How the new naira policy has affected real estate
The real estate sector and its products are feeling the pinch of the new naira policy as developers, potential investors and estate agents have been boxed to a corner by the scarcity of the new notes.
The policy has slowed activities in the sector and also reduced market transactions as seen in shrinking sales, leasing and renting activities.
While activities at project sites have plummeted, new investors have adopted a wait-and-see attitude to investing while agents are watching as potential buyers and renters concern themselves more with immediate needs of life such as food and health.
However, some close market watchers argue that the new policy will turn out a positive development or an opportunity for the sector, saying that once the CBN is through with mopping up the old naira notes, there will be a rush for real estate products by way of investment.
This, according to them, is because there will be a lot of money at the disposal of deposit banks which they can lend to borrowers/ potential investors.
“Nigerians in the habit of stacking money at home and stopping its circulation have been boxed to a corner. Banks would have more money to give out as loans. More people will be interested in housing products as investment forms as the era of keeping cash at home and in the offices is gone,” argued one real estate expert.
However others do not hold the same view as they believe the new naira policy is already affecting the volume and rate of sale of building materials, adding that block makers, cement, sand and gravel sellers and tradesmen collect cash for their sales and labour.
“The construction sector/building materials sub-sector is slowing down in performance until customers get used to cashless transactions like bank transfer which is still catching up at the moment”
Though Dotun Bamigbola, former chairman, Nigerian Institution of Estate Surveyors and Valuers, (NIESV) Lagos branch, does not see much to worry about the new naira policy and real estate as most transactions these days are done electronically, he agrees there is a slowdown.
“There are areas of the building material sub-sector which may use cash in limited quantities when it comes to material retailing. Notwithstanding, the safe mode of payment preferred in the industry is electronic through the various individual sellers’ or retailers’ banks,” he said.
As a capital intensive sector and a major store of wealth and value, some market analysts had expected that the sector would provide a haven for investors with the old naira notes which the CBN is recalling from those who have them stashed in their houses.