The real estate sector in Nigeria recorded a growth of 3.85 percent in the second quarter of 2021, the highest growth in six years.
The sector’s growth was largely due to the full reopening of the economy and increased investment interest, and is the highest second-quarter growth since the 4.95 percent growth in Nigeria, according to data from the Nigerian Bureau of Statistics. the second quarter of 2014. NSB).
However, a breakdown of NBS data shows that the sector’s contribution in the reporting period was slightly lower at 0.6 percentage points, as it contributed 5.28 percent against 5.34 percent in the same period of 2020.
Compared to the corresponding quarter of 2020, when the sector shrank by 21.99 percent, the growth rate of 3.85 percent in the second quarter of 2021 is 25.84 percentage points higher. It is also 2.08 percentage points higher than in the first quarter of 2021.
Despite the slowdown in the economy, which reduced household income and reduced consumer purchasing power, the real estate sector has seen an increase in investment interest, with individual and institutional investors raising capital and putting it into the sector.
The increase in economic activity in the real estate market was confirmed by the performance of the construction sector in the second quarter of 2021. The construction sector in Nigeria grew by 3.70 percent year-on-year, 35.46 percentage points higher than the -31.77 percent which was recorded in the comparable quarter of 2020.
Closer analysis of NBS data shows that the 3.85 percent growth reported in the second quarter of 2021 is the industry’s fourth positive GDP value in the past five years. The first positive value was reported in the first quarter of 2019, the second was in the fourth quarter of 2020 as the industry emerged from a nearly two-year recession, and the third was in the first quarter of 2021.
As yields on the less risky government bonds (T-Bills) fell to nearly zero percent in 2020, analysts said that investor interest in the more tangible real estate market increased.
Although the interest rate environment has improved in 2021 compared to the previous year (to 7% in August after almost 10% in May), the country’s double-digit inflation, which makes real returns on investment negative, makes real estate with higher a top choice for investors.
