The rebased Gross Domestic Product (GDP) figure recently released by the Federal Government has exposed much more opportunities in real estate and infrastructure investment and development than had been previously imagined by investors and analysts.
This rebasing effort by the National Bureau of Statistics (NBS), which shows that the Nigerian economy is now more diversified with a GDP value of $510 billion, reveals that activities in the services sector have overtaken those of agriculture and industry.
The implication of the present development to the real estate sector, analysts say, is increased opportunities as increased activities in the services sector, including wholesale and retail trade, human health and social services, information and communication as well as professional, scientific and technical services, means more investment in housing and infrastructure.
Obi Nwogugu, head, real estate unit, African Capital Alliance, sees increased potential and opportunities in the economy as a result of the rebasing exercise, pointing out that a lot more people will be looking to invest in the Nigerian economy.
He adds that he does not expect an overnight increase in demand and pricing for housing, but believes there will be additional level of interest in the economy from international investors.
“This increased level of interest is going to drive investment in office space; now that Nigeria has overtaken South Africa in terms of the scale of the economy, some of the international retailers who used to go to South Africa because of the size of their economy will come to Nigeria and this is going to affect retailing,” he said.
Anthony Owuye, MD/CEO, Personal Trust Savings and Loans, sees increased money supply in the economy with the rebasing, contending that if inflation is kept under control, it will be another round of boom for real estate.
Owuye also says because of the increased activities in the services sector, there is going to be a significant investment shift towards commercial real estate, explaining that there will be more investment in retail outlets, leisure, office space and hospitality.
He notes, however, that having been priced out of the reach of many, residential real estate is going to see price adjustment, citing example of Banana Island, where he notes there are many empty houses because people are opting for ‘cheaper’ locations like Parkview Estate, Osborne Foreshore, etc.
Chudi Ejekam, director, real estate, Actis, is of the view that the $510 billion GDP figure, which is materially higher than earlier projections, is yet another example of how Nigeria confounds projections, adding that the rebasing inexorably raises Nigeria’s profile in the eyes of the international business community.
According to him, many are guilty of continuing to grossly under-estimate the true nature of the Nigerian economy and opportunity.
“One of the major challenges has been communicating the depth of purchasing power of Nigerian consumers; an indication of higher per capita income boosts the thesis for retail malls investments and would encourage entry of new brands as well as investors,” he adds.
Yemi Kale, statistician-general of the federation/CEO, NBS, says rebasing the GDP shows a noticeable shift in the share of key industries to the country’s overall GDP, explaining that the rebased 2010 series reveals a decline in the share of agriculture to 24 percent from 30.3 percent in 1990. Industry has also declined to 25.8 percent, down from 46.1 percent, while the share of services has increased to 50.2 percent, up from 23.6 percent within the same period.
Chuka Uroko
