Real Estate plays an integral role in the Nigerian economy. Residential real estate provides housing for families. It’s often the greatest source of wealth and savings for many families. Commercial real estate, which includes apartment buildings, create jobs and spaces for retail, offices, and manufacturing.Real estate business and investment provide a source of revenue for millions.
In 2018, according to Nigerian Bureau of Statistics figures, real estate Services in the third quarter of 2018 grew by 3.67%, higher by 2.08% points than the growth rate reported for the same period in 2017 and higher by 2.64% points compared to the preceding Quarter. Quarter-on-Quarter, the sector growth rate was 5.44.
Real GDP growth recorded in the sector in Q3 2018 stood at -2.68%, higher from growth recorded in Q3 2017 by 1.44% points still higher by 1.21% points relative to Q2 2018. Quarter-on-quarter, the sector grew by 3.88% in the third quarter 2018. It contributed 6.50% to real GDP in Q3 2018.
Construction is the only part of real estate that’s measured by GDP. real estate also affects many other areas of economic well-being that aren’t measured. For example, a decline in real estate sales eventually leads to a decline in real estate prices. That lowers the value of all homes, whether owners are actively selling or not.
Globally, real estate sector is one of the most profitable ventures of several economies and one of the indices of measuring economic growth of a society. It is a sector that mirrors the economic viability and sustainability of an economy and its poverty level. In generality the level of infrastructure development in a country says a lot about its economic status.
The role of real estate to economic growth is overlooked in developing economies and thus its potential is often missed. Real estate is somewhat seen as a domain of the developed world who have in the past exuded their capacity to embark on very huge infrastructure projects. Several projects with potential of adding value to the economy in the developing world have suffered a still birth and some of them failed to make a way out of the boardroom.
The missed potential might be very high, although there are no figures to support but the current market situation and a high housing backlog speaks volumes about the assertion. The potential for growth is inbuilt within the availability of vast tracts of underutilized land and high demand for residential properties. There is also an expected upsurge in demand for industrial and commercial properties in a long run as populations continues to grow and as policies are shifting towards promoting the local industry.
The sector offers a great potential source of growth for our economy. Until now, the understanding of its composition and growth has been somewhat limited and even its use in the national accounts is very limited.
The impact of real estate related activity on the economy is significant, from the jobs it creates to the revenue it generates. Real estate’s multiplier effect in terms of job creation is significant. Real estate activity stimulates the economy in indirect ways as well, in the value added impacts of the purchase of goods and services that stem from real estate related businesses and real estate transactions.
In addition to the jobs, income, and business sales and revenue supported directly by the real estate industry, there are other jobs that are supported through the industry’s multiplier effects. Workers in the real estate industry and those in the broader supply chain spend a substantial proportion of their wages and income on a host of consumer goods and services.
Even in the midst of an economic downturn, the central importance of the industry to the economic well-being remains crucial. This is further underscored by the attention given to the housing sector by policymakers and through the focus and attention by some of the biggest investment corporations in the country.
Undoubtedly, these legislative efforts to accelerate the housing market’s recovery will eventually translate into growing economic and fiscal impacts as the industry’s performance returns to normal activity. One might expect that the economic impact of the real estate industry has been somewhat suppressed recently, given the downturn of the market over the past few years.
While it is true that the industry’s impacts were evidently greater during the boom years, the fact remains that much of the impact of real estate on the nation’s economy is permanent in nature, and does not disappear as a result of market fluctuations. Real estate and construction activities remain elevated over time because there is always going to be demand for houses, industrial units, offices and shopping malls.
Source: Affa Dickson Acho