Professionals in the construction sector say that the industry is the worst hit by the current economic recession being experienced in the country.

They add that apart from low activities in the development of both commercial and residential buildings, and construction of roads, the prices of building materials (both locally produced and imported) keep rising.

Similarly, the sale of existing properties in the market, has also dropped drastically, with the National General Secretary of the Real Estate Developers’ Association of Nigeria, Mr. Akintoye Adeoye, saying that the stock of unoccupied luxury apartments in Lagos, Abuja and Port Harcourt had risen significantly in the last few months.

According to him, only the sale of regular houses with mortgages has been fairly consistent among first-time home buyers.

According to findings by our correspondent, the latest development in the series of events occasioned by the recession is the withdrawal of some foreign companies.

A proposed mixed development based on a public-private-partnership between the Lagos State Government and a United Kingdom-based firm for the construction a 10-storey building in Ikeja and another large-scale development on Lagos Island were recently called off due to uncertainties in the economy.

The Director of Anglo-Celtic Engineering, a firm based in the UK and Ireland with an office in Lagos, Dr. Abid Adekunte, who spoke with our correspondent on the aborted projects, said the plan was to source funds from Ireland to execute the projects, but due to the volatility in the foreign exchange market and the falling value of the naira, the investors pulled out.

The project in Ikeja was supposed to cost N7bn and expected to provide direct and indirect jobs for at least 5,000 people, while the first phase of the Lagos Island project was estimated to cost N25bn.

“We were supposed to execute the project on a PPP basis with the Lagos State Government and we were close to agreeing to the contract, but we were expected to provide the funds, do the design, the contract and also manage it when completed, while the state government would provide the land,” Adekunte said.

He added that the plan was to source for funds from Ireland to execute the project but shareholders decided to pull out due to uncertainties in the Nigerian economy.

Adekunte explained, “If we were to secure the funds in euro, complete the projects and expect to get revenue back in naira, by the time we complete the projects, we won’t be exactly sure what the value of the naira will be in exchange to the euro.

“We had to put things on hold until the economy will get better and we can start looking at the PPP again; but for now, we are only looking at projects fully funded by the government because the current market situation is not suitable for a PPP contractual agreement.

“We have pulled out completely. We had done preliminary studies, assessing the commercial viability and the potential construction cost for the mixed use, which was about N7bn; while the residential was supposed to be in three phases. The first phase was supposed to be about N25bn. It was supposed to have both low-cost and luxury areas.”

He said the projects were supposed to be the company’s first development in the country, adding that many foreign investors were unsure of investing in PPP projects in the prevailing circumstances.

“Equity investors will not want to take the risk of the uncertainty in the market. It will get better but it’s not working at this rate,” he added.

Apart from foreign investors, indigenous contractors have also had to pull out of projects, while waiting for the economy to recover.

Investigations revealed that among other pending projects, an urban renewal programme of the Federal Government in Gwagwalada area of the Federal Capital Territory had also been put on hold.

A former President of the Association of Town Planning Consultants of Nigeria and Managing Director, Beachland Resources Limited, Mr. Moses Ogunleye, who was contracted to handle the regeneration of the area, said the plan started with the last administration, while the current government was expected to revive it.

“But so far, nothing has been said about it. It was an urban renewal project to upgrade parts of Gwagwalada. The government still wishes to come up with it, but the economy is not friendly at the moment,” he added.

Ogunleye said his firm was also working on two new estates in Lagos, but had to temporarily suspend the projects due to lack of funds.

He noted, “We started feeling the impact around February this year; our fees were not paid and we became apprehensive and we were asked to hold on. If we had finished the designs, we would have sought permission from the government and mobilise to site and that would have provided jobs for thousands of people.

“The company that was supposed to sand-fill the site is waiting. It is a private estate development that is supposed to cost about N200bn, with over 3,000 housing units made up of duplexes, flats and terraces along the Lekki corridor.”

According to him, the estate is supposed to accommodate between 15,000 and 20,000 people and a working population for the shopping malls and hotels.

Individuals who are building their personal houses are also not left out as many have been left with no choice but to discontinue such projects.

A former banker, who spoke on the condition of anonymity, said he stopped his building project when he was retrenched a few months ago.

He explained that the four-bedroom bungalow was already at the lintel level when he was relieved of his job, adding, “I initially thought I could quickly put things together and move in, but the cost of building materials put me off completely. I have to survive first; so, I renewed my rent instead.”

The 2nd Vice President of the Nigerian Institute of Building, Mr. Kunle Awobodu, noted that most projects that were supposed to be executed had been suspended indefinitely.

He said, “The cost of building materials has skyrocketed. The prices of electrical and plumbing materials, granite, sand, reinforcement bars and sanitary wares are rising regularly. It has become difficult to take a project towards execution because of the perpetual fluctuation in prices, which is not good for any contractor.

“It has become risky to take up projects now, because prices are changing rapidly. So, people are adopting the attitude of just watching or coming up with alternatives as to whether to review the scale of the projects because of cost, or redesign them. Some are introducing value engineering to remove some non-functional parts of projects or areas of waste.”

Awobodu said his firm also had to put on hold a church auditorium project due to rising costs, which he noted were not sustainable.

Ironically, the recession seems to offer some Nigerians in the Diaspora the opportunity to own houses in choice areas due to the exchange rate.

According to some developers, the number of prospective home buyers from outside the country has increased slightly.

However, those who seek to build rather than buy are still constrained by the rising prices of building materials.

PUNCH.