At a time when Nigeria’s property market showed signs of rebound, election uncertainties morphed into what the industry experts refer to as a ‘nightmare’.
The country’s real estate sector has responded differently to the last two presidential elections, as such industry experts imagine the forth coming general election will follow suit.
Jide Ogunleye, CEO of Denaro properties Ltd, a business and investment strategies expert with emphasis on real estate said the 2019 general election will have a lot of impact in the direction the real estate will take.
“As a developer, I have already started getting feedback as regards the forth coming election. If the election goes on peacefully, and regardless of the political party that wins and there a peaceful transition, it is going to hold well for the real estate sector, Ogunleye told BusinessDay.
Figures by the state funded bureau revealed that Nigeria real estate sector showed pointer of upbeat note for the second consecutive quarter in Q3 2018.
Although still in contraction mood, the sector did better than the -3.88 percent growth rate recorded for Q2 by 1.21 percentage points.
However, Nigeria’s GDP growth rate of 1.81 percent in the third quarter of this year could not rub off on the country’s property market. This is now couple with the fact that the road ahead for the sector appears bleak owing to the uncertainty around the 2019 elections.
“If the 2019 presidential election becomes toxic, the real estate sector is one of those that will suffer the most,” an industry expert who preferred not to be quoted said.
Nigeria with about 20 million units housing deficit has reported 11 consecutive quarter recession for its property market since the first quarter of 2016 when BusinessDay started tracking the data.
“If the whole process does not go well and there is unrest in the system, the recession will are seeing in the real estate sector will continue,” Ogunleye said by phone.
The real estate performance under different leaders showed that the real GDP growth recorded in the sector in Q2 of 2011, the same quarter former president, Goodluck Jonathan was sworn in, stood at 10.48 percent- the sector positively welcomed the leader.
This is compared to the 2.97 percent recorded for the same quarter in 2015 when Muhammadu Buhari, the incumbent president was given the baton.
The sector didn’t quite smile at the president’s victory, as the figure reported was less than the rate recorded in the corresponding quarter of 2014, and marginally lower than growth reported for Q1 2015 by 1.98 percentage points and 0.10 percentages points respectively, as compiled from NBS figures analysed by BusinessDay.
The third and fourth quarter growth for the property market under Jonathan followed in appreciation trajectory while Buhari’s went in opposite direction.
Meanwhile, Jonathan whose primary goal was to achieve stable electricity supply in Nigeria earned the dubious distinction of being the first president in Nigerian history to lose an election.
The former president conceded the election to challenger Muhammadu Buhari, who was sworn in to succeed him on 29 May 2015. Jonathan said in a statement he issued on 31 March 2015 that “nobody’s ambition is worth the blood of any Nigerian.”
Olurogba Orimalade, Chairman of the Nigerian Institution of Estate Surveyors and Valuers (NIESV) Lagos State Branch said the real estate sector is going to drag because of the political uncertainties. Although he mentioned the sector will eventually bounce back regardless of whether the present government remains or not.
“It is an election year, so there will be a lot of slow down coupled with the policies and initiatives that comes with a change of government,” he said that is if there will be a change of government.
Another challenge the property industry is likely to encounter in the coming year would be the purchasing power of its citizens, considering the larger population of Africa’s largest economy fall under the low income earners.
“If the increment in the minimum wage can be implemented, that will go a long way in affecting how low income earners can buy into low income real estate properties, and that will impact the sector tremendously. Right now people are not earning enough,” Ogunleye said.
Speaking on the sub-sector, Orimalade said the residential arm of the property industry is going to be buoyant because “people will want a roof over their head, so there is going to be activities in that space regardless of the political and economic fundamentals.”
Endurance Okafor
