At a webinar on Nigeria Real Estate Market Review for the first half of 2024, organized by Castle Lifestyle in Lagos, industry experts emphasized the significant potential of the real estate sector for investors while highlighting the challenges posed by inflation and fluctuating construction costs.
Akin Opatola, President of the International Real Estate Federation (FIABCI-Nigeria), expressed concern over the escalating cost of construction, attributing it to inflation and foreign exchange volatility. He advised developers and investors to benchmark prices carefully to avoid project failures.
“Each shift in the foreign exchange rate leads to a 50-70% increase in building materials, which subsequently drives up property prices, particularly in high-demand areas like Banana Island, Ikate, Bourdillon, and Lekki Phase I,” Opatola said.
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Despite these hurdles, Opatola pointed out that the market remains robust and resilient, with considerable opportunities from the diaspora. He also highlighted the growing trend of joint venture deals between landowners and developers, as well as the increasing demand for short-let apartments and event centers.
“The proximity of developments to infrastructure projects such as the proposed Fourth Mainland Bridge, Lagos Coastal Road, and the Ibeju Lekki Free Trade Zone is sparking interest in land banking,” he added.
Opatola urged the government to take a leadership role in driving sector growth by creating policies that address the concerns of real estate developers, alongside fostering advocacy for improved regulations.
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Gbenga Ismail, former Chairman of the Nigerian Institution of Estate Surveyors and Valuers (Lagos Branch), lamented the low return on investment in real estate, calling for a reduction in interest rates to stimulate growth. However, Ismail acknowledged that the Federal Government’s capital project needs may prevent such a reduction.
He further explained that rising house prices, especially in premium locations like Banana Island, are driven by inflation, urbanization, and limited housing supply. “The variation in construction costs often leads to disputes between developers and buyers, as off-takers expect fixed prices once agreements are made, even though developers cannot build below cost,” Ismail noted.
Experts agree that innovation and policy advocacy are crucial for the sector to thrive, even amidst economic challenges.
Source: guardian.ng
