Rising costs are seriously affecting the Nigerian construction industry as many projects are on hold and builders and contractors are on the sidelines.
Energy and food prices are rising for private individuals, but the construction industry is struggling as the price of building materials has almost doubled in the last 12-24 months due to rising inflation.
Contractors are writhing under the burden of diesel costs. Almost all contractors in the construction value chain, including pile drivers, welders, and mechanical and electrical engineers, run their generators on diesel.
The cost of building materials, including cement, rebar, roofing sheets, bricks, paint and even sand, has risen by almost 50% due to inflation which peaked at 17.7% in May 2022. A liter of fuel now costs N815 instead of N300 which ended. 100% increase.
Experts say several variables are to blame for the rise in inflation, including the impact of the pandemic and the war between Russia and Ukraine, which has driven up the prices of fuel and other goods.
For example, a 50kg bag of cement now costs N4,500 in Nigeria from N2,600 in 2019, while the price of a tonne of rebar has increased to N300,000 – N415,000 depending on the market where it is bought.
“Projects have slowed down because the cost of building materials has gone out of control. But we will continue to work on our projects because the procurement management is excellent,” says Odunayo Ojo, CEO of UAC Property Development Company.
The South West President of the Real Estate Developers Association, Debo Adejana, has claimed that some of their members have anticipated rising prices in the building materials market.
He added that this is quite genuine, but what is happening is that developers are paying attention to prices, especially in off-plan developments, so that projects do not come to a complete halt due to cost fluctuations.
Adejana noted that both developers and independent builders were abandoning construction sites, adding that the only option for most private individuals was to request and agree on revised prices through negotiations.
He claims that when it comes to projects in the South-West states that have been abandoned due to excessive material costs, the financial center Lagos of Nigeria is particularly noteworthy.
He explained the change in the vast list of the current initiatives of the country.
Many high-rise commercial and residential projects on Lagos Island have either stalled or are progressing very slowly.
Most of the builders, especially FIEs building private houses, told BusinessDay that they are waiting and watching the prices of building materials.