Mr Bismarck Rewane, the Chief Executive Officer of the Financial Derivatives Company Limited (FDC), has predicted that the real estate market in Nigeria is expected to record significant turnaround in 2018.
Vacancy factor for the real estate sector was estimated to remain high through 2017, just as replacement cost for the sector is currently far in excess of market values.
Rewane stated this in his latest monthly economic views and news titled: “Strong Naira – Catching a Falling Knife,” presented at the Lagos Business School recently.
He pointed out that in the real estate sector; values are exchange rate insensitive in the short run.
“Cost of building properties remains sticky downwards; effects likely to feed into higher house prices. Real estate market will pick up gradually if the economy follows a recovery path. Lagging effect of the sector means positive changes will soon be felt in the market.”
“Lagos vacancy factor index at 73.4 percent in the first quarter of 2017 dropped from 74 percent in the fourth quarter of 2016. Vacancy rates in prime areas falling gradually as rental prices become more attractive. As a lagging indicator, real estate will adjust gradually following changes in the business cycle. The cost of building materials stubbornly high and landlords offering discounts and lower advance rents – 1-year rent,” he added.
Rewane also predicted Gross Domestic Product (GDP) growth for the second quarter of 2017 of 1.5 per cent.
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