Ubosi Eleh Report Presents Overview of Real Estate in 2022

Bennett Oghifo

Against a backdrop of daunting, multi-faceted challenges in 2022, the Ubosi Eleh 2023 Report, now in its seventh edition, posits that Nigeria’s economy, the largest in Africa, showed resilience and renewed hope while real estate in particular, recorded average performance on the scorecard.

According to the Report, with inflation rising to an all high at 21.09 percent and the country gearing up for the general elections in early 2023, real estate activities were adversely affected. The residential sector of the real estate market experienced slower short term transactions because of rising costs despite the fact that it enjoys enormous incentives. In the commercial estate sector, owing to the difficulties in the market for commercial office space, developers chose to build for mixed use projects. However, the hospitality sub-sector of commercial real estate had a significant upturn after being negatively impacted for two years by the Covid pandemic.

One noticeable trend was the renewed emphasis on the development of one and two-bedroom flats which is the preferred accommodation for the millennials due to their smaller size and lower budgets. The Ubosi Eleh survey also indicated that the rental values for selected rental accommodation types and commercial real estate across the states of the federation for 2022 was either the same as in the previous year or had slightly varied increase. The Report opined that real estate performed better than expected in many instances and that was why the expected slump did not happen.

The Report maintained that the allocation of N398.28 billion made to the Ministry of Works and Housing from the National budget of N20.71 trillion presented by former President Muhammadu Buhari was grossly inadequate, moreso, for a ministry that is intensively capital driven. Accordingly, the Ubosi Eleh Report is of the view that the low allocation implied that for the 2023 fiscal year, there would be little room for capital projects. It envisages a situation where property developers would have to spend more to provide their own infrastructure, given the deplorable state of federal roads or maintaining existing ones which are in disrepair.
The outlook of the report for real estate in 2023, now in the seventh month is nonetheless promising, emphasized with the comment that “real estate remains the assets class of choice in Nigeria”, the various challenges notwithstanding. It indicated that economic activities generally and by extension, real estate would pick up when the new government had taken over the reins of power.

The report observed that Lagos and Abuja had benefitted most in terms of real estate investment driven by the high level of insecurity in the country and that this trend would continue. Amongst its projections are that the demand for medium sized retail space for shopping complexes, shopping centres, corner and neigbourhood shops would be positive and high. The report expects rental demand to move upwards by as much as 10 percent especially for flats with the demand increasing as the year wears on. In summary, the Report maintained that the market would remain slow all year with a chance of rebound in 2024 depending on the state of the economy.