Preliminary results from the ongoing rebasing of Nigeria’s GDP and Consumer Price Index (CPI) reveal that the real estate sector has overtaken oil and gas to become the nation’s third-largest economic contributor.
Currently, real estate trails crop production and trade, which occupy the first and second positions, respectively.
Historically, agriculture was Nigeria’s leading sector, contributing over 20 percent to GDP and comprising subsectors like crop production, livestock, forestry, and fishing. However, the current GDP rebasing has categorized crop production separately from agriculture, now ranking it as Nigeria’s second-largest industry. Agriculture as a whole accounted for 28.65 percent of GDP in the third quarter of 2024.
Telecommunications, previously grouped under the broader category of information and communication, has now emerged as an independent sector, ranking fourth in size. The information and communication sector contributed 16.35 percent to GDP during Q3 2024, while trade contributed 14.78 percent.
The rebased GDP structure places crude petroleum and natural gas, construction, and food, beverages, and tobacco in fifth, sixth, and seventh positions, respectively. Notably, public administration has been excluded from the top seven sectors.
In nominal terms, real estate services recorded a growth rate of 46.52 percent in Q3 2024, significantly higher than the 2023 growth rate for the same period. However, this growth was slightly lower than the rate reported in the previous quarter. On a quarter-on-quarter basis, the sector grew by 16.15 percent and contributed 5.43 percent to real GDP in Q3 2024, a slight decrease from the 5.58 percent recorded in Q3 2023.
Despite challenges such as declining purchasing power, demand for real estate in Nigeria remains strong. Industry experts estimate the country’s housing deficit to be approximately 28 million units, with an annual requirement of 700,000 new homes to address this gap.
Projections from Statista indicate that Nigeria’s real estate market could reach a value of $2.61 trillion by 2025. The residential real estate segment is expected to dominate, with a projected market value of $2.25 trillion. Between 2025 and 2029, the sector is anticipated to grow at a compound annual growth rate (CAGR) of 6.91 percent, reaching $3.41 trillion by 2029. Globally, the United States is forecasted to lead the sector, with an estimated value of $136.6 trillion by 2025.
In Nigeria, luxury apartments in urban centers are experiencing particularly high demand, further boosting the sector’s growth.
GDP and CPI Rebasing: Context and Implications
The National Bureau of Statistics (NBS) initiated the GDP and CPI rebasing exercise last year to better reflect current economic realities. The United Nations Statistical Commission recommends such rebasing every five years, with Nigeria’s last exercise in 2014 resulting in an 89 percent GDP increase and solidifying the nation’s status as Africa’s largest economy.
The current rebasing uses 2019 as the base year, replacing the previous base year of 2010. It incorporates new and emerging areas of the economy, such as the digital economy, activities of modular refineries, pension fund administration, the national health insurance scheme, and mining.
Moses Waniko, Technical Assistant to the Statistician-General, emphasized the importance of rebasing during a recent sensitization workshop organized by the Nigerian Economic Summit Group in collaboration with the NBS. According to him, the exercise aims to improve data accuracy, support policy-making, and better reflect structural changes in the economy, particularly in technology and digital sectors.
Waniko highlighted several anticipated outcomes of the rebasing, including a more accurate representation of the economy’s size and structure, improved economic and development planning, and better policy formulation. He noted that the rebased figures might lead to adjustments in key economic indicators such as the tax-to-GDP and debt-to-GDP ratios. For example, the debt-to-GDP ratio of 18.5 percent as of September 2019 could decline with a larger GDP size, while per capita income might increase.
“The rebasing exercise allows us to understand the distribution of economic activities, their contributions, and implications for national development. This will provide a clearer trajectory for planning and growth,” Waniko concluded.
