High costs of building materials, threat to Real Estate Sector: Expert
* Urges sustainable practices to ease burden on tenants
Stephen Olufemi Oni, Ilorin
A Real Estate expert, Olumofe Dele Oluwole, has lamented the negative impact of high costs of building materials on the real estate sector in Nigeria.
According to him, factors such as inflation, currency devaluation, import restrictions, and supply chain disruptions, among others, contribute in no small measure to escalation of costs, making the industry to be vulnerable to challenges that are translating into increased rental values and reduced affordability for many Nigerians.
He said: “The volatile inflation rate and weakening naira make it difficult for developers to import materials at reasonable prices. The global supply chain disruptions brought about by the COVID-19 pandemic have also exacerbated the situation, affecting the availability and cost of building materials in the country.
“Additionally, government policies like import tariffs and high energy costs further drive up production and transportation expenses for materials used in construction projects.”
The repercussions of these high building material costs, he said, are far-reaching as tenants are the people bearing the brunt of increased rental values because developers pass on the elevated construction costs, adding that this, in turn, makes housing less affordable for many Nigerians. Consequently , he added, all these result in aggravating the housing deficit and impacting economic growth by reducing disposable income and increasing the cost of living.
To address these challenges, Oluwole recommended several mitigating strategies, saying “adopting sustainable building practices can significantly reduce construction costs, as well as exploring alternative building materials and increasing efficiency in construction processes.
He added: “Governments can also play a crucial role by offering incentives such as tax breaks or subsidies to developers who undertake affordable housing initiatives.
“The real estate sector in Nigeria is facing a significant hurdle in the form of high building material costs. To overcome this obstacle, collective efforts involving government support, sustainable building practices, adoption of alternative materials, and increased efficiency in construction processes is necessary.
“By implementing these recommendations, the industry can mitigate the impact of escalating costs and work towards providing affordable housing solutions for all Nigerians.”