Real estate, not oil, should be Nigeria’s economic cornerstone – Ugodre

Mr. Ugodre Obi-Chukwu, the founder of InfoStride News, recently emphasized the pivotal role of the real estate sector in Nigeria’s economic growth during his participation as a guest speaker at the Real Estate Nexus Conference (1.0).

The conference featured a discussion on the “Forecast for Real Estate Financing in Nigeria,” and Mr. Ugodre shared his insights on the importance of real estate as the foundation of economic development.

In his address, Mr. Ugodre emphasized that the real estate sector should serve as the cornerstone of Nigeria’s economic growth, much like in developed economies. He pointed out that there is no Western economy where real estate does not play a fundamental role in capital formation and economic stability. He stated, “There is no Western economy today that real estate is not the foundation of capital formation, there is none. If you want to mess up the American economy or the UK economy, just kill their real estate sector, they’ll just die because that is the bedrock of that economy.”

Mr. Ugodre’s statement underscores the importance of a thriving real estate sector in Nigeria’s economic landscape. He asserted that for Nigeria to achieve its growth aspirations and build a strong economy, a vibrant real estate sector is essential. He further stressed that real estate should be the cornerstone of economic growth, surpassing the significance of crude oil, which has traditionally been a focal point of the Nigerian economy, as well as technology.

Analyzing the Current State of Nigeria’s Real Estate Sector

Mr. Ugodre also delved into the current state of Nigeria’s real estate industry, shedding light on its weak growth performance in recent quarters. He pointed out that the sector’s growth rate has been below 2% in the past three quarters, a figure he considered inadequate for a sector with substantial growth potential.

The underwhelming growth rate, according to Mr. Ugodre, can be attributed to various macroeconomic challenges prevalent in Nigeria. Factors such as high inflation, elevated interest rates, and the soaring costs of building materials have contributed to the sector’s sluggish growth. Mr. Ugodre elaborated on this matter, stating, “In terms of GDP, Nigeria’s real estate sector is about N10.3 trillion GDP-wise, just about 5% of the country’s combined GDP, not too much but significant albeit. The real GDP growth rate for the real estate sector is 1.7% in Q1, and 1.87% in Q2, not large enough, I’m sure you’ll all agree.”

He highlighted that the real estate sector’s growth rate over the last three quarters has been hovering at levels close to negative growth, which is a concerning trend for a sector with expectations of rapid expansion. Mr. Ugodre suggested that factors like high inflation, the cost of building materials, and the ability of individuals to afford real estate have contributed to the slowdown. He also noted that in 2022, the growth rate was more promising at 3.9%, underscoring the impact of current macroeconomic challenges on the sector.

The Impact of Inflation and Interest Rates

Mr. Ugodre underscored the role of inflation and interest rates as pivotal factors influencing the growth trajectory of Nigeria’s real estate sector. He emphasized that if inflation and interest rates continue to rise, it could have detrimental effects on the industry, hindering its ability to achieve the necessary growth and contributing to a less favorable economic environment.

In conclusion, Mr. Ugodre’s insights highlight the pressing need to prioritize and invigorate the real estate sector in Nigeria as a catalyst for sustainable economic growth. Recognizing the sector’s potential and addressing the macroeconomic challenges it faces will be crucial in ensuring that real estate can truly serve as the foundation of Nigeria’s economic development.