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‘lnterest rates stability ‘ll enhance real estate’s growth’

Francis Akinnodi

Stakeholders in the real estate sector have stated that the stability of the interest rate is vital to strengthening growth in the sector.

The stakeholders made this known at the West Africa Property Investment Summit organised by Africa Property Investment Summit in Lagos monitored by The Hope.

Speaking, Director, Capital Markets, Jones Lang LaSalle (JLL) for Sub-Saharan Africa, Mr Pepler Sandri, said that the stage of the commercial real estate cycle had hit a relatively low point.

He revealed that looking back a few years; the COVID-19 pandemic put a halt to the market globally adding that since then each country has had different rates of recovery.

He noted that Nigeria has also had macro issues affecting that recovery and as such is really at a difficult stage in the cycle.

On his part, the Head, Real Estate Finance, Stanbic IBTC, Tola Akinhanmi, said that the real estate sector had remained resilient in spite of the economic challenges.

Akinhanmi averred that the government could play a role in creating access to land and investing in infrastructure to support real estate development.

“Land availability and infrastructure expansion are key factors in reducing the housing deficit and opening up new areas for development.”

An Akure based real estate consultant, Mayowa Balogun told The Hope that acceptability of real estate investment trust (REIT) in Nigeria depended on trust being sold to investors.

Balogun said there was the need for education about how trust works in managing investments.

“Trust also goes hand in hand with sustainability and succession planning. Listing real estate businesses on the Nigerian Stock Exchange can be volatile, but it offers opportunities for raising funds and increasing the attractiveness of the business to investors.

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“The real estate sector cannot drive inflation, but it is affected by inflation through factors such as building materials and labour costs. Stable interest rates are needed for the real estate sector to deliver properties at a reasonable rate and manage them effectively. Unfortunately, the current inflation situation in Nigeria is expected to continue until at least the end of 2025.”

Also speaking, Ola Ayebo said that the real estate market was still in its early stages and needed time to fully accept the workings of a REIT.

Ayebo said: “However, looking at other markets, it is clear that REIT can be successful if given time. Real estate is heavily affected by inflation, so developers must be creative in how they approach it. Methods such as pre-paying for materials, managing projects efficiently, and hiring the right contractors can help mitigate the impact of inflation.”

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‘lnterest rates stability ‘ll enhance real estate’s growth’

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