Real sector’s growth declined in 2024 – Report

“The real estate sector’s GDP growth rates in 2024 were relatively subdued, recording 0.84 per cent in Q1, 0.75 per cent in Q2, and 0.68 per cent in Q3. These figures lagged behind the national GDP growth rate for each quarter, underscoring the sector’s challenges,” a report by BuyLetLive read.

According to the report, despite this slow growth, the real estate service GDP contribution growth rate remained robust, standing at 5.20 per cent in Q1, 5.17 per cent in Q2, and 5.43 per cent in Q3.

It stated, “This consistency highlights the sector’s indispensable role in supporting broader economic activity. Real estate remains a significant contributor to urbanisation, employment generation, and wealth creation, even amid its slower growth.

“In comparison, the construction sector showed a more dynamic growth trajectory. After contracting by 2.14 per cent in Q1, the sector rebounded with growth rates of 1.05 per cent in Q2 and 2.91 per cent in Q3. This rebound can be attributed to increased public spending on infrastructure, private sector investments, and heightened demand for both residential and commercial properties.

“The construction sector’s GDP contribution growth rate followed a similar path, reflecting the symbiotic relationship between construction and real estate. As construction expands, it creates opportunities for real estate development, while strong demand in real estate stimulates construction activities.”

On challenges holding back real estate growth, the report noted that several factors contributed to the real estate sector’s relatively slower growth.

It further read, “One of the most significant issues is the economy’s slow recovery from inflationary pressures, which has affected purchasing power and reduced demand for residential and commercial properties. High-interest rates have compounded this problem by making borrowing for real estate projects more expensive. Regulatory hurdles, such as delays in land titling and high transaction costs, also remain significant challenges for the sector. Additionally, the absence of a unified housing policy has created inefficiencies, further stifling growth.

“Another critical issue is the persistent demand-supply mismatch. Rapid urbanisation continues to drive demand for affordable housing, but supply has not kept pace due to high construction costs, limited access to land, and insufficient financing options. The lack of affordable mortgage systems has further constrained residential real estate growth, leaving a gap that needs urgent attention from policymakers and industry stakeholders.

“The implications of these dynamics are significant for various stakeholders in the real estate industry. For policymakers, there is an urgent need to streamline housing regulations, simplify land titling processes, and invest in infrastructure that supports real estate activities. Developers must focus on cost optimisation, innovative construction methods, and exploring emerging markets to overcome rising costs and limited demand. Investors can benefit from leveraging data-driven insights to identify high-potential areas for growth while diversifying their portfolios across residential, commercial, and industrial segments. For consumers, the growing adoption of green building technologies and affordable housing initiatives offers promising opportunities. However, advocacy for transparent pricing and financing options remains crucial to making real estate more accessible to the broader population.”

It further stated that despite these challenges, opportunities still abound in the real estate sector.

“The construction sector’s growth presents direct opportunities for real estate development, particularly in urban centres like Lagos, Abuja, and Port Harcourt. Public-private partnerships aimed at addressing affordable housing deficits could also unlock significant potential in the residential market. The rise of technology and innovation in the industry offers another avenue for growth. Proptech solutions, such as digital platforms for property transactions, smart home technologies, and data-driven market insights, are creating efficiencies and boosting investor confidence.

“Furthermore, the growing focus on sustainability is reshaping real estate development in Nigeria. Green building practices and sustainable real estate solutions are gaining traction as awareness of environmental issues grows. These trends not only enhance the appeal of new developments but also position the industry for long-term relevance in a rapidly changing global market.

“Nevertheless, the real estate industry faces persistent challenges that need to be addressed to unlock its full potential. Economic volatility remains a major concern, despite the improving GDP growth rate. Rising costs of building materials, labour, and logistics are straining developers and pushing up property prices, which limits affordability. Additionally, inadequate infrastructure development in rural and peri-urban areas restricts opportunities for real estate expansion, despite the pressing need for housing in these regions. Inconsistent government policies and unclear tax regimes also create uncertainties that deter both local and foreign investors.”