- Real Estate Expands at Slower Pace Amid Low Credit Facility
The negative impact of COVID-19 has started reflecting in the real estate sector, according to a recent report from the National Bureau of Statistics (NBS).
The real estate service growth declined by 1.39 percent from 2.51 per cent recorded in the fourth quarter of 2019 to 1.12 per cent in the first quarter of 2020. A sizeable number of Nigerian real estate firms are left with the option of raising funds through equity as bank lending to the sector has maintained a downward trend in the last five years. Despite reporting a 56.69 percent drop in Non-Performing Loans (NPLs) in 2019, banks’ confidence in the sector waned with rising economic headwinds.
“Real estate services in the first quarter of 2020 grew by 1.12 per cent, lower by -9.15 per cent than the growth rate reported for the same period in 2019 and lower by -1.39 per cent compared to the preceding quarter,’’ the NBS stated in the report.
On a quarterly basis, the sector grew by -28.10 per cent in the first quarter of this year.
The NBS revealed that the construction sector grew by 44.26 per cent in nominal terms (year on year) in the first quarter of 2020, dropping -22.73 per cent compared to the rate of 66.99 per cent recorded in the same quarter of 2019. It contributed 5.21 per cent to real GDP in Q1 2020, lower than the 5.57 per cent it recorded in the corresponding quarter of the previous year. Pointing out that there was a rise by 0.54 per cent when compared to the rate recorded in the preceding quarter. Nominal growth quarter on quarter was recorded at 11.03 per cent.
However, relative to the preceding quarter, there was an increase of 0.38 per cent points.
Recall, Its contribution to total real GDP was 4.08 per cent in the first quarter 2020, marginally lower from its contribution of 4.09 per cent in the same quarter of the previous year. Hence, quarter on quarter, the sector grew by 1.74 per cent in real terms, higher (by 0.38 per cent) than the 1.36 per cent it recorded in the first quarter 2019 but lower than the 20.45 per cent recorded in Q4 2019.
