Nigeria Economy | |
Nigeria Economy | |
591 VIEWS | |
![]() | |
PROSHARE | |
PROSHARE |
Tuesday, February 23, 2021 / 2:52 PM / by
CSL Research / Header Image Credit: Smyth & Bradshaw
According to the Q4 and full year
2020 GDP data released by the National Bureau of Statistics (NBS), real estate
sector returned to positive growth of 2.81% y/y in Q4 2020 following six
consecutive quarters of negative growth since the last positive growth posted
in Q1 2019 (0.93% y/y). The significant recovery in Q4 2020 reflects the full
reopening of the economy as many residential and commercial projects began
operations fully following the
suspension of activities during the national lockdown. Overall, the real
estate GDP FY 2020 contracted by 9.22% y/y which was well below our 2020 estimate
of a 13.7% contraction.
The real estate sector like many
other sectors of the economy suffers deeply from a dip in macro economic
conditions of the country. In 2016, when
the economy went into recession, the sector declined by 6.86% compared with the
growth of 2.11% recorded in 2015. Subdued activities in the real estate and
construction industry had a spillover effect on the cement sector where growth
slowed drastically to 5.4% in 2016 from 22.1% in 2015 on the back of weak
private sector investments and low government spending.
In 2020, as the pandemic ravaged
the economy, the real estate sector was not left behind as the unprecedented
crisis elevated vacancy rates in existing commercial properties, reduced
average footfalls across retail centres and slowed the completion time of many
residential developments and infrastructure projects in the country. This led
to an all-time high of a 21.99% contraction recorded by the real estate sector
in Q2 2020. The impact of the restrictive measures put in place during the
second quarter was apparent in the financial performance of two key cement
players (Dangote Cement and Lafarge) as both top and bottom line performances
were pressured.
Looking ahead, we expect growth in
the sector to remain weak due to a plethora of
factors from high inflationary figures and devaluation which continue to
pressure consumer purchasing power to little access to finance which has
continued to undermine the demand for housing. Despite efforts geared
towards improving mortgage financing or consumer credit, the rate of mortgage
financing to housing development in the country remains very low compared to
peers in the emerging market.
Related News
1.
Nigeria Defies Recession, Blows up Analysts Expectations
2.
Recession Over as Nigerian Economy Surprisingly Records Positive
Growth of 0.11% in Q4 2020
3.
Q4 2020 GDP: A Welcome Exit from Recession
4.
Nigeria Exits Recession, Real GDP Grew by 0.11% in Q4 and -1.92%
in Full Year 2020
5.
Nigerian GDP Better Than Thought
6.
Q3 2020 GDP Report: Deepest Recession in
Decades Offers Opportunity for Extraordinary Reforms
7.
GDP by Expenditure: Household Consumption Expenditure
Contracts By -0.08% in Q2 2020 - NBS
8.
Second Recession in 5 Years: Urgent Need for Robust Fiscal and
Investment Policies
9.
Nigerian Economy Slides into Second Recession within 5 years
10. Nigeria's Recession Bust: GDP Does A Bungee Jump, Reverses To
-3.62%
11.
Q3 2020 GDP: How Long Until Exit From Recessionary Waters?
12. Recession: Nigeria's Economic Crisis Requires a
Political Solution
13. Nigeria Slips into Recession; Real GDP Contracts
by -3.62% in Q3 2020