Despite rising demand for residential real estate, there are still not enough homes on the market, making some properties desirable and expensive for potential purchasers. Mortgage rates and funding costs continue to be high despite the weak state of the economy as a whole. A substantial portion of the labour force has upped their costs due to inflation and the rising cost of living, which is harming investors and forcing them to push back project completion dates.
Depreciation of the naira, limited access to public land for mass housing, high building material and financing costs, a growing number of people wishing homeownership, a lack of options for those with low incomes, and an unfavorable business climate are some of the issues affecting the market. The listings and associated offers of residential real estate transactions and trades in the marketplace, according to estate surveyor and valuer Mr. Sam Eboigbe, have recently grown more intriguing.
Commercial real estate sectors loose while residential real estate gain.
What the commercial real estate sector would see as setbacks, according to Eboigbe, the former chairman of the Nigerian Institutions of Estate Surveyors and Valuers (NIESV) faculty of estate agency and marketing, is, however, viewed as the many wins for the residential real estate market. They have recently seen offices reduce their workforces and put some commercial space back on the market. He claims that the widespread adoption of the “work from home” attitude has had a favorable impact on the market’s high volume of transactions.
Since some developers wanted to capitalize on the market and introduced items that couldn’t compete with the expectations and standards present in the market area, it is not uncommon to see listings without healthy bids. You are urged to create expansive designs and elegantly polished products that will stand out in the market arena for quick deal completion. With the exception of the unbelievable exchange rate where the naira was being exchanged at N850 to a dollar going by the black market, he claimed that new elements that could affect the market may not have changed much.
The pandemic negatively affected the real estate sector.
Eboigbe pointed out that Nigerian elections have historically been conducted in a capital-insensitive manner and said that candidates and sponsors will raise significant sums of money via the sales of property portfolios. According to him, this would increase the number of listings in residential real estate portfolios that show the current situations. According to Mr. Demola Adetola, a fellow of the NIESV, residential real estate is currently moving south after seeing exponential expansion over the previous few years. It has gradually decreased as a result of falling remittances from the diaspora, falling foreign direct investment, and weak corporate demand. As shown by large inventories of vacant rental properties and a decline in the number of qualified tenants, they have caused market contractions.
The epidemic had a bad impact on the real estate industry, according to Adetola. It caused a decline in real estate sales and development. Due to the difficulty in obtaining foreign cash and the devaluation of the naira, access to financing and the price of building supplies have increased during the past few months. Nevertheless, he thinks the residential real estate industry is likely to keep growing in the future, albeit at a slower rate, despite the wide range of urgent concerns. Dr. Yemi Adelakun, a real estate developer and managing director of Nigeria Integrated Social Housing (NISH) Affordable Housing Limited, claimed that given the off takers’ purchasing power, the residential real estate market in the upper- and middle-income bracket is healthy. New homes are being built and houses are being sold. The dollar to naira exchange rate is being used by Nigerians living abroad to purchase real estate there.
The real estate market is struggling in two major areas.
Dr. MKO Balogun, an expert with Excellence in Design for Greater Efficiencies (EDGE), said the real estate market is hurting right now on both sides – the rise in construction costs and the subscribers’ inability to finance their acquisition. Before the government implemented the dollar collection to promote remittances, real estate experienced negative growth for more than 36 months and contributed nearly nothing to the GDP. The early excitement about the market’s rise with the increased delivery of one and two-bedroom flats has been muted by higher prices. Balogun continued, “Investment will continue to view residential as a strong alternative. Inventory is slow but not dropping.”