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Property developers are upset as soaring material costs sabotage projects.

July 19, 2022, 1:02 am News Seen: 5947
Property developers are upset as soaring material costs sabotage projects.
The construction industry in Nigeria is being severely impacted by rising costs, with many projects being placed on hold and developers and contractors on edge.

While energy and food prices are skyrocketing for individuals, the construction industry is in trouble as building material costs have nearly doubled in the last 12 to 24 months as a result of rising inflation.

Contractors are writhing under the burden of the expense of diesel. Nearly all of the construction value chain's contractors, including pile drivers, welders, and mechanical and electrical engineers, depend on diesel to run their generators.

The cost of building supplies, including cement, reinforcement bars iron rods, roofing sheets, tiles, paints, and even sand, has increased by almost 50% as a result of inflation, which peaked at 17.7 per cent in May 2022. A litre of fuel now costs N815 instead of N300, a price increase of more than 100%.

Experts claim that several variables, including the pandemic's effects and the Russia-Ukraine war, which has raised the price of fuel and other goods, are to blame for the increase in inflation.

For instance, a 50 kg bag of cement now costs N4,500 in Nigeria, up from N2,600 in 2019, while the cost of an iron rod ton has climbed from N300,000 to N415,000, depending on the market where it is purchased.

"Projects have slowed because the price of building supplies has gotten out of hand. However, we are still working on our projects since we have excellent procurement management, according to Odunayo Ojo, CEO of UAC Property Development Company.

When we hire contractors, we typically mobilize them significantly so they can purchase and maintain everything they desire.

Ojo stated that the purpose of their significant contractor mobilization was to prevent cost variation, which he claimed was now endangering numerous projects.

Real Estate Developers Association's South-West Chairman Debo Adejana claimed that some of their members were taking a wait-and-see attitude toward the market's growing building material prices.

It's quite genuine, but what's occurring is that developers are keeping an eye on prices, especially for off-plan developments, he added, to prevent projects from being completely stalled by cost variations.

Adejana stated that both developers and independent builders are leaving construction sites, adding that for the majority of individuals, asking and settling for negotiated reviewed rates has been the only option.
He claims that when it comes to abandoned projects because of excessive material costs in the South-West states, Lagos, the economic hub of Nigeria, is particularly notable.

He ascribed the change to the state's extensive list of current initiatives.

Numerous high-rise commercial and residential construction projects are either halted or moving very slowly on Lagos Island.

The majority of builders, particularly independent ones who are constructing their own homes, told BusinessDay that they were waiting and keeping an eye on building material pricing.
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