Real estate and construction sectors displayed remarkable resilience in the face of economic challenges, contributing a significant N11.2 trillion to Nigeria’s economy in the first quarter (Q1) of 2024. This impressive figure has surprised many observers, given the sector’s struggles with issues such as soaring inflation, a volatile exchange rate, high-interest rates, and a sharp rise in the cost of essential materials like cement and iron rods.
Real Estate and Construction Defy Economic Turbulence
Real estate and construction are the most resilient sectors of the economy, as evidenced by the first-quarter figures from the National Bureau of Statistics (NBS), which show the sector’s N11.2 trillion contribution,” noted Funsho Adebayo, a real estate consultant, during an interview with BusinessDay.
This sentiment was echoed by Risdikatu Ahmed, MD/CEO of Aso Savings and Loans, a leading mortgage bank, during her opening remarks on Day 3 of the ongoing Africa International Housing Show in Abuja. Ahmed described real estate as the most dependable and rewarding investment asset class and emphasized the need for greater female participation in the sector to boost its economic contribution. She urged the government to implement more initiatives to encourage investment, highlighting the sector’s potential to contribute even more to the GDP if provided with the right environment.
The NBS report reveals that the sector’s Q1 2024 contribution of N11.2 trillion is an improvement from the N9.1 trillion recorded in Q4 2023. Specifically, the real estate sector contributed 5.20 percent to the GDP, while the construction sector added 4.0 percent during the same period.
In nominal terms, real estate services grew by 126.71 percent in Q1 2024, a significant increase of 124.34 percent compared to the same period in 2023, and also higher than the growth recorded in Q4 2023. However, real GDP growth in the sector for Q1 2024 was 0.84 percent, slightly lower than the 0.86 percent growth in Q1 2023 and 0.50 percent lower than in Q4 2023. Quarter-on-quarter, the sector saw a contraction of -27.88 percent.
Real Estate and Construction on the other hand, experienced a nominal growth of -0.29 percent year-on-year in Q1 2024, a significant decline from the 37.71 percent growth in Q1 2023, and a decrease of 3.16 percentage points from the previous quarter. Despite this, the sector contributed 10.24 percent to nominal GDP in Q1 2024, down from 11.79 percent a year earlier but up from 9.00 percent in Q4 2023.
Analysts attribute this resilience and contribution to growing investor confidence and increased diaspora remittances, which have surged over the year. “Diaspora Nigerians are leveraging the stronger currency at their disposal to invest in real estate,” explained Odunayo Ojo, CEO of UPDC, adding that these remittances often flow into real estate, which remains a solid store of value.
