Nigeria’s construction sector is under severe pressure as imported inflation, foreign exchange volatility, high land costs and weak mortgage financing continue to drive up the cost of building, property valuers have warned.
The Association of Capital Market Valuers raised the alarm, saying urgent reforms were needed to prevent further deterioration in the sector.
The Chairman of the association, Chudi Ubosi, said the heavy dependence on imported building materials had exposed the industry to exchange rate shocks.
He said fluctuations in the foreign exchange market were being passed directly to builders and ultimately to property buyers.
“The cost drivers of building materials and equipment are primarily inflation. Remember that virtually all we use is imported,” Ubosi said.
“The high exchange rates only make them more expensive to import, and these costs are reflected in higher purchase prices.”
The valuer called for urgent reform of the Land Use Act to make land more affordable and accessible to developers and prospective homeowners.
According to him, the law must be reviewed to reflect current economic realities and the housing needs of Nigerians.
“We need to make land cheaper and more accessible, and that means tweaking the Land Use Act to bring it in line with modern-day realities,” he said.
Ubosi also urged the government to promote locally manufactured building materials as a way of reducing the sector’s exposure to imported inflation and foreign exchange volatility.
He said greater use of local materials would help reduce construction costs while strengthening domestic manufacturing.
The ACMV chairman also identified a weak mortgage system as another major obstacle to growth in the sector.
He stressed that banks and other financial institutions must develop financing products tailored to developers and prospective homeowners.
“The mortgage industry has to function well because if there is demand, there will be commensurate construction to meet the demand,” he said.
“The financial institutions need to play their part in developing products and giving financial services to help both developers and end users.”
Ubosi further called for greater visibility of research conducted by the Nigeria Building and Road Research Institute.
He acknowledged the work being done by NBRRI but questioned how accessible its findings were to industry players.
“A lot is already being done. NBRRI is doing so much, but how public or available are their results? How many even know of their existence?” he queried.
The valuer advocated stronger collaboration among architects, manufacturers and other stakeholders to promote the use of locally available materials.
He also called for standardisation of building components, particularly doors and windows, to encourage mass production and reduce costs.
“If standard doors or windows were a certain height and specification, then companies can go ahead and produce them in large quantities knowing they will be taken up,” he said.
“But today, virtually every property comes with its own design and specifications.”
Ubosi stressed that no single intervention could resolve the challenges confronting the construction industry.
He said reforms in land administration, local manufacturing, mortgage financing, credit access and standardisation must be pursued simultaneously.
“It’s all a gamut of so many things coming together,” he said.
