Northcourt: 2025 budget to fuel wait and see approach in Q1’25

Real estate investors in Nigeria are gearing up to adopt a wait-and-see approach in the first quarter of 2025 as they closely monitor the announcement and execution of the upcoming budget. Ayo Ibaru, the CEO of Northcourt, shared insights on the current market dynamics in a recent interview on CNBC Africa. Ibaru highlighted that currency pressures continue to be a significant factor influencing the cost of construction materials and rent in the real estate sector. Despite these challenges, he remains optimistic about sustained demand growth in the warehousing and industrial segments of the market. Reflecting on the performance of different real estate segments, Ibaru emphasized the resilience of land investments amidst economic uncertainties. He noted a rise in investment in land banks due to increasing instability in Nigeria's economy. Residential construction, on the other hand, experienced a decline as fewer investors were willing to venture into housing development. However, there was an uptick in demand for rental apartments, driven by the persistent housing deficit and population growth. The retail sector faced hurdles primarily due to reduced purchasing power among consumers, leading to struggles in maintaining full occupancy rates. Ibaru suggested that adopting a mixed-use model could be a viable solution for retail players in the current market environment. On the positive side, warehousing and industrial segments saw continuous growth, fueled by the logistics industry's expansion in Nigeria. Companies like Childeck and Glovo were mentioned as key players driving this trend. Moreover, the healthcare sector witnessed an increase in demand, with more Nigerians opting for local healthcare services over overseas alternatives. Ibaru highlighted the cost-effectiveness of seeking medical procedures within the country, attributing the shift to prolonged waiting times and evolving healthcare provisions in foreign countries. Looking ahead, Ibaru discussed the development pipeline for the Nigerian market, with a strong emphasis on the hospitality sector. He noted a growing demand for big-brand hotels and mid-market accommodations, fueled by the trend of staycations and reduced international travel. Mixed-use developments and investments in arts, culture, and creative spaces were also identified as emerging opportunities in the market. Addressing the traction in the serviced apartment sector, Ibaru acknowledged the increasing demand for grade B hotels and serviced apartments, driven by the hospitality industry's growth. He emphasized the importance of quality and strategic location in maximizing returns from serviced apartment investments, considering the competitive nature of the market. When discussing local players' expansion strategies in real estate, Ibaru expressed optimism about the potential for more listings on the Nigerian Stock Exchange. He emphasized the benefits of long-term funding for real estate projects and viewed the listing requirements as a positive signal of market regulation and investor protection. Ibaru's insights shed light on the evolving landscape of the Nigerian real estate market, highlighting both the challenges and opportunities that lie ahead for industry stakeholders.