Both domestic and foreign investors are being deterred from making real estate investments by the unstable economic environment and growing uncertainty.
Real estate development delivery dates were impacted by project delays and cost overruns brought on by supply chain interruptions and economic concerns. It became more costly to develop new projects due to the devaluation of the naira and growing input costs including labor, steel, and cement.
The paper claims that government attempts to support affordable housing development prospects for developers coexist with the rising demand for affordable homes.
“Both domestic and foreign investors were discouraged from investing in the real estate sector due to the unstable economic climate and increased uncertainty,” the statement continued. Tenant affordability was further strained as a result of landlords raising rental prices due to rising operating costs, such as power bills and maintenance fees.
In response, senior partner Emeka Eleh of Ubosi Eleh & Co. stated that the depreciation of the naira and the growing costs of building materials, including as steel, cement, and labor, have greatly raised building expenses and made it more costly to carry out new projects.
He continued by saying that supply chain interruptions and economic uncertainty have caused project delays and cost overruns, which have affected real estate development delivery schedules.
“Landlords were forced to raise rental rates due to rising operational costs, such as utility bills and maintenance expenses, which further strained tenant affordability,” Eleh stated. “Both domestic and foreign investors were discouraged from investing in the real estate sector due to the unstable economic climate and increased uncertainty.”
Knight Frank Nigeria CEO Frank Okosun confirmed the development, saying: “We have seen a sharp rise in house prices to about 40% due to inflation, both for sales and leases.” The rise brought on by the hike in inflation is reflected in newly constructed properties.
Okosun went on to say that on the supply side, players have adopted a wait-and-hold approach due to market uncertainty and growing costs, which has slowed capital-intensive projects and allowed cash to find its way into capital-efficient projects.
