THE real estate market in Nigeria, particularly in the SouthWest region, has always been dynamic, progressive and full activities, reflecting the broader and vibrant economic conditions of the geopolitical zone. However, in recent years, the market has witnessed significant changes in terms of low activities and crash dive liquidity, whereby the ability of buyers and sellers to initiate and complete transactions has been greatly influenced by economic conundrum. Thus, this write-up seeks to enunciate on how such uncertainty affects real estate market liquidity, focusing on both residential and commercial sectors, while considering the rate of transactions, price trends, and stakeholder reactions to the real estate market volatility.
In the South-West, particularly in major cities like Lagos and Ibadan, the property market remains active, though the economic volatility is basically what determines what actually happens in the market, how frequently properties change hands. Residential transactions have witnessed fluctuations, with the total market projected to reach a transaction value of $14.04 billion in 2024. Thus, investors, especially in the commercial property sector, have adopted cautious strategies, preferring to delay purchases or divest to maintain liquidity.
The prices of goods and services have consistently moved in an upward direction with that of the real estate products not speared, and the driving forces for this have been inflation and depreciation in the value of the naira against the dollar, which has eroded the purchasing power of the people and cause upsurge in construction costs. This has greatly affected the middle-class buyers and renters, who now face affordability issues, especially for new developments. On the commercial side, some areas in the major cities in the South-West have seen varied investment returns, particularly in office and retail spaces. While in other locations, it is a reversal.
However, economic factors such as inflation, high-interest rates, fluctuating exchange rates, and government policies affect transactions in commercial properties and thereby constrain real estate activities in the geopolitical zone. The naira’s depreciation has significantly increased the cost of building materials and caused market sentiment, leading to cautious investor behaviour. Meanwhile, the slow economic output has reduced the speed at which properties exchange hands, as buyers delay decisions or seek better financing options.
Without mincing words, the economic uncertainty currently witnessing in Nigeria has deeply affected the real estate market’s liquidity particularly in the southwest region of the country. Both residential and commercial real sectors have faced challenges in terms of real estate investors apathy to invest in real estate sector. Price increases, slower transaction rates, and cautious investor activities underscore how economic factors like inflation and currency depreciation influence the market. For the market to stabilize, improved economic conditions and policies that enhance affordability and encourage investment will be essential and entrenched in the region.
- Olufemi, an estate valuer, is of Diya, Fatimilehin & Company
Read Also: ‘We are all humans’, Fireboy DML speaks on artists’ dispute
