Having exited narrowly from negative zone in Q1 of 2019 after 12 consecutive quarters, real estate stakeholders have identified some issues to activate activities and growth in the sector. Dayo Ayeyemi reports
Shortly after the National Bureau of Statistics (NBS) released report of performance of each sector of the economy for the first quarter (Q1) of 2019, real estate professionals have identified gaps and suggested ways to activate activities in their sector for improvement.
Speaking with New Telegraph, some of the professionals blamed paucity of fund, high interest rates,volatile forex market, multiple taxation and delay procedures associated with grant of planning approval and building permit for poor contributions of the sector to economy.
The experts want government to demonstrate the political will and create a conducive environment to drive investments and job creation in the sector.
Going by the NBS report on “Nigeria’s Gross Domestics Products (GDP) for First Quarter 2019,” the real estate sector has left negative growth territory, growing by 0.93 per ent in the first quarter (Q1) of 2019 from -3.85 in Q4 of 2018 and -2.68 per cent in Q3 of 2018.
According to the report, real estate sector, which had remained in contraction mode for 12 consecutive quarters, although at a decreasing pace long after the wider economy exited recession, grew by 0.93 per cent in real term in Q1 2019.
The current GDP growth for real estate sector in Q1 of 2019, the report said, was 10.38 per cent points higher than growth recorded in Q1 of 2018 and 4.78 per cent points higher than growth recorded in Q4 of 2018.
The NBS report pointed out that quarter on quarter, the real estate sector grew by -27.11 per cent in Q1 2019, and contributed 5.58 per cent to real GDP in Q1 of 2019.
It noted that the recorded contribution in 2019 was, however, lower than contribution recorded in the preceding as well as the corresponding quarters of 2018.
In nominal terms, the latest NBS report showed that real estate services in Q1 of 2019 grew by 10.27 per cent higher than the growth rate reported for the same period in 2018 by 18.65 per cent points and by 6.50 per cent points when compared to the preceding quarter.
“Quarter on quarter, the sector growth rate was -26.02 per cent. The contribution to nominal GDP in Q1 2019 stood at 5.80 per cent as against 5.88 per cent recorded in the Q1 of 2018 and 7.07 per cent in Q4 of 2018,” the NBS report read.
On methodology adopted by NBS to arrive at the figures, the report took cognizance of the gross output, which comprises the sum of fees and commissions receivable for the serviced rendered; and intermediate consumption, which encompasses details of the cost of structure including transportation fees, operational expenditure, minor repairs and maintenance, among others.
Commenting, Chairman, H.O.B. Estates Limited, Chief Olusegun Bamgbade, said the NBS report had shown that there was not much developments in real estate sector in the last one year.
“This potends terrible times for the real estate sector and the macroeconomics of the country in general,” he said.
He blamed systemic delay and lack of courage to drive policies to activate activities in the sector by the present crops of policy administrators for poor growth in the real estate sector of the economy.
He said :”The real estate sector is one of the greatest employers of labour in any economy.
“If there is no tangible activity in the real estate sector, there is bound to be laxity in the macroeconomic growth of the country.”
Publicity Secretary, Nigerian Institution of Estate Surveyors and Valuers (NIESV), Lagos Branch, Mr. Richard Olodu, cautioned that it was too early to say whether the growth would be sustained or not, but that the data were enough sign to say that property market has been improving.
While expressing a lot of optimism about the rebound of the sector. he said: “What the NBS report for first quarter of 2019 means is that the graph of property market is looking up. We should expect a slight improvement in property transactions (sales and lettings) in the coming months.”
He recalled that the market had been on negative zone for over three years, warning that with the rate foreign investors have been offloading Nigeria investments, property developers must take this development with caution.
The Associate Director, Capital Markets and Pwc warned that foreign investors withdrew N435.51 billion from stock market, he said advising on current property issues to tackle.
According to him, real estate investors/ developers must look into issues of exchange rate and its impact on property development; rail transportation and its impact on property investment; high rate of kidnapping and its effects on property investment; and lack of electricity and its impact on property investment.
Principal Partner, Akin Olawore and Company, Mr. Akin Olawore, noted that real estate sector was a highly capital intensive one that gets profitable with efficient use of resources.
He pointed out that some government policies involving building permits, property taxes and levies, high cost of materials due to power inefficiency, fiscal policies especially with regards to company taxation and high interest rate, among others have individually and jointly combined to kill efficiency in the sector.
He explained that to obtain building permit, the hurdle was unnecessary, adding that the process was time-consuming and a drain on the economy despite the Executve Order 5 executed to ease this burden.
Decrying this as one of the inhibitors in the sector, Olawore pointed out that government departments were still work in silos and failed to focus on the big picture.
Policies that will have direct positive impacts on real estate sector for better performance of the general economy should be urgently activated.