Despite Nigeria emerging as the largest economy in Africa post rebasing,the contribution of real estate, mortgage and construction industry to the country’s gross domestic product (GDP) lags behind those of its peers, BusinessDay investigations show.
South Africa, the United Arab Emirates (Dubai) and Austria, which will be in the same GDP size range with Nigeria (post rebasing), are far ahead in both GDP growth and contribution to their economies, it was further learnt. While real estate contributes 2.20 percent in Nigeria, the contribution in the UAE is 9.10 percent; Austria, 6.90 percent, and South Africa, 2.50 percent.
Analysts say poor land policy and administration, a fledgling mortgage system, among others, are responsible for Nigeria’s distant position behind its peers.
Expectations from Nigeria’s GDP rebasing, expected by the end of this month as announced by the National Bureau of Statistics (NBS), are high, with experts saying it may increase the size of the nation’s economy by up to 60 percent, which will see the country’s estimated economic size increase from $262 billion to about $405 billion.
Kingsley Moghalu, deputy governor, financial systems stability, Central Bank of Nigeria (CBN), believes that when the GDP is rebased, it would become so huge, adding, however, that “it doesn’t mean that the infrastructure that I see in South Africa whenever I go there exists in Nigeria. It is creating these infrastructures here and not just having an absolute GDP figure that brings development”.
Sola Olubode, former CEO, Refuge Homes (mortgage bankers) agrees, stressing that infrastructure, including housing and a well-structured mortgage system, are critical to the growth of GDP in any economy.
Olubode explains that the reason for the difference in real estate contribution to GDP in Nigeria and other countries lies in the difficulty in registering property in Nigeria relative to other countries where it is faster, cheaper and a lot more convenient.
He says Nigeria lags behind countries like Ghana, Thailand and New Zealand in ease of registering property, pointing out that in Ghana it requires just five procedures, 34 days and 1.3 percent of a property’s value to register the property.
“In New Zealand, property could be registered online in two days at a cost of 0.1 percent of the property’s value; Nigeria is one of the world’s most difficult places to register property, especially when compared to countries such as Thailand, where registering property requires just one step, less than a day and 1 percent of property value,” he adds.
Abudulrahman Kadiri, CEO of Lagos-based Oak Properties, tells BusinessDay that in the UAE, a buyer should have perfected his land titles in less than 72 hours, adding, “You don’t even have to pay through your nose to get building approval.”
Chudi Ubosi, principal partner, Ubosi Eleh + Co, also explains that real estate contributions to GDP, as indicated above, are indicative of economies that are still on the rise and have potential for a lot more activity in terms of construction and housing needs.
Ubosi is of the view that if Nigeria structures its housing sector properly, it would have a major impact on the economy, adding that mortgages would be securitised and plentiful; title to property would be readily available, meaning that property owners could free huge capital from financial institutions to be applied to production and other activities.
“Getting the housing sector right means an increase in demand for housing which would impact positively further on construction and the construction industry; even the housing sale and leasing market will benefit,” he says.
