A breakdown of the recently released GDP report by the National Bureau of Statistics showed a further contraction in the real estate sector. The sector’s real growth stood at -3.85% from -2.68% recorded in the preceding quarter.
The sector has now been in the negative territory for at least 12 consecutive quarters. However, the sector’s contribution increased from 6.5% in Q3’18 to 6.6% in Q4’18.
The global real estate agency, Knight Frank, recently released its ‘The London Report 2019’. In this report, the agency observed:
1. Commercial offices in central London attracted a total of £16.2 billion of global capital ahead of other cities like Paris, Manhattan and Hong Kong. China was the largest investor in the city.
2. London’s real estate market remains the most liquid and transparent in the global market. This will remain an attractive feature for global and domestic investors.
What does this mean for developing countries like Nigeria?
Renewed hope in London’s real estate market coupled with the negative growth recorded in Nigeria’s real estate market reduces the possibility of increased investment in the domestic real estate sector.
Performance of real estate companies in Nigeria
Currently, four companies – UPDC, UAC Property, Union Homes and Skye Shelter Fund – are listed on the Nigerian Stock Exchange.
In the period between December 31, 2018 and January 31, 2019 there was mixed movement in share prices across the board. UPDC and UAC shares declined by 9.9% and 9.95% respectively to N5.95 and N1.72. Union Homes and Skye Shelter Fund’s share prices remained flat at N45.20 and N95.00 respectively.
Outlook for real estate in February
Minimal activities are expected within the real estate sector in February. The election season will slow down activities across various sectors including real estate. However, we expect activities within the sector to improve by H2’19, driven by increased government spending.