More investment opportunities in real estate
The just released Gross Domestic Product (GDP) rebasing by the Federal Government placing Nigeria as the largest economy in Africa with a GDP of $510 billion ahead of South Africa(having a GDP of $370 billion) has exposed much more opportunities in real estate and infrastructure investment and development than had been previously imagined by both investors and analysts.
This rebasing effort by National Bureau of Statistics (NBS) shows that the Nigerian economy is now more diversified and reveals that activities in the services sector have overtaken those of agriculture and industry.
Yemi Kale, Statistician-general of the Federation/CEO, National Bureau of Statistics, says rebasing the GDP shows a noticeable shift in the share of key industries to the overall country’s GDP, explaining that the rebased 2010 series reveals a decline in the share of agriculture to 24 percent from 30.3 percent in 1990; industry has also declined to 25.8 percent, down from 46.1 percent while the share of services has increased to 50.2, up from 23.6 percent within the same period.
The implication of the present development to the real estate sector, analysts say, is increased opportunities as increased activities in the service sector including wholesale and retail trade, human health and social services, information and communication as well as professional, scientific and technical services, means more investment in housing and infrastructure.
Though it is not expected that there would be an overnight increase in demand and pricing for housing, but definitely there will be additional level of interest in the economy from international investors that will drive demand for office space in Nigeria. Beyond mere office space, the upsurge in investor interests in the retail market will continue as more investors are likely to head for Nigeria even as she has overtaken South Africa in terms of the scale of the economy.
It is projected that with a large economy and a controlled inflation rate, real estate will experience a boom as investors will have a field day. And with increased activities in the service sector, there is going to be a significant investment shift towards commercial real estate, as there will be more investment in retail outlets, leisure, office space and hospitality.
The recently concluded rebasing exercise confirms clearly that Nigeria has a higher per capita GDP ($2688 from an estimated $1,437), thus higher purchasing power more than assumed. This reveals a capacity to absorb more shopping malls, hospitality businesses that will boost Nigeria’s real estate sector.
We urge stakeholders in the real estate sector to strategise appropriately to leverage on new economic trends that show that commercial and even affordable residential properties are worthy investments in the country.