Apparently impressed by 2021 growth of the real estate industry, practitioners are of the opinion that the sector will perform better in 2022, being an election year. DAYO AYEYEMI reports…
Having recorded 2.3 per cent growth in 2021 following a number of contributing factors, built environment practitioners have expressed optimism that the real estate sector of the economy will do well in 2022.
Some of them, while speaking on the general outlook for the sector at different fora in Abuja and Lagos, believed that with the Central Bank of Nigeria (CBN) housing intervention, enabling environment and deployment of technology, the sector will surpass the performance of the previous year in 2022
According to a renowned estate surveyor and valuer, Femi Oyedele, who was a guest at the Housing Development Advocacy Network (HDAN) Real Estate Outlook for the year via virtual meeting in Abuja, the sector will witness a growth rate of 2.9 per cent in 2022.
He pointed out that year 2022, people expect that things would greatly look up and that politicians would be able to find solutions to the insecurity challenges in the country, especially ahead of the 2023 general elections.
He expressed optimism that 2022 would be much peaceful and with that, diasporas and foreign investors would be attracted to the real estate sector.
“Lagos State Government is also doing so much and the Federal Capital Territory (FCT) is also talking about land swap and if this is properly executed, it will have great impact on the sector in year 2022,” he said
Oyedele maintained that the general outlook of the sector is bright.
In another forum, the 2022 Real Estate Market Outlook hosted by Northcourt Real Estate in Lagos, experts said that the disruptive role of technology and population movements, especially among millennials, would be among the four major factors that will drive demand for real estate assets in 2022.
The other two factors that will also drive real estate demand in the new year, according to the experts, included deficit in quality real estate and demand for yield by investors in this largely preferred asset class.
Quality real estate assets, they explained, are still in deficit while investors and home buyers, especially foreign and institutional ones, would always look out for them whether commercial, residential or retail.
With the observation of positive movements in the sector in 2021, the experts agreed that the sector has a bright outlook that would translate into growth and opportunities in the New Year.
Director Real Estate, at Actis—an institutional investor with interests in diverse sectors of the economy, Funke Okubadejo, “These four D’s represent the opportunities we see in real estate business going into the new year.”
Tax Leader at Deloitte, Yomi Olugbenro, said that though the growth in the sector slowed in Q2 2021 to 2.23 per cent in Q3 2021, it was still higher than the growth recorded in the third quarter of 2020 by 15.72 per cent.
Okubadejo noted that, at the moment, investors were looking for where to invest productively in order to get good yield, adding that yield-hungry investors no longer worry about risks as much as they do with yield.
Digital disruption
Explaining how digital disruption would impact real estate business in the New Year, CEO, Purple, Laide Agboola, said that increasingly, Proptech and blockchain were helping real estate business and making transactions a win-win situation for both developers and their product buyers.
According to him, more of these technology disruptions would be deployed in real estate business and that would drive demand significantly in the New Year.
Blockchain’s inherent system of trust makes it the ideal technology for real estate and, in recent time, real estate companies all over the globe are using its smart contracts and ledger abilities to transparently and efficiently facilitate renting, buying, investing and even lending.
Similarly, Proptech is helping to keep a tight lead on costs more effectively now. It is helping product suppliers to transfer the benefits of cost optimisation to their customers who get properties at lower rates. The use of technology is helping the real estate sector a great deal and also ushering in new professionalism into the business.
Asset to beat
Chief Operating Officer, Northcourt, Ayo Ibaru, explained that land remains an investment asset to beat, explaining that it remains resilient as its price keeps appreciating, pointing out that its demand is still on the increase and would continue into the New Year.
Ibaru projected marginal growth in the co-working space despite issues arising from the COVID-19 pandemic, noting that operators are factoring in COVID-19 precautions and also banking on foreign investors for whom they find office space.
Ibaru noted that 2022 will impact the real estate sector, explaining that a lot of money is expected to be spent, adding that much of the money would find its way into real estate, being the only viable investment asset class in the market.
2021 sector performance
Oyedele attributed growth in the sector in 2021 to a number of factors, which include the Central Bank of Nigeria (CBN)’s real estate support programme, and enabling environment, amongst other factors.
Taking stock of happening in the sector last year, he said “2021 was not that bad for the real estate sector as we recorded 2.3 per cent growth while we predicted 1.5 per cent.
He noted that the sector started slowly but picked by the second quarter of the year, adding that the outlook was fantastic as it ended the year with 2.3 per cent growth despite the challenges and uncertainties in the economy and the damaging role of some unscrupulous elements in the sector who were engaged in sharp practices.
“Not even the COVID-19 was able to stall the growth of the sector. Don’t forget, we had a major incident towards the end of last year – Lekki building collapse – which claimed no fewer than 50 lives,” he said
According to him, many factors were responsible for the growth witnessed, which included the use of technology.
“As being observed, there was the deployment of technology which allowed virtual interactions between the players in the industry. The Lagos State Government’s plan of monthly rent instead of the yearly rent also impacted on the growth of the real estate sector in the last one year,” Oyedele said.
Last year also, he noted that the Federal Ministry of Works and Housing announced the delivery of 5,000 houses and that a lot of people have started applying. From feedback, he said the ministry got more than what they bargained for as the houses were oversubscribed.
“This is a sign that a lot of people need houses in the country. Don’t also forget that COVID is fizzling out and businesses are beginning to open and this is an assurance that 2022 will be much better. So, the growth recorded in 2021 will be sustained and don’t also forget that we are entering into electioneering period,” Oyedele said.
After 12 straight quarters of recession, real estate services recovered in the first quarter of 2021 and progressively recorded 3.85 per cent GDP growth in the second quarter of the year. This growth, which was the sector’s highest in six years, was higher than Q2 of 2020 by 25.84 per cent and 2.08 per cent higher than Q1 2021 growth.
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