Industry experts predicted that an increase in activities in the real estate sector will help to boost the development of the sector.
This was disclosed during a recent Gross Domestic Product report for first quarter of 2021, which was released by the National Bureau of Statistics.
According to the report, the sector recorded a growth of 1.77 per cent in the first quarter of from 2.81 per cent recorded in the fourth quarter of 2020.
Reacting to the report, Ese Oikhala, a consultant with SBM Intelligence, noted that the upturn in the real estate sector from Q4 of 2020 was due to the eased COVID-19 restrictions.
“The real estate sector which has had a relatively weak performance since Q2, 2019 returned to positive trajectory in Q4 2020.
“The positive growth recorded is likely as a result of developers’ rush to complete high-end residential and office projects that were stalled due to the pandemic as lockdown restrictive measures were eased; this perceived boost in activity in the later part of Q4, 2020 led to the positive growth recorded.”
She expressed some concern about the diminished growth in Q1 2021, projecting that it may escalate further till Q3.
She said, “The dip recorded in Q1, 2021 growth was largely due to the current macroeconomic environment as well as impact of the pandemic which has led to investors focusing on smaller and more affordable real estate projects.
“It is our expectation that activities in the real estate sector may continue to slow down until Q3 2021. This is however dependent on the nation’s macroeconomic environment, demand for real estate services and the sector’s ability to boost investors confidence”.
Also reacting to the report, Chinedu Onubogu, an investment analyst at Argentil Capital Partners, said that the growth in Q1, 2021 was positive for the economy and showed that the real estate sector was recovering, while calling for weaknesses to be addressed.
Onubogu said, “The sustained growth recorded in Q1, 2021 is positive for Nigeria’s economy and reflects the real estate sector’s recovery from the pandemic, which we believe is largely driven by increased private sector investments amidst the high inflationary pressures and low yield environment in alternative asset classes like risk free government securities.
“Nevertheless, if you consider the sharp contraction of over 30 per cent between Q2 and Q3 of 2020, the slowdown in growth from Q4 2020 indicates that there are still weaknesses that need to be addressed in order to unlock the sector’s growth potential.
“They include the low mortgage penetration as well as rising development costs occasioned by the lingering FX devaluation pressure”.
A recent report by the Nigerian Investment Promotion Commission, said that the real estate sector, along with power, manufacturing and agriculture sectors received $8.35bn worth of investment in the first quarter of 2021, providing some long-term optimism for prospective investors.