estate in 2023, now in the seventh month is nonetheless promising, emphasised with the comment that real estate remains the assets class of choice in Nigeria, the various challenges notwithstanding,” the report concluded.
