REU 2015: Demographics, infrastructure top experts’ list of RE drivers in Nigeria
Demographics and infrastructure were top on the list of factors experts at the fourth edition of the annual Real Estate Unite (REU) Conference hosted by 3Invest Limited in Lagos recently identified as major drivers of real estate (RE) demand and supply in Nigeria.
The experts also identified urbanization, economic growth, capital—private and public equities— government’s policies, investors’ appetite for above-average yield, low-correlated, risk-adjusted returns, etc as critical drivers.
The annual event through which 3Invest pushes the frontiers of its real estate advocacy and draws private and public sectors’ attention to the huge opportunities and challenges in the sector was organized this year with the aim of connecting the DOTS in the real estate sector.
DOTS is an acronym for Drivers, Opportunities, Transformation, and Sustainability and in the opinion of Ruth Obih, the 3Invest CEO, these DOTS are the main building blocks that contribute to the long-term viability of this growing sector of the economy.
Africa’s population is said to be rising rapidly at a time when population growth is slowing in other regions of the world and, according to the experts, this population shift which is driven by demographic trends and urbanization create investment opportunities as they drive demand for real estate
Roland Igbinoba, MD/CEO, FHA Homes Limited, explained that unprecedented shifts in population, would drive changes in demand for real estate, noting that Africa was becoming much more populated, creating more demands for real estate which constituted 54 percent of the world’s wealth.
Quoting a UN projection which suggests that the population of Africa will almost quadruple to more than four billion by 2100 with nearly one billion of these people in Nigeria alone, Igbinoba also cited a World Bank estimate of Nigeria’s average urbanization rate of 3.75 percent per year for the period 2010–2015 which, by the same token, creates a huge market for real estate assets.
Besides population shift, Africa and Nigeria in particular, is fast urbanizing such that over the next 40 years, 86 percent of the global urbanisation will occur in Africa and Asia. Nnema Byrd of STANLIB of South Africa estimated that by 2030, over 50 percent of the African population would reside in cities, rising to 60 percent or 1.2 billion people by 2050.
Byrd, whose company is the biggest listed property asset manager in South Africa, advised on the need for infrastructure expansion, adding that connections to road, rail and public transport were vital for urban success just as new infrastructural links between countries, towns and cities were needful.
“Transformational infrastructure is essential for opening up new markets and promoting middle class growth”, Byrd emphasized, prompting insights into the gaps in the role of government in driving real estate supply in the country.
Speaking from a developer’s perspective, Hakeem Oguniran, the MD of AUC Property Development Company (UPDC) Plc, noted that developers in Nigeria were their own local governments, explaining that they provided virtually everything including primary and secondary infrastructure.
Adetokunbo Ajayi, the MD/CEO of Propertygate Investment and Development Company Plc, agreed, stressing that government needed a strong and working policy on infrastructure that would encourage development in new frontiers such as Sangotedo in Lagos where new developments were hampered by absence of roads and other basic infrastructure.
CHUKA UROKO