A former chairman of the Nigerian Institution of Estate Surveyors and Valuers (NIESV), FCT chapter, Adamu Kasimu, has said the recent abrupt removal of subsidy on petrol will trigger an increase in the cost of building materials and construction, leading to high accommodation cost.
The federal government led by President Bola Ahmed Tinubu, has announced the removal of subsidy on Premium Motor Spirit (PMS), popularly known as petrol.
Adamu who spoke with LEADERSHIP over the weekend, in Abuja, noted that the removal of subsidy implies that prices of petroleum products, particularly, PMS would be determined by market forces.
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He said, “This policy might generally lead to increased costs of construction in terms of labour and petroleum related materials input cost.
“The real estate market is an amalgamation of various sectors: development and construction, letting, leases and management, recreation and hospitality, commercial estates etc. Increased PMS prices have the tendency to severely impact the purchasing power of spendable incomes of property demanders.
“Purchasing power will drop and similarly, labour costs goes up impacting negatively on the anticipated net gains of real estate companies.
“In general, the short run impact will affect incomes and shore up costs. In the long run however, the real estate market will benefit from a reliably predictive economy which supports a more sustainable economic planning and financial projections.”
He stated that the money market will in the long run also make short term credits available to the sector because of apparent reliable market predictability.