Survival instinct of real estate during recession
unemployment, stock market crash and declining businesses. The general business cycle of recessions also affects real estate as home prices tends to fall when the demand shrinks, but the extent to which that happens can vary by the local market. In areas of high demand, property owners may not see their home values go down at all. As the pandemic continues to take its toll on the Nigerian economy, the country has witnessed a massive crash in the prices of stocks and shares in the stock exchange market. However, the real estate sector has enjoyed some mixed blessing in this economic situation.
Further to the worsened fluctuation in the value of the Naira against the Dollar/pounds, re-appraisals of values and pricing of high end residential and commercial asset classes is inevitable. Immediate pricing in the local currency has made some of these assets more competitive and desirable.
Recent experience in the market showed slightly higher activities in the high-end strata of the market with developers pushing hard to find new developments for the market and off-takers seeking deals within that segment. My personal experience shows how two well-known developer friends of mine (names I cannot disclose) called requesting for land and advisory for Ikoyi residential development urgently. The mid-income market isn’t left out of these opportunities, the stay-at-home global phenomenon has pushed demand especially for investment drives.
Real estate as an essential product/ service
Consequently, real estate is regarded as a pertinent commodity both in and out of recession. While lockdowns may affect many types of businesses, especially those that provide in-person services which include retail stores, restaurants and hotels, entertainment venues and museums, medical offices and beauty salons however shelter remains a fundamental right and human need. In a case of a global pandemic which individuals need to remain isolated to stay safe, invariably pushing for real estate as an essential status.
To curb unemployment which is one factor that leads to recession, it is important to note that every home sale could generate a job in a country. Housing is currently 14.6 percent of Gross Domestic Product (GDP) and a major engine of the economy. Real estate activities that are considered essential include; residential and agricultural real estate services, staff of government offices that perform specific sensitive services, notary and recording services in support of mortgage and real estate services and transactions.
The essential services are primarily responsible for sale and leasing of residential properties to provide individuals and families with ready access to available housing. They are also responsible for handling property/facility management and maintenance as someone needs to ensure basic amenities such as power, water, security; janitorial and other services are running smoothly. These activities create the real estate ecosystem integral in government economic policies to exit recession. These roles are often offered by estate surveyors, engineers, technicians and other professionals in the built environment and the hospitality sector.
Workers performing housing construction-related activities to ensure additional units can be made to combat the nation’s existing housing supply shortage, including those supporting government functions related to building and development processes such as inspections, permitting and plan review services that can be modified to protect public health. If the construction industry and its supply chain are disrupted there will be a crash in the housing sector.
Nigeria has one of the largest stocks of human resources for health (HRH) in Africa; hence, there will be a need for development services, the health sector will need more developments to house patients and health workers. The hospitality sector which amounts to 1.9 percent of the country’s GDP is a breeding ground for international business seekers and will need to house tourists as Nigeria remains an attractive market to major hotel brands with strong infrastructures.
‘