Northcourt: Nigeria's real estate market defying the odds

Nigeria's real estate market is defying the odds with a projected 5.7% expansion in the construction industry this year, according to North Court Real Estate. Ayo Ibaru, the Chief Operating Officer for Real Estate Research, joined CNBC Africa to discuss the company's projections and shed light on the key drivers and emerging trends shaping the market in 2021. The half-year performance report on the real estate sector in Nigeria highlights the resilience of the market despite challenges. One of the major drivers identified in the report is the growth in diaspora funding for residential and retail projects. Developers have noted a significant increase in diaspora investments, especially in Gated Community Developments, with 60 to 80% of the plan already taken by diaspora investors. Retailers are also exploring new options such as family entertainment centers, attracting diaspora investments due to their high value proposition. The trend towards large-scale developments of around 8,000 square meters for retail spaces continues, with a focus on convenience and customer experience. The Gated Community Development remains a leading pathway for real estate development in Nigeria, catering to the shrinking middle class and consumer wallet pressures. Developers are innovating by reducing household expenses through shared services and amenities, such as common electricians and security, leading to cost efficiencies for residents. The market has also seen a shift towards two and three-bedroom apartments in Gated Communities, reflecting changing consumer preferences and lifestyle needs. Another emerging segment in the market is the short stay sub-market, which witnessed growth due to the impact of the COVID-19 pandemic on traditional hotel stays. People sought home-away-from-home options for safety and comfort, leading to increased demand for short stay accommodations in city centers. Despite the rising cost of maintenance, the short stay market remains attractive for investors, with a focus on thorough tenant vetting processes to ensure profitability and sustainability. Looking ahead, the real estate market in Nigeria is poised for further growth and resilience, driven by diaspora investments, innovative development strategies, and emerging trends in consumer preferences and lifestyle needs.