The chief executive officer (CEO) of Financial Derivative Company(FDC), Bismarck Rewane, has projected that the nation’s real sector would be sustained growth driver for the economy in 2023, noting that, the sector will expand by 5.2 per cent in the current year.
According to Rewane, the sustained growth of the real estate sector would increase demand for real estate assets.
The FDC boss noted that, the sector’s contribution to GDP would increase by 6.5 while contending that this growth would be sustained in the new year due to high population and urbanisation growth would be the major driver of the trajectory in both short and long terms.
The expansion, according to Rewane, will happen on the back of the sector’s sustained growth among other drivers.
He said the traditional risks in the sector, includes; high unfriendly interest rate environment, increase in the cost of building materials, and poor land acquisition policy.
Figures released by the National Bureau of Statistics (NBS) in its third quarter of 2022 GDP report painted a clear picture of both construction and real estate sectors growth trajectory in 2022.
The report showed that, both sectors together contributed N20 trillion to the GDP in the first three quarters of 2022, explaining that while construction services earned N12.9 trillion, real estate contributed N7 trillion to the GDP.
The report added further that construction contributed 9.5 per cent to nominal GDP in the third quarter of 2022 which is higher than the 9.26 per cent it contributed a year earlier and higher than the 7.95 per cent contributed in the second quarter of 2022.
“Nigeria has the largest consumer market in Africa; its population will increase to 223.8 million in 2023; inflation will tapering in 2023 which implies that real disposable income will increase and real returns will rise,” he noted.
He added that, the private consumption will also increase, meaning that, there will be a potential upside for corporate which, in turn, will translate to higher earnings and greater profit margin.
Rewane sees positive and bright outlook for the economy in 2023 as, according to him, exchange rate adjustment will narrow the import-export foreign exchange (IEFX)-parallel gap from 747 in 2022 to 680 in 2023.
“Inflation is to taper on restrictive monetary policy regime from 19.5 percent in 2022 to 16.3 percent in 2023,” he said, predicting that, there will be increase in non-oil revenue while invisible exports will support improvements in the current account balance.
Also speaking, economic analyst, Funsho Abayomi, posited that, “we expect to see a new government in 2023 and, depending on who becomes the next president, the economy will definitely experience a positive turn-around while noting that the interesting thing to think about is that each of the frontline contenders to presidency promises economic reform.”
Abayomi noted that, even though the outgoing year recorded growth in the real estate sector, it was still difficult for many home-seeking Nigerians to buy one, adding that, this was not surprising to many close watchers of the sector and the economy at large.
“Buyers of real estate products have been complaining about rising property prices over the past few years. Apart from the effect of this on construction and variations on projects cost which is forcing investors to shift completion dates, some developers have scaled down their units and re-planned their schemes to meet wide gap in the residential segment of the property market,” he said.
He pointed out that, what is called affordable housing is becoming increasingly out of reach for many low – and even mid-income renters and buyers in urban centres and their surrounding suburbs.
This, he explained, was because supply did not keep pace with growing demand, leading to a decline in vacancy rates. “The average number of people living in rented accommodation increased and, in most areas, rents rose,” Abayomi said.