The Nigerian property market operates within the broader real estate sector, encompassing property development, transactions, and rental operations. Its focus lies in the purchase, sale, and leasing of properties across Nigeria, significantly shaping the country’s real estate landscape.
According to the data gleaned from the National Bureau of Statistics (NBS), Nigeria’s real estate sector in 2022 contributed over N28 trillion to the nation’s GDP highlighting its pivotal role in the economy.
Market Performance and Impacts:
The first quarter of 2023 witnessed a 7.4 percent reduction in infrastructural contributions from the Construction and Real Estate sector to Nigeria’s real GDP. Factors such as cash scarcity, stemming from the naira redesign policy of the Central Bank of Nigeria, led to this decline, impacting the GDP growth below global projections. Contrarily, Nigeria’s economy displayed a 2.54 percent year-on-year growth in the third quarter of 2023, outpacing previous quarters. The report attributed this to substantial growth in the services sector, contributing significantly to the nation’s GDP.
Insights into Nigeria’s property market
The property market in Nigeria dances in tandem with the country’s Gross Domestic Product (GDP), population dynamics, and the ranking of ease of doing business across states. States exhibiting higher GDP values often witness a more robust property market, attracting investments and fostering real estate growth.
Additionally, a burgeoning population often signifies increased demand for housing and infrastructure, stimulating the property market.
Furthermore, states positioned favorably in ease of doing business rankings tend to attract more investors, facilitating smoother real estate transactions, and fostering a conducive environment for property development and investment.
The Lagos Conundrum:
Lagos, boasting an active housing market, witnesses ongoing construction projects every few kilometers. Despite this, a significant housing supply deficit persists, primarily driven by rapid population growth through rural-urban migration, infrastructure challenges, and inflated construction costs.
The housing gap in Lagos stems from a mismatch between high-end property development and the demand for affordable housing.
This trend deviates from the majority of Lagosians who fall within low to middle-income brackets, demanding affordable housing options.
Diversifying Investments:
The burgeoning demand for short-term accommodations in Lagos presents an enticing investment avenue. Short-let properties offer diversification, catering to tourists, and business travelers, and hosting events, leveraging the city’s economic and tourist status.
With rapid urbanization and economic growth, investing in short-let properties in high-demand areas in Lagos holds promise for capital appreciation, indicating potential long-term value appreciation.
Akwa Ibom, Rivers, and Imo State markets:
Akwa Ibom, a significant oil-producing state with industries in agriculture and fishing, provides real estate opportunities, reflecting varied rental and purchase costs. Rivers State, particularly Port Harcourt, stands out for its developed property market due to its economic significance.
Imo State, known as the Eastern Heartland, offers a temperate climate and is favored by Igbo businessmen. Its real estate landscape presents varying rent and purchase costs based on property type and location.
Similarly, the property market statistics from Nigeria Property Center revealed Lagos as the top destination, accounting for 56.7% of property searches. Additionally, the types of properties sought after ranged from apartments, houses, and land, to commercial properties, highlighting diverse investment interests.
In the realm of Nigeria’s property market, while prospects gleam brightly, challenges such as demolition, frequent building maintenance, high cost of construction materials and maintenance, etc, loom as well, necessitating strategic investments that align with the varied dynamics across the country’s states and cities.
