Real estate stakeholders have attributed the decline in the sector’s contribution to the country’s real Gross Domestic Product in the first quarter of 2023 to the naira scarcity witnessed during that period.
The latest GDP report from the Nigerian Bureau of Statistics revealed that the construction and real estate sector’s contribution to the country’s economy declined by 7.4 per cent in the first quarter of 2023.
The NBS attributed the decrease in the growth rate to the negative impact of the cash shortage experienced during the quarter.
Corroborating NBS’s claim, the Managing Director of O’Dram Project Ltd, OlatunbosunAdaramola, said the cash crunch had a negative impact on the sector, particularly on skilled labour.
He added, “The election period also impacted negatively as investors were speculating whether to invest in the sector or not.”
Also, a surveyor with Samson Agbato Consulting, Olorunyomi Alatise, told The Punch that the economy affected sector growth.
He said, “The real estate investment (which by extension affects construction and hitherto the real estate contribution to GDP) can be projected to be on the increase year in and year out as investment appreciation is deemed constant in real estate. But the state of the economy can sometimes slow down the activities of key players within the industries.
“The NBS report corroborates the special economic factors such as the naira redesign and its scarcity that we experienced late last year. Also, the election year attributed to the decline experienced as investors want to be careful because policies change from government to government in Nigeria.”
A detailed analysis of the Q1 GDP report revealed that the construction sector’s real growth rate declined by 1.56 percentage points compared to the rate recorded in the previous year.
However, the NBS highlighted that the sector’s contribution to nominal GDP in the first quarter of 2023 was 11.79 per cent. This was higher than the 9.68 per cent it contributed a year earlier and also higher than the 10.16 per cent it contributed in the fourth quarter of 2022.
It stated, “Construction contributed 11.79 per cent to nominal GDP in the first quarter of 2023. This was higher than the 9.68 per cent it contributed a year earlier and higher than the 10.16 per cent it contributed to the fourth quarter of 2022. The real growth rate of the construction sector in the first quarter of 2023 was recorded at 3.27 per cent (year-on-year), lower by 1.56 per cent points from the rate recorded in the previous year.
“Relative to the preceding quarter, there was a decrease of 0.53 per cent. Quarter-on-quarter, the sector grew by 2.78 per cent in real terms. Its contribution to total real GDP was 4.22 per cent in the first quarter of 2023.”
For the real estate sector, the statistics agency recorded a relative decline of 4.46 per cent compared to 5.62 per cent during the fourth quarter of 2022.
It stated, “In nominal terms, real estate services in the first quarter of 2023 grew by 2.36 per cent, lower by 8.47 per cent points than the growth rate reported for the same period in 2022 and lower by 8.25 per cent points compared to the preceding quarter.
“On a quarter-on-quarter, the sector growth rate was -28.39 per cent. The contribution to nominal GDP in Q1 2023 stood at 4.46 per cent, relative to 4.92 per cent recorded in the first quarter of 2022 and 5.62 per cent in the fourth quarter of 2022. Real GDP growth recorded in the sector for the first quarter of 2023 stood at 1.70 per cent, lower than the growth recorded in the first quarter of 2022 by 2.74 per cent points, and lower by 1.08 per cent points relative to Q4 2022.”