Mr. Bismarck Rewane, who is an Economist and Chief Executive Officer of Financial Derivatives Company Limited, has predicted a dynamic real estate market in the country this year.
Rewane said the real estate market would be based on economic activities and hinged on effective demand, which would be a function of the government revenue, adding that there would be a rebound in the economy in the fourth quarter after currency adjustments, which would increase capital inflows.
He spoke at the inaugural New Year dinner of the International Real Estate Federation (FIABCI) Nigeria Chapter on the theme: ‘The 2016 budget: The role of the real estate sector in reshaping the economy’.
Describing the sector as the fastest growing as of the third quarter of 2015 at 9.18 per cent and contributing about 7.57 per cent to the Gross Domestic Product, he noted that ongoing projects in the residential, office and retail subsectors scheduled for delivery this year were likely to be completed despite the challenges in the economy.
These include the Madina Tower, The Wings Towers, Eden Heights, Alliance Place, Heritage Place, World Trade Centre, Abuja; Maryland Mall, Benin Mall and the Abeokuta Mall, among others.
Rewane said, “We are likely to see a rebound in construction activities after budget funds are released and contractor arrears paid; Lagos and Abuja, having the same political party, will also have positive impact, while there will be infrastructure development to make real estate more attractive.
“There will also be clearer policy direction, which will boost the confidence levels of private investors and the reduction of the benchmark interest rate to encourage borrowing for buyers and property developers.”
The economist, however, stated that the residential and non-residential buildings market might register sluggish growth, especially in the early part of the year, with government funding for housing restricted by the fall in oil revenues.
“Projects such as the Eko Atlantic City and major commercial projects such as shopping centres may struggle to gain traction because domestic and international investors are likely to adopt a wait-and-see approach to their projects,” he said.READ ALSO – Surveyors Urge Lagos State To Collect Land Use Charge On Income
He noted that a major threat to the sector’s growth would be persistent macroeconomic headwinds to slow down construction activities; continuous forex restrictions, which would increase the cost of building materials; and lower disposable income, which would have a negative effect on demand.
Others are challenges with the transferability of titles and weak judicial system; and the clampdown on corruption and money laundering, which would reduce new money going into real estate transactions.
According to him, the major economic indicators that will affect the real estate market growth are the Gross Domestic Product, oil price, exchange rate and inflation, which he noted would hit 12 per cent within the year and increase in interest rate.
He said the sector, like others, would also be affected by the major impediments to growth such as underfunding and lack of access to capital; outdated technology and strangulation by government dominance and control.