Experts in the real estate industry are divided on how the industry will fare this year, considering certain economic indices that may determine its growth or lack of it.While some feel that there will be marginal growth, especially in the residential sub-sector, others see a bleak year for the industry.
There are also some professionals who think that the industry’s growth will be hinged on the outcome of the general elections and global oil price which would affect investments.
An estate surveyor and valuer, and the Principal Partner of real estate services firm, Kola Akomolede & Co, Chief Kola Akomolede, said the much expected recovery from the recession did not take place in the real estate industry.
According to him, unlike other products, real estate does not increase or decrease quickly in response to demand or supply situations.
“It takes time to build a house. But many properties remain vacant especially in the highbrow areas,” he said. The Principal Partner, Bode Adediji Partnership, Mr Bode Adediji, in an interview,stated that if informal and objective data were to be readily available, it would show that the contributions of the real estate industry must have been the poorest in decades.
He said that as tragic as the 2018 industry experience might have been, the 2019 outlook might be more worrisome for understandable reasons such as a possible economic recession as predicted by the Central Bank of Nigeria and the price of crude oil which had begun to crumble.
He said, “Even as the government and the National Bureau of Statistics had pronounced Nigeria as having crawled out of its self-inflicted recession, the contrary unfortunately was, and still is, the case for the real estate industry in every aspect of the crucial but neglected industry.
“Majority of completed properties remained unsold or unlet in most parts of the country. And the struggling supply side had moved into a state of comatose due to the lack of demand, lack of development capital and even lack of confidence concerning the future. Unfortunately despite this scenario, the normal expected plummeting of prices across board has refused to materialise.”
Adediji, a former President of the Nigerian Institution of Estate Surveyors and Valuers, said election year in the country had always proved to be an albatross for the real sector particularly the property industry and this year would not be different.
He explained that the government would dwell more on politics and all politicians would struggle for power and control, and virtually relegate the economy to the background.
“The outlook for the property industry in 2019, in my humble opinion, appears to be bleak, pathetic and even dangerous,” he said. For the Principal Partner at Ubosi Eleh & Co, Mr Chudi Ubosi, the industry might not be different this year, from the way it was in 2018.
He said, “There will continue to be cautious approach to large scale investments in real estate. The outcome of the elections whether peaceful or not and the aftermath will equally determine whether investors’ confidence will be boosted or not.
“The peaceful nature or otherwise of the elections will determine a lot of things regarding real estate in 2019. Oil price and whether the government will spend more money in an attempt to reflate the economy will also impact real estate.”
He noted that the real estate industry did not fare well in 2018, adding that most of its sub-sectors suffered stagnancy or outright regression.
“One area that has fared well though, is the residential market but for real estate sales under N70m. It remains fairly dynamic but yet not at the rate it was three or four years ago,” he said.
Some experts are, however, of the opinion that some aspects of the industry would experience growth and improvement against all odds.
The 1st Vice President, Nigerian Institute of Building, Mr Kunle Awobodu, said a lot of investment had gone into the training of artisans in the past one year, and the results would begin to manifest from this year.
According to him, the N-Power Build, one of the people-oriented initiatives of the Federal Government to harness the potential of youths has empowered some artisans in the built environment to deliver better quality houses.
He said, “The training will increase the number of trained building artisans because we have been having a shortage of competent artisans. Thousands have been trained across the country and accessed.
“So, the quality of work that will be produced going forward will be better. Some of the challenges we have had in the industry have been the quality of houses that were built; some of the artisans lacked quality and finishing expertise.
“That is an area that was identified and a lot of training and provision of modern tools for the artisans to do their work, is ongoing. The level of supervision will also increase. So gone are the days when houses will be delivered with inferior finishing.”
He said 2018 was an improvement over 2017 in the industry in terms of construction activities, adding that “there was a greater percentage of construction work recorded in 2018 than 2017.”
According to him, this year, the expectation is that there will be greater activities in the industry; the number of housing unit being developed will increase and if there is increased purchasing power, there will be improved demand.
“It is unfortunate that despite the N5.4bn voted for housing in 2018 budget, the impact was not felt and also the housing schemes have not spread across the country but there is a possibility of improvement in the area,” he said.
In its outlook for 2019, real estate investment solutions firm, Northcourt, said the country’s real estate market would record more supply across the various sub-sectors but with varying levels of demand.
The report stated that the residential market would record more partnerships involving proptech firms and the introduction of data-driven products and services.
“Well put together property startups are raising funds from local and foreign investors who are not averse to potential risks vis-a-vis the high yields obtainable. The Federal Government, coming to terms with the impact of housing, will begin delivery from adopting a number of models,” it added.
According to the report, the high-end office market may struggle, albeit less so as the economy improves and landlords embrace incentives as a constant in leases.
It added that there would be a tempered take -up of traditional office space as co-working and conversions would receive more interest.
The report stated that, “2019 will be the year co-working fully takes on A grade space. Foreign industrial concerns will increase their presence in Nigeria, and so the search for Grade A warehousing continues. More than 40,000m2 of space is expected to be delivered to the already oversupplied office market with some pipeline projects due for delivery by the fourth quarter in 2019.
“Though vacancy rates for Grade A offices remain high, buildings designed with user experience as the primary consideration will tend to have lower vacancies. Again, the results of the elections will determine just how much space is absorbed by the market – especially by the international community.”
On retail, the report noted that proximity to densely populated areas, accessibility, parking and entertainment facilities would remain key factors to the growth and success of the retail market.
It added that the grounds gained by family entertainment options were also expected to deepen with more retailers now aware of their roles in sustaining footfall.
The report stated that, “Having tested the mid-range mall concept albeit vicariously through the likes of retailers such as Blenco and Ebe Ano in Lagos, investors are warming up to developing mid-sized malls, adding strong entertainment features for good measure.
“Online retail will continue to justify its position as an option for modern day shopping. Going into the year 2019 will see the opening of Filmhouse Cinemas at Circle Mall in Lekki, Lagos and Viva Cinemas at the Palms in Ota, Ogun state.
“ The growth of Nigeria’s film industry, Nollywood, will further increase the number of movies available and translate some of the benefits of the growing hunger for local big budget productions to the financial statements of mall operators.”