The lingering scarcity of foreign exchange and economic slowdown hitting the country have created a glut in the Nigerian property market due to a sharp drop in demand, findings have revealed.
Our correspondent gathered that since the last quarter of 2015, the number of real estate transactions in terms of outright sale of properties and new developments had fallen significantly.
It was learnt that the continued drop in demand, exacerbated by weak consumer confidence, had led to consistent drops in property prices in 2015, especially during the third and fourth quarters.
According to players in the real estate sector, the fall in prices has continued into this year.
"All aspects of real estate, from residential to commercial, are affected as about 30,000 square metres of retail mall space across the country billed for delivery in the last quarter of 2015 have been put on hold, primarily due to the restrictive foreign exchange supply and low demand for space by retailers," a major player in the property market, who preferred to speak on condition of anonymity, said.
Although the sector was said to have grown at 8.7 per cent to become the sixth largest sector in the economy in terms of its contribution to the Gross Domestic Product, stakeholders estimate the industry may be the worst hit under the current economic downturn.
The Managing Director, Interstate Architects Limited, Mr. Olusegun Ladega, said that whenever there was a fall in any country's currency, the real state sector was usually the first casualty.
"The reason is not far-fetched.Real estate is capital intensive; hence most people who want to invest in real estate are usually compelled to make a downward review of their budgets. You may also want to know that construction has never been cheap, so there is a need for people to make some form of adjustments in line with their pockets," he said
"It may interest you to also know that the real estate sector was the first sector of the economy that started feeling the heat of the downward economy as far back as last year, except that it got more pronounced this year as a result of the drastic fall in the value of the naira," he added.
The Principal Partner of an estate surveying and valuation firm, Kola Akomolede & Co, Chief Kola Akomolede, said that the increase in the prices of raw materials and finished goods by building materials manufacturers could be obviously linked to the sector's heavy dependence on imported materials.
This, he said, accounted for the downturn in the sector's fortunes.
Akomolede said, "Those who import raise their prices due to the cost of forex and unfortunately, the property market does not accommodate increase in prices. Now, costs are rising but we can't really increase prices; rents can't go up because people don't have money to even pay their rents let alone buy properties."
He observed that the number of unoccupied houses had risen especially in prime locations in Lagos such as Ikoyi, Victoria Island and Lekki, as well as Abuja.
Estate surveyor and valuer, Mr. Gbenga Ismail, said lack of liquidity had affected the number of property sale transactions.
According to him, most transactions are currently done at lower prices as investors are forced to sell at lower rates or keep the property unoccupied.
"It's not negative altogether but profit has gone down drastically because there is low demand due to lack of liquidity," he said.
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