UPDC Real Estate Investment Trust (REIT) reported top line growth in the period under review meaning the company is tapping into Nigeria’s growing population that crave for commercial and residential accommodation.
For the first nine months through September 2015, UPDC’s income from investment properties increased by 16.01 percent to N817.60 million, from N704.41 million last year.
Interest income followed the same growth trajectory as it moved by 33.56 percent to N590.17 million in 2015 as against N442.22 million in 2014.
UPDC is in a growth spurt as investment into the sector is expected to increase on the back of the continent’s economic and demographic growth prospects.
“Sub-Saharan Africa is one of the world’s most rapidly developing economic regions, and it is projected that 13 of 20 fastest-growing global economies over the next five years will be in Africa, said analysts at Knight Frank, in their 2015 Africa Report.
“By 2100 nearly 40 percent of the world’s population will live in Africa, with the large majority of these being in the continent’s fast-growing cities,” the report added.
Africa’s largest economy Nigeria has a huge housing deficit of between 17 and 20 million, a figure that means huge investment in infrastructure to bridge these gaps will spur the demand for housing and real estate business.
According to the United Nations, Nigeria’s urbanization rate was estimated at 51 percent in 2012, which suggests that over 80 million people live in the cities; the UN estimates that this number is growing at an annual rate of 3.5 percent.
While opportunities abound in the real estate business in Nigeria, macro economic conditions are stunting the growth of housing and real estate business in the last two years.
The slow economic growth caused by 60 percent drop in oil price and rising inflations that dampened discretionary spending saw the demand for accommodation dwindle.
Economic growth slowed to 2.8 percent on an annualized basis in the third quarter of 2015 from 6.2 percent a year earlier.
Inflation may increase to 9.40 percent, according NBS data.
Further analysis of the financial statement of UPDC REIT show net income fell by 50.60 percent to N1.56 billion in 2015 from N3.16 billion in 2014.
The drop at the bottom lines was caused by an 88.47 percent slide in the fair value gain on investment properties in the period under review.
UPDC total assets increased by 7.53 percent to N33.25 billion in September 2015 as against N30.92 billion the previous year.
Return on equity (ROE) reduced to 5.07 percent in September 2015, as against 10.87 percent in 2014.
UPDC’s share price closed at N10 on the floor of the exchange while market capitalization was N26.26 billion.
BALA AUGIE
