The Chief Executive Officer of Propertygate Development & Investment Plc., Mr. Adetokunbo Ajayi is optimistic of an improvement in the nation’s real estate sector, fueled by a combination of factors.
After reviewing PricewaterhouseCoopers’ report, Emerging Trends in Real Estate – The Global Outlook 2017, at the 8th Annual General Meeting of Propertygate Development & Investment Plc., held recently in Victoria Island, Lagos, the Chief Executive Officer of the company, Mr. Adetokunbo Ajayi said he was optimistic of an improvement in the nation’s real estate sector.
“For the real estate sector, we are optimistic of an improvement in its fortune,” Ajayi said.
He said PricewaterhouseCoopers in its report, Emerging Trends in Real Estate – The Global Outlook 2017, stated that “It is striking that while concerns around geopolitics are at unprecedented levels in recent times, confidence in the ongoing flows of capital into real estate remain high.”
The report went on to state that the consensus was that the current macro-environment of geopolitical uncertainty and fragile economic growth is set to remain a strong feature but interestingly added that consensus was that real estate will remain in risk-off mode.
The report noted that “global cross border investment into real estate is holding up given the chase for yield and real estate’s position as a safe haven.”
Giving reasons for his optimism of improvement in the nation’s real estate, he said, “We believe that at home, a combination of factors will help to drive growth in the sector.
These include population strength of the country and its growth rate, growth in the economy, and increase in the flow of foreign/local capital, with investors returning to the sector.
Others include massive expansion in infrastructure by government, the readiness of operators in the sector to leverage on the much awaited government investment in infrastructure and the need for real estate products and services which remains very huge.”
He said at a corporate level, the company believes the huge potentials of the Nigerian economy and the vast opportunities in the sector remain strong.
“The company, in demonstration of its commitment, will continue its development and investment activities in residential and commercial properties, in addition to other opportunities it intends to leverage on within its strategic plan.”
Presenting the operating environment, Ajayi said, “2016 was a particularly difficult year for the country and businesses. The country entered recession within the year and ended with GDP growth of 1.51% negative.
The economic challenges of the year included inflation at record high 18.71%, drastic fall in national revenue, acute scarcity in forex market, badly weakened naira, decline in foreign and local investment, high interest rate, and atmosphere of uncertainty. Most sectors of the economy were adversely impacted.”
The real estate sector’s contribution to GDP, he said declined compared to the preceding year. “Lending to the sector dropped and those brave enough to lend, did so at very high rates.
“According to CBN reports in the year, maximum lending rate was as high as 36% per annum for development activities and 32% per annum for mortgage in some banks. With the economy in downward slope, aggregate demand plunged and real estate development and investment activities took a hit.”
He said at the continental level, real estate suffered a setback in the year under review. “Investment from international investors slowed down. Of note was the drop in capital inflow from South-Africa investors who shifted their attention to Eastern Europe.”
He said the forecast for 2017 for global and national economies and real estate is positive.
Ajayi quoted IMF report, which states that “the global productivity growth for 2017 is projected to show improvement compared to 2016. Economic activities in both advanced economies, and emerging market & developing economies (EMDEs) are expected to accelerate in 2017, with global growth for the zones projected at 3.4% and 3.6% respectively, compared to 2.4% and 2.5% in 2016. The primary factor underlying the strengthening global outlook in 2017 is the projected rise in EMDE’s growth.”
He said at home, the IMF revised its 2017 forecast for Nigeria, as it predicts a positive growth for the economy. Positive indicators in the year so far are all pointing to economic recovery.
They include: increased oil production, security improvement in the oil rich Niger Delta, ongoing success in the war against insurgency in the volatile North East, the recent intervention of the Central Bank of Nigeria in the forex market, aimed at achieving convergence of currency exchange rates, and inflation dropping from 18.71% at the beginning of 2017 to 17.24% as at April 2017 according to Nigeria Bureau of statistics.
He said the renewed assurance by governments at various levels to improve diversification of the economy, block leakages, and improve efficiency and ease of doing business are also reassuring to businesses.
A Director of the company, Mr. Peter Folikwe also spoke about its fortunes, stating that “Propertygate has remained resilient despite the prevailing economic challenges in the country as it affects the sector. This is attributable to visionary leadership of the Board and Management team. The company is exploring new frontiers with its Propertygate Center, hence, the future looks very bright for the company.”
Another Director, Mr. Wole Ogungbola said, “Relative to the global and local economic performance, Propertygate has recorded a strong performance. It is now clear that the company is more positioned to weather the storm of economic challenges in the years ahead.”