Nigeria’s real estate sector contracts 13.4% in third quarter due to pandemic

Nigeria’s real estate sector has been facing challenges amidst the COVID-19 pandemic, with a contraction of 13.4% in the third quarter of the year. However, this marks an improvement from the 21.99% decline reported in the second quarter. Damilola Akindolire, Managing Director of Alpha Mead Development Company, shed light on the current state of the real estate space in Nigeria in an interview with CNBC Africa. Akindolire expressed optimism about the sector's potential for recovery in the upcoming quarters. One of the key factors contributing to the decline in the real estate sector is the decrease in remittances from overseas customers and restrictions on movement. These challenges have impacted the industry but signs of recovery are beginning to emerge. Akindolire believes that the sector could move towards positive growth by the first or second quarter of 2021. The dynamics of the office real estate market are also changing due to the COVID-19 pandemic. The shift towards remote work has led to a reassessment of how commercial office spaces are utilized. While there may be a reduction in footprints, Akindolire emphasized that as long as there is economic growth, there will still be demand for commercial office spaces to conduct business. The retail property market in Nigeria has faced significant challenges, exacerbated by the fallout of the NSAS campaign. The retail industry is grappling with competition from online retail and e-commerce stores. Akindolire pointed out that security concerns following the unrest during the NSAS movement have impacted retail malls. The retail sector is witnessing a shift towards neighborhood malls and supermarkets as consumer preferences evolve. In terms of the residential property market, Akindolire highlighted the relatively neutral impact amidst economic factors affecting disposable income. While the rental market remains strong and bullish, there may be stagnation in the purchase capabilities of consumers. Despite these challenges, there are emerging trends in the rental market, with opportunities for innovative structures. Looking ahead, Akindolire anticipates that the real estate sector will make a significant contribution to Nigeria's GDP as economic activity picks up. Stability in the foreign exchange markets and growth in the construction industry are positive indicators for the sector's recovery. Akindolire projects a 2% growth in Q1 and envisions reaching pre-2019 levels by Q2, driven by positive growth in the industrial industry. Overall, while challenges persist in Nigeria's real estate sector, there are signs of recovery and opportunities for growth amidst the ongoing pandemic.