The nation’s property market has witnessed surprising stable prices despite the sharp fall in the demand for property, the President of FIABCI-Nigeria, Joseph Akhigbe, has said.

He stated this at a special forum of the Nigerian chapter of the International Real Estate Federation (FIABCI), which held in Lagos, recently.

“I am sure that in this brief period since the economy took a downturn, we have all witnessed the good, the bad and the ugly of the devaluation of the Nigerian currency, rising inflation, excess supply of property as a result of the economic downturn and surprising stable prices despite the sharp fall in the demand for property,” Akhigbe said.

He said Real Estate 2017 was all about the economy and that they chose the theme carefully in light of the prevailing economic situation, as it affects the real estate industry.

In his remarks, Lagos State Commissioner for Housing, Gbolohan Lawal said, “We have noticed no growth in the real estate industry,” stating that there was need for reawakening in the sector.

Lawal said, “We have decided to inject private capital into housing delivery in Lagos state,” adding that it was time for the government to re-charge the economy.

He said, “As government we want to assure that your property right is ensured.”

In a keynote address, Dr. Doyin Salami, Lecturer and member of faculty, Lagos Business School said real estate was eight per cent of the Nigerian economy and that for practitioners in the real estate sector, “I think you already know from your interactions that your sector has been in decline; real estate sector has been in decline, contracting so many falls.

“The data is very clear, the Real Estate sector is about 7-8 per cent of the economy and it has contracted consecutively for five quarters. In other words, for more than a year, the sector in which you operate has been shrinking.”

Salami said, “It may take another two years for the housing market to become productive, looking at the present economy and the rate at which already built houses put up for sale or rent are not occupied.

“The housing sector needs to look on how to capture more information and data to help those who want to invest to have a holistic approach on the sector. It is a major challenge that the professionals in the sector need to solve.”

He said, “What happens to it in 2017 will depend on what happens to the economy generally; housing/real estate takes its cue from the general economy.”

He gave statistics to show the decline in the economy and how the income of families is shrinking, stating that “if incomes do not rise at the same pace, it means the real value of income continues to shrink and therefore the capacity for demand/spending continues to diminish, and once the capacity of spending diminishes, demand falls and create no end of other difficulties.

“On the supply side, as your sector is concerned, the figure that is most regularly brandish about is how there is a housing deficit of about 17 million. The figure seems not to change since more than 10 years even with the increase in the population.

“As far as the supply on the real estate side is concerned, if there is no construction, then supply suffers. Within, we do not have any data about housing in the different states of the federation, which is what would have been helpful.

There are some pieces of data around the states but it does not give us a national figure.

“But what we do know about the national economy and what will happen in 2017 gives a bit of concern, as far as the supply side is concerned.

Let’s ponder on this between the federal and the state governments they are going to spend a better part which shows less than N14 trillion. Looking at the Federal government budget for 2017, there is an inbuilt of a deficit of over N2 trillion. For any economist, there are only two ways to solve this which are borrowing domestically or borrowing internationally.

“In 2016, The Federal government tried to borrow but it was unsuccessful, what we got was $600 million from the AFDB. This year, we are looking for a much more money to borrow.

If the federal government finds it difficult to borrow internationally then they will want to borrow domestically and borrowing domestically will increase the interest rate which is presently at between 16 – 18 per cent for companies and for individuals, it can go as high as 27 per cent and so the big question will be is real estate still attractive as at today.

“It is much better to buy a government treasury bill than to build a house now because treasury bills will give 20% returns and no risk, because houses are associated with a whole lot of risk; government approvals and consent; like nonpayment of rent by tenant, and managing the house as a whole.”

He said, “Capital appreciation in housing is one of the slowest, it’s long term and it is not something that is rapid.

The risk that investors in treasury bills tend to face is no longer the risk of inflation, and looking at standard economic parameters like yields, inflations and interest rates.”

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