The real estate market is currently underpinned by an unexpected rapid rise in exchange rates, foreign exchange issues, rising production costs, soaring material and building reinforcement costs, and a significant decrease in housing affordability conditions, particularly in critical entry-level markets.
Unsurprisingly, the influence of forex rates on the economy is causing gaps in sensitive areas such as the construction sector, where house prices have continued to climb astronomically, eroding investor and homebuilder confidence.
This appears to be causing high building material costs and limited purchasing power, which is limiting market deliveries.
As a result, there are severe concerns about the development, with some claiming it is already having a negative impact on the real estate sector.
Hence, stakeholders have called on the federal government to embark on price control and price implementation policy to control as absence of thud has caused shortage of homes and disrupted sales of building materials in relative demand.
Reacting, the managing director/CEO, PWAN HAVEN Investment, Mr. Frederick Okpaje said the persistent rise in exchange rates is impacting negatively in the construction business sector, adding that, real estate investors in diaspora markets are benefiting from the fluctuating exchange rates such that whatever money they are sending becomes big money for Investment in Nigeria.
Okpaje said, for them, they are gaining more from the Nigeria economy while our institutional players are finding it difficult to adapt to the current inflationary pressures that is disrupting the economy and shrinking the purchasing power of consumers in the market.
He noted that, for these reasons and more, the cost of construction and procurements of materials have been inflated with the current economic realities and this has made it lower in clear terms for people investing in construction business.
PWAN boss hinted that, the banks should step up plans with intervention programmes to bail out the real estate sector while affirming the need for the banks to boost the economy of construction business sector by releasing money for the SMEs in the construction sector.
Also speaking, chief executive officer, LandWey Investment Limited, Mr. Olawale Ayilara said the Nigerian real estate sector is currently battling economic challenges ranging from contractors’ time inefficiencies, inflation and the fluctuating Forex, which has severely impacted the procurement of construction material.
According to him, while it may appear on the surface that the world has made a successful return to business as usual, this is not the reality of most businesses, especially the Real Estate sector which is still battling with the challenges mentioned above.
LandWey boss said: “since 2020, companies like LandWey have battled different challenges ranging from contractors’ time inefficiencies, inflation and the fluctuating forex, which has severely impacted the procurement of construction material.
“There is a lot to be said about the burden of construction in Nigeria. However, at LandWey, we have learnt that construction requires a daily review of our processes and improving on them. In the reality, we are learning to adapt to thrive. The companies that survive these challenging times are those that can lead with integrity and have a deep understanding of their customers.
“We are facing these challenges by being optimistic despite the tough market conditions and devising new strategies that will enable us to create greater value for our customers in the long run. We are bringing together our industry expertise; quality product and service applications, and safe and reliable supply to provide more viable solutions.
“As part of its efforts to deal with the ripple effects of these current challenges, LandWey has constantly improved its communication to clients who may be understandably displeased with the delays. Through routine project updates, an increased workforce and an efficient work plan towards delivery, LandWey is also optimizing its processes to keep to its promise of quality service to clients.
The company stated that LandWey has taken stringent measures to avoid common preventable disasters peculiar to the industry by ensuring the use of quality building materials and hiring experienced skilled workers who are focused on expediting the delivery of housing units without the risk of compromising the existing standards.
Okpaje affirmed the need to stabilise exchange rate, adding that, this would reduce the cost of building procurements and cost of materials in the market.
He encouraged government to come up with policies mandating the banks to finance the building sector such that the commercial banks would have to lend money for infrastructure financing.