Weak Macro Tempers Real Estate Market Performance
Real estate services surged by 1.87% in the second quarter of 2023 amidst uncertainties, and declining occupancy rates in key areas in major cities amidst multiple pressures affecting demand in the urban areas of Lagos, Rivers States, Abuja and Kano among others.
According to operators in the segment, the housing market remains susceptible to tight economic condition that affects individuals and corporate who are net buyers, and users of real estate assets in the country.
As a result, the segment contribution to real gross domestic product (GDP) growth in the second quarter moderated to 5.29%. This translates to a 4 basis points decline when compared with a 5.33% contribution to GDP in 2022.
Data from the National Bureau of Statistics (NBS) explained that growth tapered year on year. However, when compared with record growth in the first quarter, there was an improvement.
The Naira crisis underscored key market performance in the first quarter of the year as the Central Bank of Nigeria (CBN) demonetisation policy spooked business activities. The real estate business made its first rebound in the second quarter of the year.
The growth moderated as occupancy rates on major assets slumped due to tough economic conditions. Productive capacity has slowed as companies struggle to stay afloat.
According to NBS, in nominal terms, real estate services in the second quarter of 2023 grew by 2.58%. The figure was lower by 10.23% points compared with the growth rate reported for the same period in 2022.
However, the second quarter growth rate was higher by 0.22% points compared to real estate service growth recorded in the preceding quarter.
NBS said in the GDP report that on a quarter-on-quarter, the real estate service sector growth rate printed higher at 0.12%. It added that the segment contributed 4.39% to nominal GDP in Q2 2023, relative to 4.95% recorded in the second quarter of 2022.
Recall that in the first quarter of 2023, real estate services contributed 4.46% to the Nigerian economy. Meanwhile, real GDP growth recorded in the sector for the second quarter of 2023 stood at 1.87%, lower than the growth recorded in the second quarter of 2022 by 2.54% points.
Data showed that real GDP growth came higher by 0.17% points relative to Q1-2023 results due to improved activity levels.
On a quarter-on-quarter, the sector grew by -0.57% in the second quarter of 2023, according to NBS. It contributed 5.29% to real GDP in Q2 2023, lower than the 5.33% it recorded in the corresponding quarter of 2022.
Elsewhere, the construction sector grew by 41.27% year on year in nominal terms in the second quarter of 2023, representing an increase of 36.64% points compared to the rate of 4.63% recorded in the same quarter of 2022.
The statistics office reported that there was an increase of 3.56% points when compared to the rate recorded in the preceding quarter. Nominal growth quarter-on-quarter was recorded at -16.42%.
Details showed that construction contributed 9.69% to nominal GDP in the second quarter of 2023, which was higher than the 7.95% it contributed a year earlier. However, the segment’s recent growth record was lower than the 11.79% contributed to the first quarter of 2023.
The real growth rate of the construction sector in the second quarter of 2023 was recorded at 3.42%, lower by 0.60% points from the rate recorded in the previous year.
Relative to the preceding quarter, there was an increase of 0.15% points. Quarter-on-quarter, the sector slumped by 23.57% in real terms, according to the NBS report.
Its contribution to total real GDP was 3.23% in the second quarter of 2023; higher than its contribution of 3.21% in the same quarter of the previous year, and lower than in the immediate past quarter where it contributed 4.22%. #Weak Macro Tempers Real Estate Market Performance Fidelity Bank Loses 25% of Its Market Value