For a number of reasons which include the persisting housing deficit estimated at 17 million units, rising urbanisation and evolving scenarios that are likely to stimulate supply, investors and developers are optimistic that the real estate sector in Nigeria will become vibrant again after the general elections slated for next month.
Presently, the sector, on account of political activities and mounting insecurity in some parts of the country, is experiencing a slow down as investors are withholding investment, cautiously watching the political space to see the direction of the economy after the election.
Because of unguarded utterances from some political actors coupled with unfavourable macro-economic decisions by the Federal Government, investors consider the investment environment too risky and even those who have interest already are slowing down.
Optimism, however, persists, and it is against this backdrop that Omochiere Aisagbonhi, the CEO of Omais Homes, hopes that “even though people say 2015 will be tough, I believe that after the elections, things will stabilise because Nigerians are resilient and will be able to readjust and carry on with life and business”.
“The sector will still pick up after the elections”, he added, stressing that “it can’t be worse and we cannot get it wrong with our large and growing population, rising urbanisation and 17 million housing deficit estimated to increase to 25 million units by 2020”.
An equity investor, who did not want to be named, shared this view in a telephone interview with BusinessDay, pointing out that riding on the back of the new land policy in Lagos State which has crashed land transaction cost in the state to 3 percent, down from 13 percent, the real estate sector would be upbeat with increased investment.
“It is just natural to hope that more investment will come into the sector with this development, but that will depend on what we get after the elections”, he said, adding that even the foreign investors were waiting to see how Nigeria survives the elections.
“What the incoming government will do or will not do will have significant impact on the entire sectors of the economy including real estate”, Femi Akintunde, the CEO of AMFacilities Limited, said, adding that the investment environment should be improved in the new year.
“When we come out of politics and issues of elections; if the new government comes and it is the right government, we expect they will be doing things, at least, to impress the people and all these will come on within the first quarter of the year.
“We expect also that we will have a better understanding of the security challenges, deal with them and by the end of the year put them to rest through any means possible. With this, a lot of the foreign direct investors that have been waiting on the sideline may reconsider their decision and start coming into the country to invest”, he added.
According to him, infrastructure will get attention because this also impacts on the entire value chain, pointing out that with infrastructure, the sector would be stimulated, leading to increased supply.
Aisagbonhi warns, however, that all these were not going to come quick and cheap, explaining that “after the elections, there will be a lot of cash squeeze that will affect everybody including the government. There is already some kind of austerity measure that government has pronounced and so, even corporate individuals will have to apply the same measure because there won’t be enough money to throw about”.
This item originally appeared in BusinessDay news