It is impossible to exaggerate the significance of real estate and its contributions to the expansion of the economy. The property industry is not only a crucial part of the economy of every nation, it also serves as the global economic engine and is responsible for stimulating economic growth.
Real estate is at the heart of the growth of cities, towns, and communities. The sector has helped to build wealth in households, the country as a whole, and communities through producing jobs and revenue.
When we talk of globalization, real estate is an essential component because property development companies invest in other countries to establish and maintain a global presence. The impact of the sector is very large because there are so many different sectors that are involved in real estate, from construction to leasing. Without the real estate sector, modern life would not exist. Real estate investment has over the years enhanced the economic development of countries like Brazil, Taiwan, the United Arab Emirates, China, Russia, Indonesia, and South Africa, to mention a few. Economists are of the position that countries with high levels of economic freedom have higher levels of GDP growth than those without, especially when it comes to low levels of real estate development. Unfortunately, Nigeria is situated within this category.
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The real estate sector is heavily underdeveloped in Nigeria. With an estimated population of about 200 million people, Africa’s leading economy is highly dependent on crude oil which accounts for about 10 percent of the country’s GDP, 70 percent of government revenue, and more than 83 percent of the country’s total export earnings, according to Organisation of Petroleum Exporting Countries, OPEC, making the country’s economy highly vulnerable to fluctuations in crude oil production, prices and earnings. As a result, the economy has been periodically or intractably challenged, slipping in and out of recession. At some points, production and exploration were challenged by the activities of militants in the South-South region of the country. Oil theft is the biggest challenge facing the oil sector, with huge economic consequences.
In other words, it has been challenging for the real estate sector because the real estate business follows the economic circle and the economy has been having challenges, and real estate latches on the way the economy is patterned. There are prospects for the industry to thrive however; there are lots of opportunities for development within the real estate sector, but the opportunities can only be realized by conscious efforts of government and private sector commitment to realizing them. One thing we have continued to brandish in the country is the housing shortage which has risen from about 17 million in 2008 to about 21 million today. This is logical because Nigeria’s population has also grown from about 80 million 15 years ago to about 200 million. The key thing here is that the housing shortage provides opportunities and incentives for housing and real estate development. The real estate sector in other climes contributes hugely to Gross Domestic Product. In the United States of America and the United Kingdom, you have contributions of 18 to 20 percent to GDP. In Nigeria, statistics indicate that housing contributes a ridiculous percentage of about 0.5 percent.
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But then, the country remains a real estate investment attraction and commercial destination in Africa. No matter what, real estate is an important part of our society and culture and will always have a significant impact on our everyday lives. So, the real estate market in Nigeria is filled with lots of opportunities. At this point, the government has to come out with a visible, clear-cut, and well-orchestrated policy direction that would be able to promote real estate investment. The government ought to invest in critical real estate variables as it is done in other climes when there are challenges in the economy. What the government does is invest massively in infrastructure, create jobs, and stimulate economic activities and development.
For instance, when government or private developers acquire land for housing development, the government needs to provide infrastructure, which is access roads, water, electricity, and other facilities that will make the place habitable. Once the cost of infrastructure is removed, the remaining cost of the project is negligible. The government should also engage in site and services schemes; property development should not be an ‘all comers field’; it ought to and should remain an area for experts. You see houses collapsing here and there, glorious ghettoes and dens of criminals here and there, just because non-professionals have infiltrated the terrain, just because the right things are not done, and appropriate regulations are not applied. Minimum entry qualifications must be set for those who desire to go into real estate investment and development. The government must come out with clearly defined policies. You must have in your organization professionals in the built industry, estate surveyors and valuers, architects, COREN-registered engineers, and several others before you go into property development.
A new leadership is now in place; the government is just taking shape with the appointment of ministers; people are not bringing out money at the moment to invest in properties due largely to the body language of the present administration; but things will change. It might not be as it were, but I am optimistic that vibrancy will return very soon to the nation’s economy and the property market which have suffered a lull in the past few years. There is no business that does not require real estate and there is no human being that does not require real estate one way or the other, which buttresses the importance of real estate to economic growth and development.
Real estate is the most important and influential industry in our economy. The property sector will always remain an essential part of the economy and investment in properties will most certainly fetch income for families, investors, professionals, and government through taxes and other fees. This is particularly true when it comes to developing states, cities, and towns. Real estate is at the core of these processes.
Written by Olagoke, a Lagos-based estate surveyor and valuer
