A new report by the Nigerian lnstitution of Estate Surveyors and Valuers (NIESV) has challenged government across levels on the need for improved housing, business support facilities and infrastructure to meet increasing population growth.

Entitled: ‘NIESV Real Estate Market Report’, produced by the national body, covers activities in the sector from 2021 to 2023 and predicts this year’s market outlook, and property market dynamics for residential and office space in the country.

Among key recommendations is the need for the government to provide social housing for the lower class of the growing population, as well as support for private real estate developers targeting the middle and upper classes of society. This, the report noted, would assist in resolving the major obstacle of affordability in the real estate industry.

The report called for the re-engineering of existing models and adopting new financing options, mortgage schemes, and rent-to-own programmes, and empowering more cooperative housing societies to achieve the long-term vision of ‘housing for all.’

According to the report, Nigeria’s population and growing urban cities have long presented a significant opportunity for real estate growth, adding that demographic shifts, economic reforms and foreign investment continuously influence the steady economic growth in the country.

“It should also be noted that the Nigerian real estate sector has an auspicious future with challenges and opportunities for investors, developers, and homeowners. Real Estate Investment Trusts (REITs) are becoming a significant model in the real estate market in Africa through the purchase of diverse income-generating portfolios by investors.

“There is a need for expansion of the REITs market in Nigeria as a deliberate avenue for small investors to participate, which in turn would increase the capital base of the companies involved.
“There is also a need for improved technological integration and sustainable practices, regulatory reforms, regularising land titles, and enhanced ease of doing business, among other ongoing issues,” it stated.

To fully realise the promise of this thriving market and create a landscape that meets the varied requirements of its expanding population, while promoting sustainable and equitable development, it advised that players in the real estate sector must, in the least, address the concerns.

It revealed that in 2024, Africa’s overall growth is projected at 4.0 per cent, a notable increase from 3.3 per cent in 2023, positioning it as the second highest globally, trailing after Asia (4.8 per cent).

“In 2023, the real estate market was majorly influenced by higher interest rates across economies, increased adoption of hybrid work structures, and sluggish economic activities.

More importantly, China’s property sector faced immense pressure, resulting in large private developers defaulting on their debt repayment.

Nigeria, the market experienced a mixed performance. In the first quarter of 2023, the cash crunch adversely affected the sector. However, the sector improved by 1.90 per cent in Q3 2023 (compared to 1.70 per cent in Q1 2023).

“Conversely, the bullish sentiment in the local stock market spurred buying activities in Nigerian REITs. UPDC REIT and SFS REIT gained 113.33 per cent and 31.62 per cent, respectively, while Union Homes REIT remained flat,” the report said.

The report said the real estate sector is expected to continue its recovery at a faster pace this year with the critical driver for this positive outlook centred on the government’s interest in spurring growth within the sector (reflective of the 2024 budget allocation to capital expenditure).

Also, it noted that the National Pension Commission (PenCom) guideline on accessing 25 per cent of retirement savings balance towards residential mortgage equity contribution as a factor will influence growth in the sector. “Notwithstanding, high inflationary pressures and borrowing costs are key downside risks to highlight. However, in the case of REITs, we project a positive outlook as these securities are likely to mirror the mood in the Nigerian equities market,” the report noted.

The Chairman, Research and Development Committee of NIESV, ‘Dotun Bamigbola, said the institution intends to provide a yearly perspective on the real estate sector performance and outlook.

He said the report has a year-on-year review of the real estate market and various economic indicators, which impacted it within the year, adding that the information will provide insight into the trajectory of the sector in the period under review while setting the stage for dynamics of the market in 2024.

Immediate past President, Johnbull Amayaevbo, said the report will equip real estate practitioners with accurate valuation and informed investment advisory, as well as guide practitioners through the intricacies of the dynamics of the real estate landscape, ensuring that they remain at the forefront of their profession.