The Rising Macroeconomic Challenges, A threat to Real Estate Development in Nigeria

ESV Leke H. Jide

In the midst of the Nigerian fragile economy as occasioned by the growing macroeconomic challenges, one of the most hit sectors is the real estate sector. The development sub-sector of the real estate market in Nigeria is having its worst times. The rising macroeconomic challenges are fast affecting the pace of property development in Nigeria.  Real estate developers in Nigeria are having a rough time in meeting the economic demands of modern day property and housing development.

In simple terms, real estate developers are professionals who build and manage real estate projects of all kinds – residential, commercial, parks, shopping malls, plazas and many more. In many climes, including the Nigerian property development market, the core functions of a real estate developer encompasses all the processes from the point of land acquisition to construction, finishing, leasing, and sales. As it is in every production process, real estate development ends at the point when the property gets to the hands of the consumers.

From the point of land acquisition to development and finishing, developers face a lot of challenges and paramount among them is the high cost of building materials that are imported to complement the locally produced materials for housing development. 

The high exchange rate, growing inflationary trend, paucity of foreign exchange, removal of petroleum subsidy, unfavorable tax policies, and the inconsistency in government policies are all challenges bedeviling developers. To develop a state-of-the-art building today in Nigeria, most materials for the construction must be imported and with the current economic situation, foreign exchange must be accessed for importation.  There is no specialized mortgage institution for developers to access funds for importation and this has been a perennial challenge before developers in Nigeria.

On the above premise, developers are finding it very difficult to develop quality and affordable houses that will cater for the Nigerian growing population.  The inability of developers to access funds for quality housing development is one of the reasons why the government can never bridge the Nigerian housing deficits. The economic policies to achieve adequate housing development may be in place, but the macroeconomic environment is too hostile for developers to develop houses that are affordable by low-income earners in Nigeria.

On the way forward, the needed macroeconomic environment for all businesses to thrive in Nigeria must be put in place by the current government of President Bola Tinubu. Partnership among developers should be encouraged, especially when it comes to the development of highly capital intensive projects. Public-private partnership will equally serve this important sector well in the areas of project initiation, operations, execution, and deliveries. With a congenial economic environment, Foreign Direct Investment (FDI) in all phases of real estate space in Nigeria will definitely receive a boost.

ESV Leke H. Jide is a registered Estate Surveyor & Valuer. He is the Principal Partner of Leke Jide & Co. (Estate Surveyors & Valuers) with a corporate head office in Abuja. He sent this piece from Abuja.