The average cost of building materials in Nigeria went up by 35.75 percent in the first half of 2022, compared to the same period in 2021.
This was revealed in a recent report by NorthCourt Real Estate, titled, ‘Half Year 2022 Nigeria Real Estate Market Review.’
It stated, “That the rising cost of building materials continues to have a negative influence on the real estate market” even though “developers are making g timely adjustment to deliver projects.”
The report has it that “The first half year review also declared that the private sector appeared more likely to deliver the types of housing that the majority of Nigerians could afford, adding that suburban and co-working real estate markets might become the more favored investment destination.
“It stated that, “demand for the Grade ‘A’ office market has been poor as large corporates continue to implement key elements of working from home policies.”
It also showed that building materials with the highest percentage increase in price were Ariston water heater, Dulux’s white emulsion and cables 6mm coil at 55, 52 and 52 percent, respectively.
“But, those with lowest percentage increase were 50kg cement, 14 percent; nine inches sand block, 14 per cent and 13A socket 15 per cent,” it added.
The report, which was signed by the Chief Operation Officer and Director, Real Estate Research of NorthCourt, Mr. Ayo Ibaru, also estimated that average increase in land prices per square meter in selected areas in Lagos State in the first half of 2022 was 64.63 per cent.
The selected areas and their percentage rate of increase were estimated at Old Ikoyi – 53 percent; Lekki Phase One – 79 percent; Victoria Island – 7 percent; Sangotedo – 56 per cent and Agungi – 73 per cent. Other areas were Abraham Adesanya – 51 per cent; Magodo – 95 per cent and Ikeja GRA – 35 per cent.
This indicated that the location with the highest percentage increase in price was Magodo at 95 per cent while the location with the lowest percentage increase was Ikeja GRA at 35 percent.
The report states that, “The private sector appears more likely to deliver the types of housing that the majority of Nigerians can afford.”
It also declared emphatically, “that public sector’s efforts to address the growing housing deficit and rising housing costs through direct housing construction and other enabling strategies have been ineffective.
“When measured in terms of housing units produced, private developers have not significantly increased supply even as Low-income groups have limited access to Organised Private Sector’s (OPS) housing delivery capacity, stating that this is further constrained by the nature and pricing of the houses produced, as well as their locations and mode of access.
The report also stated that “recent surveys suggest that residential projects have the most demand for construction contracting, followed by healthcare and then industrial uses for factories, and warehouses.
”It noted that “While the demand for new office developments has been, at best, sluggish, the construction contracting value chain is becoming increasingly specialised, with enterprises electing to focus on residential, healthcare and retail development. At least until Q1 2023 infrastructure projects are anticipated to be commissioned.”
It also noted that the housing supply in Nigeria was still trailed by effective demand while key players continued to tinker with their solutions to restore the balance, and added that, “Developers will continue to focus on lean, onsite execution”.
This is expected to feature in the retail and hospitality sub-markets as they accelerate the deployment of their strategies honed during the pandemic.
Neighborhood malls are still the way to go, and larger offerings will have to incorporate other uses – hospitality, family entertainment, and residential building to mitigate Nigeria’s unique economic circumstances.
“Hospitality concerns will emphasize alternative services that proved successful during the pandemic, and improve formal and informal partnerships while introducing technology to more areas of the business. While boutique hospitality returned to profitability first, big name brands have closed the gap,” it reports.