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Macroeconomic Dynamics in Real Estate Market amid Covid-19 Pandemic in Abuja, Nigeria

Author

Listed:
  • Muktar Babatunde Wahab
  • Wasiu Ayobami Durosinmi
  • Matthew Mamman
  • Dodo Usman Zakari
  • Adetoye Sulaiman Adepoju

Abstract

Purpose: Quite a substantial number of academic studies have investigated dynamics of macroeconomic factors in real estate markets across the world. While these studies are valuable in the field of macroeconomic dynamics in real estate markets, a gap still exist in the literature on the recent disruption in the economy caused by covid-19 pandemic and subsequent impact on real estate market of emerging economy in Abuja, Nigeria.Design/Methodology: Monthly returns on real estate investment from sampled registered real estate firms in addition to data on macroeconomic indicators were obtained for the period (February 2020 and April 2021). These data were then analysed using econometric analysis - Augmented Dicker Fuller (ADF), Engle Granger cointegration and cointegrating regression analysis.Findings: The empirical evidence shows a long run negative impact of macroeconomic indicators on real estate market caused by covid-19 disruption in the economy. The study further understood that correction in market disequilibrium caused by economic disruption would require a slow adjustment. The real estate investor should exercise caution in investing into real estate due market disruption or disequilibrium that would take long period to correct.Practical implications: This paper provides empirical evidence of interrelationship between covid-19 driven macro economy and real estate markets. The result showed that the real GDP, exchange rate, inflation and interest rates have been found to have a significant explanatory influence on property return across the markets. The result further suggested that the impact of covid-19 in the economy requires government intervention to correct future abnormalities in the real estate market.

Suggested Citation

  • Muktar Babatunde Wahab & Wasiu Ayobami Durosinmi & Matthew Mamman & Dodo Usman Zakari & Adetoye Sulaiman Adepoju, 2021. "Macroeconomic Dynamics in Real Estate Market amid Covid-19 Pandemic in Abuja, Nigeria," AfRES 2021-002, African Real Estate Society (AfRES).
    • Handle: RePEc:afr:wpaper:2021-002
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    References listed on IDEAS

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    More about this item

    Keywords

    Engle-Granger cointegration; macroeconomic indicators; real estate returns; stationarity test;
    All these keywords.

    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

    NEP fields

    This paper has been announced in the following NEP Reports:

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