NIGERIA: Real Estate Investors Expect Windfall Profit In 2019 After Records Of Losses

Available statistics indicate that the Nigerian real estate sector is currently experiencing a decline which is propelled by low bank credit.

According to reports, in the year 2015, the sector had an apportioned Q1 credit of ₦615 billion, the credit in the Q2 of the same year took a fall to ₦548.2 billion, however, according to the Q4 report of the same year, the credit stood at ₦692.2 billion.

Also, in 2018, an analysis of the 2018 selected banking sector indicators’ report as published by the National Bureau of Statistics (NBS), revealed that the total bank credit for the real estate sector decreased by 12 per cent between Q3 and Q4 of 2018.

The real estate sector got ₦710bilion, while the corresponding value in Q4 had a huge decline to ₦622billion. Financial reports stated that the allocation to real estate sector in Q4 2018 was 4 per cent of the ₦15trillion worth of credit facilities.

When the credit facilities from the Q4 of 2015 to the Q4 of 2018 were compared, a 10 per cent decline was evident. Hence, this confirms that there has been a decrease in the value of bank credits since 2015. This also points out that the cyclical growth movements in the real estate sector are the source of the decline experienced in bank credits that are made available to investors.

Industry statistics, however, shows that the agricultural sector is discovered to get the lion share of the credit facilities given to private investors. For example; the Q4 of 2018 saw the agricultural sector receive the highest bank credit of ₦3.5trillion, ₦2.2trillion and ₦1.4 trillion to the oil and gas and manufacturing sectors respectively.

The slight dip in the Nigerian real estate sector can be linked to the lull in the nation’s economy. However, better figures are expected this year due to the improvements in the economy as well as the foreseeable political and economic stability.

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