Uncertainties in Nigeria’s political environment coupled with cautious investment by potential investors may bring about a slow-down in activities in the real estate sector in this second half of the year, experts have predicted.
The experts note that heightened terrorist activities in the country in the past six months are sending negative signals and fears into the minds of investors, making them see the country as an unsafe haven for investment. They add that monetary policies are also big issues for the market.
“We will still have to contend with security issues, monetary policies especially with a new CBN governor in place. We can only hope that he eases both fiscal and monetary policies so that banks can lend to real estate without demanding so much from borrowers”, Yemi Madamidola, a real estate consultant, told BusinessDay in Lagos.
Madamidola, who spoke in an interview with BusinessDay on his expectations from the market in an election year, differed from the belief that elections would excite the market, explaining, “I see a situation where people become very apprehensive of the kind of things that characterise election time. People are concerned as to whether there will be disorder and so tend to withhold cash”.
However, whereas Chudi Ubosi, the Africa president of the International Real Estate Federation (FIABCI), shares this view, stressing that “we are likely to see a slowdown in activities in the market because people are going to be a lot more cautious with where they put their money”, Bismarck Rewane differs.
Rewane, the CEO of Lagos-based Financial Derivatives Company Limited, says that politicians would be selling properties as elections approach, thus bringing pressure on house prices.
Reviewing market activities in the first half of the year, Madamidola said that the first half of 2014 ended with a relative slowdown in the real estate market, adding that this situation would continue to the end of the year as investors watch the economy, security challenges and the heated political environment in the country.
According to him, though the market might have seen some level of investment, it would have seen a lot more if the security issues had been sorted out and the political environment was more stable.
“Nigerians cannot really see any dynamism in the economy; there are a lot of factors that are dampening the market situation such as security, the heated political environment and uncertainties in government policies all of which are affecting the economic outlook negatively”, Ubosi emphasised.
According to him, real estate is still performing below par, contending that “we are not anywhere near the kind of activity we saw in the pre-recession era. From the financial angle, none of the banks is ready to fund real estate development; when you approach them, they tell you straight away they don’t fund real estate development. If you are building a block of 10 flats, they can agree to fund it on the condition that you provide the off-takers”.
Continuing, he said, “I am not sure that the market is doing well”, adding, “When I look at our inventory, that is the properties we have in the market, I see that never in the history of our practice have we had such a huge number of unsold and unrented properties; these are fantastic, well located and well appointed properties, yet we cannot find buyers for them. People are interested but the capacity to conclude the transaction is missing”.
