Business Day (Nigeria)

Survival instinct of real estate during recession

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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.

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