Real estate overtakes oil as third-largest sector – Report

Preliminary figures from the ongoing GDP and CPI rebasing have revealed that real estate has surpassed oil and gas to become Nigeria’s third-largest sector.

Real estate now ranks behind crop production and trade in first and second positions, respectively.

Previously, agriculture was Nigeria’s dominant sector, contributing over 20 per cent to the GDP. It comprises subsectors like crop production, livestock, forestry, and fishing.

In the ongoing GDP rebasing, crop production has been separated from agriculture and now stands as Nigeria’s second-largest industry. Agriculture contributed 28.65 per cent to the nation’s GDP in Q3 2024.

Telecommunications, previously grouped under information and communication, has emerged as a standalone sector, now the fourth largest. Information and communications contributed 16.35 per cent to the GDP in Q3 2024.

Trade accounted for 14.78 per cent of GDP in the same quarter.

Under the rebased GDP structure, crude petroleum and natural gas, construction, food, beverages, and tobacco occupy the fifth, sixth, and seventh positions, respectively, while public administration has been entirely displaced from the top seven sectors.

In nominal terms, real estate services grew by 46.52 per cent in Q3 of 2024, higher by 43.70 per cent points than the growth rate reported for the same period in 2023 and lower when compared to the preceding quarter.

On a quarter-on-quarter basis, the sector growth rate was 16.15 per cent. It contributed 5.43 per cent to real GDP in Q3 of 2024, lower than the 5.58 per cent recorded in the corresponding quarter of 2023.

Despite the declining purchasing power, there is a growing demand for Nigeria’s real estate.

Though there are conflicting figures regarding Nigeria’s housing deficit, several real estate experts estimate the gap at 28 million units, stating that the nation needs 700,000 new homes annually.

According to Statista, the real estate market is anticipated to achieve a value of $2.61tn by 2025, showing that the sector has huge potential.

“Among the various segments within the market, residential real estate holds the largest share, with a projected market volume of $2.25tn by 2025.

“Throughout 2025-2029, the market is expected to exhibit a compound annual growth rate (CAGR) of 6.91 per cent, resulting in a market volume of $3.41tn by 2029. When compared globally, the United States is projected to generate the highest value in the real estate market sector, amounting to $136.6tn in 2025.

“The real estate market in Nigeria is experiencing a surge in demand for luxury apartments in major cities.”

The NBS, last year, commenced rebasing the country’s GDP and CPI.

This initiative aims to reflect updated economic conditions and is recommended every five years by the United Nations Statistical Commission.

The last rebasing occurred in 2014, leading to a significant GDP increase of 89 percent and positioning Nigeria as Africa’s largest economy.

The technical assistant to the Statistician-General, Moses Waniko, who presented the provisions of the rebasing exercise in a sensitisation workshop organised by the Nigerian Economic Summit Group in collaboration with the NBS recently, said that the base year for new provision was 2019 as against the former’s 2010.

According to him, the rebasing covers new areas of the economy, including the digital economy, activities of modular refineries, pension fund administration, the national health insurance scheme, and mining, among others.

Noting the implications of the rebasing exercise, Uwaniko said it would allow for economic and development planning, growth, and an increase in the size of the economy.

“This current exercise will enhance data accuracy and inform better policy-making in the light of recent economic shifts, particularly in technology and digital sectors.

“It is good to look at the rebasing from different angles, not just the aggregate numbers. It is good to look at what those numbers are supposed to tell us in terms of the distribution, the aggregate numbers, their weights, contributions, and the rest. Beyond that, there are other implications for the national economy. The first is that rebasing will provide or allow for an economic and development plan,” he said.

“The second is that the rebasing will help to provide a good trajectory for the economy. Beyond this, it’s important to also state that after the rebasing, there are certain things that we expect might change, such as changes in the size of the structure of the economy. We expect that the size of the economy will be bigger.

“The tax-to-GDP ratio is something that people may want to see. The debt-to-GDP ratio of 18.5 percent as of September 2019 could also reduce with the bigger size of the GDP, and then per capita income will increase after the rebasing,” he added.

In his keynote address, the Statistician-General of the Federation, Adeyemi Adeniran, explained that rebasing both the GDP and CPI was a vital exercise that ensures the economic indicators are current and accurate reflections of the economic realities.