After frustrating 12 straight quarters of a negative growth trajectory that ended in the first quarter of 2019, the property market in Nigeria has started waking up with observable activities and closed deals which investors in the sector hope will record a marginal increase in the second half of this year.
Over the past four years, the last six months of the year have been the most promising period in the market. This was reflected in the high number of calls and inspections which the investors say they have been receiving for both residential and commercial properties.
According to them, even before the general elections, this was happening, and the second quarter of this year was really more active than the first, meaning that buyers and investors’ confidence level in the economy which was slightly eroded by election concerns has started rising again.
Indications that the market might witness a rebound in 2019 were visible from its performance in the last two quarters of 2018. The growth rate in the real estate sector in Q3 2018 was higher than the growth recorded in Q3 2017 by 1.44 percentage points.
Dolapo Omidire, founder, Estate Intel, a real estate research company, affirmed that the performance of the sector in 2018 generally was better than what was seen in 2017.
Modupe Anjous, managing director, Rydal Mews Limited, a real estate firm, agrees, predicting an increased performance and growth in the sector and basing her projections on the country’s economic growth.
But there was a flipside to the perceived and anticipated growth in the sector. The sector was among the least attractive sectors to commercial banks and other institutional lenders. Not surprisingly, the sector got one of the smallest portions of loans advanced in the third quarter of 2018.
Available records show that the sector was only able to attract N710.2 billion in the third quarter of 2018 as against the N744.56 billion and N784.2 billion it got in Q2 and Q1 of the year, respectively.
However, despite this development, the sector still exited a three-year recession in the first quarter of 2019 following a 0.93 percent growth it recorded.
“We have seen movements in the market; we may not see what we had in 2008 nor the boom days of 2011 to 2013, but what we see happening now are increased activities and deal closures in the market,” Gbenga Olaniyan, CEO, Estate Links, confirmed to BusinessDay in an interview.
“Though the economy is passing through a slowdown, I don’t see that affecting real estate, unless something crazy happens which we don’t expect,” Olaniyan said.
He noted that commercial properties that were not leasing before are now leasing, even though prices have not moved much. He cited a development that his company did, called ‘The Parade’, at Osapa area of Lekki, Lagos, where they sold eight units early last year and the remaining two units just refused to move.
“But in the last two months, we have sold both of them,” he said.
Olaniyan also cited another project, a mini estate of seven housing units in Oniru area of Lagos which, he said, has attracted so many calls and traction that confirm to them that the market was really waking up again.
“People are having more confidence in the country and its economy and this is coming from the angle of investors and owner-occupiers,” he said, adding that “somehow, there seems to be more disposable income in the hands of the people now”.
Since exiting recession in the first quarter this year, the sector has been experiencing positive growth trajectory and expectation is that it will record an estimated 2.5 percent growth within the next six months to the end of the year.