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How Real Estate affects the GDP in Nigeria

With the rebasing of Nigeria’s Gross Domestic Product (GDP) last year, the country was rated as one of the fastest growing economy in the world notwithstanding the high poverty level among the population.

Despite their economic importance, Real Estate contribution was pegged at 7.5 per cent, a situation that irked stakeholders who believed that the sector was poorly rated by the National Bureau of Statistics.

To this end, they called on the federal government to integrate the construction and building sector into the formal sector in order to capture their contributors accurately.

The Chairman, Fellows Forum of Nigeria Institute of Quantity Surveyors, Mr Ifeanyi Anago stated that the built industry contributed between three to five per cent to the countrys Gross Domestic Product (GDP) despite their versatility stressing that the only way to capture their contributions was to integrate the industry into the formal market.

Anago who is also the Principal Partner of Ifeanyi Anago & Partners added, “When our economy was rebased, we took over from South Africa not because we did anything extra ordinary but because we captured markets that were not captured before, so it is the only industry where wealth grows and you don’t experience depreciation all the time.

He confirmed that in developed economies that the built industry is the ground wealth, contributing higher to their GDP adding that since Nigeria is under-developed that most of the construction market is in the informal sector.

Giving instances on how the built industry boost employment, he added, “If you are building a typical house, at least 10 people will be employed like the Carpenters, masons, tillers, painters, welders and labourers.

According to him, “If government decides to construct 10,000 housing units in a given time, multiply it by 6 which is 60,000 direct employment, you will find out that our cry concerning unemployment especially with young ones will be greatly minimized when we have articulated programmes of sustainable housing expansion.

Also, the Head of Department, Securities and Investment Services (SEC), Mr Abdulkadir Abbas said the report released by the National Bureau of Statistics in third quarter 2015  revealed that real estate was one of the fastest growing sectors contributing 7.5 per cent to GDP.

He further disclosed that investment in real estate in Nigeria would rise from $9.16 billion in 2015 to $13.65 billion in 2016 according to Price Waterhouse Coopers (PwC) report of 2015.

Abbas highlighted the growing middle class demand for residential property which has resulted in propelling retail, industrial and commercial real estate development.

According to him, “Housing is not only a basic necessity that affects the welfare of the citizenry but also a critical sector of an economy, so a viable and sustainable housing finance plan is essential.

He emphasized that due to population growth and surge in rural-urban migration that Nigeria’s housing needs have increased significantly saying that Nigeria required one million units of houses every year to close down the 17 million deficits according to World Bank report of 2014.

“The World Bank in 2014 also projected the cost of bridging the housing deficit in Nigeria to be N59. 5 trillion at N3.5 million per unit, so the housing industry presents a huge opportunity for positively impacting the economy to promote growth and inclusion.

Abbas insisted that financing housing like other infrastructure required the availability of affordable long-term funds to be provided by the capital market noting that SEC as the apex regulator of the Capital market is saddled with the dual role of regulating and developing the market.

“Funding from the capital market reduces the cost of mortgage loans, cost of funds and allows for longer repayment tenor.

Reacting, the President of Real Estate Development Association (REDAN), Rev Ugochukwu Obiora Chime was optimistic that real estate sector offered the fastest means of resolving the current economic problems especially youth employment which currently stands at over 60 per cent.

He added, “The future of investment in Nigeria with the increased GDP we are asking for,  can come from the housing sector because global economy dynamics whether in the housing or other sectors has shown clearly that when America had their problem in 2008 that Obama’s administration went to housing as a way to develop their economy.

He was optimistic that the solution to the current economic crisis would be addressed through reinvigorated, dynamic and refocused housing development saying that is why America is investing in the housing sector.

According to him, “The absence of effective interaction, coordinated action coupled with competency gap among all stakeholders has impacted negatively on all efforts to harness the sectors’ potentials for economic growth and huge GDP contribution.

Chime who also doubles as the President of Enugu Chamber of Commerce, Industry, Mines and Agriculture (ENUCCIMA) maintained that REDAN members had insisted on investing in the sector to reduce the 17 million housing deficit.

“We are also considering reviewing the house types and quality of houses. We will also create a portal in REDAN so that people looking for competent real estate developers can access such category of people.

He regretted that the developer that facilitated Nigeria Labour Congress (NLC) was not a registered member of REDAN yet he was paid billions of naira by NLC.

At the flag-off of a tripartite programme organised by Construction Skills Training and Empowerment Programme (C-STEmp) in collaboration with the Council of Registered Builders of Nigeria (CORBON), Nigeria Institute of Building (NIOB) in Abuja, the Minister of Power, Works and Housing, Mr Babatunde Raji Fashola described the housing sector as a strategic sub-sector in the construction industry that remained an important contributor to the Gross Domestic Product with vast potentials for energizing and catalyzing growth of the overall national economy.

The minister who was represented by Director of Building in the Ministry, Bldr Olusegun Bolarinwa said the federal government was mindful of the importance of skills development programme in order to prepare eligible beneficiaries for employment as skilled workers or independent labour trade contractors as entrepreneurs in the housing and construction industry.

Source: Leadership

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