- Banks’ Credit to Real Estate Sector Drop By 24%
The total credit facility from commercial banks to the real estate sector declined by 24 percent to N596 billion in the first quarter of 2019, according to the National Bureau of Statistics (NBS).
The sector received N596 billion or 3.92 percent of the total N15.21 trillion loan extended to the private sector in the first quarter.
This represents a decrease of 24 percent or N188 billion when compared with N784 billion received by the sector in the first quarter of 2018.
The report also revealed that credit to the sector has been declining for over a year now.
For instance, in the first quarter of 2018, real estate sector received N784 billion. That number dropped to N744 billion in the second quarter before falling to N710 billion and N622 billion in the third and fourth quarter of the same year.
According to industry experts, commercial banks are no longer interested in financing real estate projects due to the high rate of default in the sector.
Mr. Ugo Chime, the President, REDAN, explained that financial institutions do not approve credit facility for the real estate sector in the first quarter because of the general elections.
He said, “During election period like the one we went through in the first quarter of this year, the demand for real estate is usually low because most people use their money for elections which is common in most countries of the world. This is due to the measure of uncertainties during such times.
“It is understandable that a number of financial institutions will not be willing to give out money at such times or allow developers to take money from them.
“So, a combination of factors have made it possible that there would be low activities in the industry but we hope that in the coming quarters, starting from next month, we will have increased activities.”
