Despite the lull in the property market, a new report says the country’s real estate landscape is physically growing.
According to the report, there are currently large-scale new city projects underway and numerous smaller private estates in most states of the country that will cover about 25 million square metres of land upon completion.
The new major cities include Alara City, a mixed-use development on over 2,000 hectares of land; Eko Atlantic City and Orange Island.
The 2020 Real Estate Market Report by Northcourt Real Estate noted that these new towns would benefit the government, private businesses and players in the built environment expected to profit from the city construction boom in terms of taxes, better workspaces and eco-friendly developments.
The report, however, stated that the country’s economic growth this year would have a huge effect on the growth of the real estate industry.
It added that this would depend on far-sighted fiscal and monetary policies as well as prudent management of public debt, currently at over N25tn.
The report read in part, “Most developing countries possess effective formal budget systems that work but turn out ineffective because they lack disciplined budgets, effective programmes or efficient operations.
“Solving this does not solely depend on the improvement of budget procedures but also on the government’s adherence and its attitude towards fiscal rules.”
According to the report, apart from policies, technology will also play a critical role in the industry.
It noted that towards making land administration effective, a number of states had started implementing the systematic land titling and registration as part of a broader plan of growing investment.
“The use of technology in land administration is paying off in states like Edo and Anambra and other states are considering the adoption. With more registered titles being issued in shorter time frames, there is a growing case for long-term investment especially in states outside the leading cities of Lagos, Abuja and Port Harcourt,” the report added.
It stated that modular construction contesting to be the future of the building construction should be explored more in residential development.
The report stated that the benefits over traditional construction would be huge and included lower costs, accelerated schedules, greater predictability of both time and cost, and improved building quality.
“The incumbent and investors are realising the potential of technology to accelerate projects, reduce costs, and embrace sustainability. Building relationships with modular suppliers will be crucial,” the report stated.
On the retail part, the report said as had been the case in the past, proximity to densely populated areas, accessibility, parking and entertainment facilities remained key factors to the growth and success of this market.
Reflecting on the industry’s performance in 2019, the Chief Operating Officer, Northcourt Real Estate, Mr Ayo Ibaru, said it struggled.
According to him, developers became much more flexible on payment plans and significantly revised their product types and prices to accommodate their target market.
He stated that going forward, it would be necessary for real estate developers and service providers to consistently focus on products and services in tune with effective demand.
The Chief Executive Officer, Northcourt Real Estate, Mr Tayo Odunsi, predicted that construction costs could rise by mid-year as development activities increased.
He, however, stated that yields would favour operational real estate having development such as student accommodation and entertainment.
He said more international entrants were also expected to invest more in the country’s retail, hospitality and proptech space.
source: Maureen Ihua-Maduenyi