Consumers’ Low Spending Power, Other Factors Negatively Impact Real Estate, Says Abegunde
Bennett Oghifo
Nigeria’s real estate market is reeling from a combination of factors, including the nation’s struggling economy, but regardless, there are opportunities in the sector.
The Group Managing Director, Meristem Securities Limited, Oluwole Abegunde stated this, as the guest speaker, at a Business Forum organised by Ubosi Eleh + Co with the theme, Current Economic Realities and its Impact on the Nigerian Real Estate Market’.
He said tighter financing conditions have worsened financing for new real estate projects and also reduced “returns on highly-levered on-going projects, noting that, on average, rent review is not adequately compensating for spiraling inflation.”
According to Abegunde, there is persisting vacancy rate in commercial real estate triggered by hybrid work culture and that the mixed impacts of migration, weak consumer spending power, favourable mortgage policies/regulation have left residential real estate performance on the sidelines just as the hospitality sector remains depressed due to rising construction cost and increased operating expenses.
He said, “In the midst of all these, however, pockets of opportunities still exist in real estate in the areas of land banking, trade-related real estate projects, real estate investment trusts (REITS), house flipping among others.”
He said trade GDP and e-commerce growth should trigger increased demand for warehouses, adding that there has been moderate growth in retail (malls, fitness centres, entertainment centres), health awareness and hedonistic lifestyle which are offset by lower income.
A Principal Partner at Ubosi Eleh + Co, Emeka Eleh, said the forum was designed to inform, educate, provide a platform for sharing ideas, get feedback, interact with shareholders, and also as part of their corporate social responsibility (CSR).
The Forum, Eleh said, is held twice or thrice annually. The previous one was held in Victoria Island because they moved the location round for the convenience of their clients and shareholders.
The forum, he said, was part of their efforts as a firm of estate surveyors and valuers to champion engagements to deepen the real estate space, stating that their aim is to render the best kind of professional real estate advisory services and also to make real estate information readily available for decision making.
He said they also host regular radio programmes in Lagos Talks FM known as ‘Real Estate Today’, adding, “We also have regular speaking engagement by our partners; we do mentorship, we have a monthly newsletter publication and another publication of our flagship annual Real Estate Report which analyses macro-economy and gives real estate market updates and forecasts.”
