Despite the fact that Nigeria is negatively affected by falling oil prices and rising inflation, some economists are still optimistic that the real estate market in Nigeria will be vigorous this 2016.
Recently, Nigeria was said to have witnessed the slowest growth in over a decade as a result of the tremendous drop in oil prices. According to Africa News, people are suffering because of rising rent and cost of living. Many experts fear that if the oil prices continue to sink or if investors lose interest, the country would turn to foreign institutions to obtains funds to finance infrastructures development.
Furthermore, as investors become wary that the Naira will further devalue, it is understandable if they would wait for a secure monetary policy from government before going into any deal. The recent positive outlook on the real estate market for Nigeria might come as a good news for these wary investors.
According to Punch, Bismarck Rewane, the Economist and Chief Executive Officer of Financial Derivatives Company Limited, believes that the nation will witness a dynamic property market this year despite the challenges in the current economy of Nigeria.
Rewane remarked, "We are likely to see a rebound in construction activities after budget funds are released and contractor arrears paid; Lagos and Abuja, having the same political party, will also have positive impact, while there will be infrastructure development to make real estate more attractive." He added, "There will also be clearer policy direction, which will boost the confidence levels of private investors and the reduction of the benchmark interest rate to encourage borrowing for buyers and property developers."
On the other hand, Rewane admits that residential and non-residential buildings market might see very little growth because of limited funding from the government as a result slumping of oil prices. As previously reported, budget will come from borrowing. According to Africa News, President Buhari has already hinted devaluing the naira to encourage investors.
