Downturn in Nigeria's Property Sector - Adversity or Opportunity?

Nigeria's real estate sector was filled with optimism with the emergence of the Buhari led administration there were predicted increases in the volume of activities and high returns on investments in 2016. But contrary to the predictions, the real estate industry seems to be experiencing lack of activity and low returns on investments. So 10 months since the new government took over power the real estate sector is on a downward slump.

According to some experts the crash in oil prices and foreign exchange market are some factors that have contributed to this slump in the country's property market. It seems that many investors are pulling back on their plans with a keen eye on the outcome of the the new administrations housing policies. For this reason some plans by some local and international firms to start some major housing projects have stalled due to uncertainty with the country's economic direction. For example, Pinnacle Point Limited from South Africa where scheduled to commence construction of a world-class golf estate in Badagry towards the end of last year, have stalled their plans that would have injected an estimated N30 billion into the sector. Indications are that the current economic reality in the country are contributing factors to the delay. Another example is with the  Democratic Republic of Congo based property development firm EREI who were scheduled to kick off a project to build 18000 housing units also appear to be feeling the effect of current economic situation in the country.

The current government had promised to review the regulatory frameworks to boost the nation’s housing stocks, and promised to create an environment  that will enable private operators the opportunity to invest in the sector, in order to assist government reduce the housing deficit. Stakeholders are now calling on the government to take urgent steps that will ensure favourable economic policies that will create conducive environment for developers. One example is the call for government to recapitalise the nations mortgage banks which is necessary to attract capital to aid more new homes to be built. 

Some experts believe  that the situation may be discouraging foreign direct investments into the sector at the moment. But other experts as well as investors are said to be optimistic, even though the situation at the moment is bleak. Because in the midst of this slump, the industry is still boasting of 10 percent annual growth 

In any economic downturn, there is an opportunity.