Why Real Estate investment is the solution to Nigeria's Recession
As recession continues to take its toll on the Nigerian economy, the country has witnessed a massive crash in the price of stocks and shares in the stock exchange market.
Indeed, the real estate sector is not exempted from this economic situation. It is common knowledge that one of the most notable hallmarks of a recession is the scarcity of funds.
This is further worsened by the fluctuation in the value of the Naira against the Dollar/Pounds. This fluctuation has made it difficult for some people to consider the possibility of investing in real estate at this time. Even those who are willing to invest are faced with the burden of finding investment opportunities in markets that offer the greatest long term growth and stability. It is thus safe to say that, with the current low investment in the real estate sector, which has seen housing prices dropping at near historical lows, this may be the perfect time to invest in real estate
Nigerians, generally, like to do a lot of comparison with Americans. In fact, we set them as a standard on most issues that bother us; ranging from dressing, lifestyle and to virtually everything.
Well, I also understand it’s not just a Nigerian trend, it’s a worldwide one since the United States of America (USA) is known to be the World Power. Many economies, by finding solace in the ‘supremacy’ of the USA, have not only gotten its military support but also enjoyed its ‘mentor-ship’
Given the ongoing recession in our dear country, Nigeria, it would as well do us a lot of good to learn from the historical achievements of the USA which has also undergone more serious periods of recession.
First, the recession is caused by the fact that the Gross Domestic Product (GDP) has dropped two consecutive times within a short period and this is widely known to be a result of unfavorable foreign exchange in Nigeria and, in turn, an over-dependence on the Oil industry which has been suffering from sharp decline in oil price.
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Since Nigeria depends heavily on the present failing Oil Industry which contributes 70% to government revenue, the recession could have been expected.
Back to our economic comparison: the contribution of the housing market to the GDP in Nigeria is less than 1 per cent, compared to that of the USA, which accounts for over 80 per cent. This implies that the housing sector in the USA contributes hugely to its success, hence, the drop in international oil prices does little or no harm to its economy. Hence, if you look at Nigeria’s 1 per cent contribution of housing to GDP, imagine what the economy will look like when it is grown to 80 per cent.
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It is, therefore, advisable to use the housing sector as a stimulant to grow the economy thereby increasing its contribution to GDP; and, in turn, to curb the ongoing and likely recession. In fact, the Nigerian economy has a huge chance of booming if there is a sustainable investment into the housing sector to grow it from its dismal one per cent contribution to the Gross Domestic Product (GDP).
Therefore, if you’re an investor and looking for lucrative investment areas in Nigeria, don’t overlook the housing sector. More so, if you’re a developer, be informed that this is the right time to build as even the government is beginning to consider the housing sector for diversification.
Finally, home seekers need not worry as the government is working on a collaboration with China for a single digit interest rate mortgage that civil servant4, 2020 Federal Government Warns DISCOs Collecting Money F Met