Real estate industry experts have raised concerns about the current economic downturn in Nigeria.
Speaking in separate interviews with our correspondent at the 30th Edition of the Annual Memorial Lecture on January 31, 2024, in honor of the first president of the Nigerian Institute of Estate Surveyors and Valuers, ESV J.W Ekpenyong, at the Abuja Continental Hotel, they highlighted the importance of the real estate sector to the economy and the impact of the ongoing economic downturn on the sector.
They emphasized that the economic challenges in Nigeria, such as inflation and exchange rate fluctuations, have cast a negative impact not only on the real estate sector but also across every facet of the country.
Leading the pack, president of the Institution, ESV. Johnbull Amayaevbo, expressed concern about the economic effect on housing.
He highlighted the diminished capacity of individuals to invest in real estate due to the adverse impacts of inflation and the fluctuating exchange rates affecting the supply chain of building materials.
“The capacity for people to acquire, to go into the investment of real estate industry has been affected because of the economic situation. Some of these building materials are still import dependent. How many people today can afford dollars? The effect is negative. The supply is dwindling. You may see people building everywhere but if you look at the ratio of those who are in the market, the major players, they are feeling the pains.”
He advocated for government involvement of professionals in policy-making as a solution to navigate the challenges.
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“Government should listen to professionals. Government should involve trained professionals not just estate surveyors in the formulation of policies that affect real estate. Real estate is a catalyst to any economy in the word and getting the right professionals on board is important.”
Past president of the institute, ESV. Roland Abonta, characterized the economic situation in the country as a crisis, underscoring its disproportionate impact on low and middle-income earners.
“The situation is critical and one may not be able to use words to explain what is happening in our nation, in our towns, in our cities and worst still in the villages. The low and middle income group have been suppressed and have been pushed. Our nation seems to be a nation that doesn’t care so much for the low income earners. The low income people are the worst hit by the economic prices we are facing and it has also been aggravated by the challenges of insecurity.
“When you go to the hinterlands, people no longer go to farm. Like the village i come from, people depend on things that are being brought from outside and those things have gone so high. I learnt that a mudu of garri is about five hundred Naira or more in the East, and remember the East used to be a place where garri was produced in the past but today you don’t have so many people having confidence to go to the farm, particularly in some locations in the South East geopolitical zone because of insecurity.”
Abonta addressed the surge in urbanization, causing increased demand for housing and subsequently inflating prices.
“In the last six months as the new administration came in, more than original thirty percent of residents in Abuja came from outside to join us. And they came in with pressure for accommodation and so the houses available became limited, short in supply and that brought about skyrocketing of the prices.
“Those who are also into construction are not excluded. I have seen cement go from N2,500 in the last one year or there about to now N5,700 per bag. That is the common material used in developing housing and construction . So if that has taken that turn, the tendency is that every other thing in the building industry will be affected.
“In the labour side, labour that was employed for three thousand Naira to four thousand Naira now talk about five thousand to ten thousand Naira per day. And you can’t blame them. What will they do with ten thousand if they have to pay two thousand to come or two thousand to go to his base outside the city. So it’s a vicious cycle and it’s affecting every body not only in real estate sector.”
He urged immediate government intervention to prevent a total collapse of the nation and facilitate access to basic needs, including housing.
“There should be an action of intervention that will be taken on emergency to rebuild our nation from total collapse, to stop people from dying of hunger and basic needs. So residential accommodation or any form accommodation is not exempted in the skyrocketing prices”
First Vice President of the institution, ESV. Victor Alonge focused on the devaluation of the Naira, acknowledging its impact on house affordability for most Nigerians. Despite concerns, Alonge urged patience from Nigerians, suggesting that the policy needed time to materialize and encouraged Nigerians to give the government the benefit of the doubt.
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“On consideration you will say it is bad because it means people have to pay more for the same quantity of construction materials and eventually even houses. But again, it’s got to do with correcting our national habits, the habit has before now being heavily subsidized by government, that subsidy comes from somewhere, government borrows money to subsidize Naira, so it is actually not in our long term interest for government to continue to subsidize the Naira. So if we have to correct it as government is doing now, I think we all have to understand and give government the benefit of the doubt and also make sure government is doing the right thing.
“We all want houses to cost less because that makes it affordable but unfortunately the effect of devaluation has meant that houses are even more out of the reach of most Nigerians now. But I think it will correct itself soon.”
On his part, another industry player, ESV. Olugbenga Ismail emphasized the need to make housing affordable, attributing the rising costs to the import-dependent nature of nearly 70% of building materials.
“For us in the real estate sector, what happens to the price of houses…the value of houses is important. There is a difference between the cost of houses and what the value Is. For us the most important thing is to protect the value of those houses but if it’s a cost push that makes them unaffordable then we have a problem with value. Value is reflecting in rent, so if rent which is a rent does not match against the cost then obviously investment has gone down. How do we keep houses affordable? That’s what we have to think about.”
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Chairman Lagos state branch Nigerian Institution of Estate Surveyors and Valuers, ESV. Ismail proposed local production and substitution of imported materials with locally sourced alternatives as a potential solution to alleviate the pressure on Nigeria’s housing sector.
“The most important thing is to make sure that the constituents of building, the building materials, the content of building come down. Seventy percent of everything that we put into housing is almost imported, so we must reduce and substitute all of those for local contents.”
As the real estate sector grapples with these challenges, the call for a comprehensive government response echoes among experts to stabilize the economy and ensure the accessibility of essential needs, particularly housing.
