That real estate remains the most dependable preferred asset class for investment does not consist only in it being durable and relatively risk-averse, but also because it offers immense opportunities and guarantees high return on investment.
In Nigeria, opportunities in real estate market are compelling and they are such that with the country’s estimated 17 million housing units deficit, it is estimated that at N3.5 million per housing unit, which is unimaginable given market realities, the value of opportunities in this market open to investors is estimated at $385 billion.
Analysts say this estimate is conservative enough, explaining that even in the country’s rural communities, it is hard to get low cost housing with N3.5 million price tag, meaning that the value of the opportunities could be many times higher than estimated.
Additionally, using the mortgage-to-GDP yardstick, compared to the BRICS which include Brazil, Russia, India, China, and South Africa, Nigeria has a mortgage funding gap of $58 billion, representing another bouquet of opportunities for real estate and savvy investors.
These revelations came to the fore after the rebasing of the country’s economy which shows that as against 33 sectors believed to be accounting for its gross domestic product (GDP) valued at $270 billion, the country, indeed, has a GDP value of $510 billion produced by 46 sectors.
Real estate sector which accounts for about 7 percent of this new GDP size, has been discovered to be bigger than previously thought with its current size seen to be 30—40 percent larger than it was previously estimated. The sector is today the sixth largest sector after crop production and distribution, crude petroleum and natural gas, information and communication, telecommunication.
Speaking on ‘Rebasing Nigerian Economy and the Impact on Real Estate Market’ at Mandatory Continuing Professional Development (MPCD) Forum organized by the Lagos State chapter of the Nigerian Institution of Estate Surveyors and Valuers (NIESV) recently, Doyin Salami, an economist and teacher at the Lagos Business School, noted that rebasing the economy has shown that real estate is the fastest growing sector and its growth is faster than average GDP growth.
“Real estate grew 8.7 percent in 2013 compared with GDP growth of 7.4 percent; its average growth was 6.9 percent between 2011 and 2013 while GDP average growth was 6.4 percent”, he explained, pointing out that the economy has seen structural shift from being industry-driven to service-driven.
(Culled from http://businessdayonline.com)