Real estate experts have said that with the current economic recession in the country coupled with high unemployment rate, the country’s real estate sector is faced with the most “dangerous conditions” yet, which may take years to recover from.
Most players in the sector think the recession may not be over so early, despite the assurances by the Federal Government, therefore, people are afraid to spend money as unemployment keeps going up, which creates problems for every sector of the real estate market.
Speaking on the turbulence that currently pervades the Nigeria economy, Dr Femi Adeola, a real estate consultant based in Lekki Phase1, told the Nigerian Tribune that certain factors that include the exchange rate, lean purchasing power of many Nigerians, general infrastructure decay, among others, posed a threat to any possibility of real estate recovery, even till the next two quarters of year 2017.
“Facts on ground are enough to show that real estate sector is in trouble. There is no indication of possible recovery this year and such feat is even doubtful to achieve not until possibly, middle of next year, all things possible,” he said.
Commenting on the issue, President, Building Collapse Prevention Guild, who is also a builder, Mr Kunle Awobodu, noted that components in housing supply that include using land, labor, and various inputs, such as electricity and building materials would be determined by the economic situation at any point in time.
“The quantity of new supply is determined by the cost of these inputs, the price of the existing stock of houses, and the technology of production.
“For a typical single-family dwelling in a place like Lagos, Abuja, or Port Harcourt, and many suburban, approximate cost percentages varied as a result of purchasing power and cost of living in these different locations.
“It should be noted that high unemployment rate has taken its toll on the housing sector, Although the market is difficult to determine right now because of extremely high prices, thus, total sales of single-family homes will probably decline as job insecurity grows, he said.
Similarly, The Nigerian Institute of Quantity Surveyors (NIQS), also bemoaned what the recession is doing to the sector.
To them, apart from government projects, not many housing projects are currently ongoing “as many construction sites are deserted.”
President of the Institute, Mrs Mercy Iyortyer observed that construction activities affect nearly every aspect of the economy, with such recession bound to have severe consequences on the sector.
She noted that the negative effect on the sector can cause high mortality rate of contractors, affect negatively manufacturers of construction products, suppliers, professionals in the built environment, not mentioning the resultant job losses that will go with it.
“Consequently, the Industry players will definitely face challenges at this period and indeed quantity surveyors will be affected”, she said an adding that as cost and procurement managers of construction projects, quantity surveyors who are key players in the construction industry need to take the challenges.
Iyorter noted that any policy or development that affects the Industry affects the profession directly and that, either negatively or positively.
In the case of a recession, there is bound to be a downturn in the volume of construction activities, which will lessen our engagement on projects.”
NIQS boss was of the view that government can solve the problem by adopting deliberate strategies to pump money into the sector even if it means borrowing in order to stimulate the economy.
In some climes, she said, government takes this deliberate initiative to stimulate the economy because of the multiplier and ripple effect it has on most other sectors of the economy.