An Examination of the Effects of Current Economic Recession on Real Estate Development in Enugu Urban, 2005 - 2014

Abstract

Recently, Nigeria witnessed unstable exchange rate, currency devaluation, high cost of fund e.t.c, which were attributable to the current global economic recession. As a result of the recession, real estate development in Enugu Urban was equally affected and it became impossible to access development funds due to scarcity and high cost of fund. Meanwhile, most existing studies on the subject tend to concentrate on the demand side of the effects of the economic recession on real estate development (rent, affordability, e.t.c ) to the neglect of the supply side (cost of fund, mortgage financing and actual development of real estate development in particular). The aim of this study was to address this supply side by critically examining the effect of the current economic recession on real estate development with a view to proffering alternative solution for cost – effective finance and development of real estate in Enugu Urban. The specific objectives were to examine the impact of the economic recession on the quantity and quality of real property development and also to verify the effect of economic recession on the cost of fund. The data collected were through primary and secondary data collection. The primary data collection was through the use of interview and questionnaire. In the course of the survey a mixed mode of data collection procedure was employed. Two separate questionnaires was, one for financiers and the other for real estate developers. Oral interviews were organized by the research with some Estate surveyors and manager of some commercial banks in Enugu Urban. Data collected from the period 2005 to 2014 were analyzed with descriptive and parametric statistics based on normality. The hypothesis tested showed that there was no significant difference in the opinion of Estate Surveyors and Valuers that the recent economic recession has effect on real estate development in Enugu. The study concluded that: from the fore going, it has been discovered that real estate development in Nigeria, especially in Enugu Urban is immensely affected by the current economic recession ravaging the globe. It is therefore very imperative for all the stakeholders in real estate development sector of the economy to adopt such measures that could bring about a change in the current economic trend to avert further negative impact occasioned by economic recession. The study recommended that: the Nigerian government should weather the storm of the current economic recession in the country by diversifying the economic resource base currently dominated by crude oil. One of the ways of achieving diversification of economic resource base of the country is by encouraging commercial agriculture and tapping other mineral resources available in the country such as Gold, Tin, Coal, etc. Also, the Central Bank of Nigeria is urged to evolve policies that would ensure steady flow of financial resources to the mortgage finance sector.