By Mustapha Suleiman
Covid-19, a viral disease that struck from Wuhan, a Chinese city, which spread like wild fire throughout the world impacts were enormous at the first and second quarter of 2020 to the extent that leaders across the world ordered lock down, so as to restrict movement of people and non-essential goods. The movement restriction is to make people stay at home and avoid public gathering, which has been confirmed by medical experts to be an effective way of curbing the spread of the deadly virus. Like other African countries and by extension the rest of the world, Nigeria joins the fray in implementing the lockdown by shutting down businesses, market places, offices, airports as well as intra – inter- states movement for close to 7 months across the nation with the intent of controlling the spread of the disease which cure is yet to be found, but vaccination.
As the citizenry heaved a sigh of relief after the lifting of the lock down, a few days after the country celebrated its 60th year anniversary, the youth started #ENDSars protests across the country. For more than 10 days, business operations were disrupted in towns and cities after the peaceful protests turned violent, when it was hijacked by hoodlums in retaliation to the killing of some protesters at the Lekki Tollgate in Lagos. The outcomes were looting of warehouses, shops and other business premises, including burning of public and private properties, including 97 police stations.
In view of these scenarios, analysts opined that the already contracted real estate industry in terms of nominal real GDP and percentage share contribution to the GDP was further forced to be on a steep decline. According to analysts, before the protests there were indications that the industry would pick when the country returns to normal life. In our experience, we discovered that a number of businesses have developed post Covid-19 impact navigation strategies in Africa’s largest economy before the youths staged the protests, especially in Lagos, the industrial hub. As the industry battling impacts of the first waves of the protests, analysts have equally noted that there would be negative growth in the economy. This would not exempt the real estate industry.
Our analyst notes that the views of the analysts are likely to come to pass as the performance of the industry in the Stock Exchange market was not encouraging between October 19 to November 6, 2020. During these periods, the financial services, conglomerates and consumer goods industries performed better than real estate industry. From October 8 to November 9, 2020, our analysis indicates that public interest in buying homes, renting apartments and maintaining houses reduced by 33.9%, 33.5% and 21.0% respectively. However, our analysis further establishes that the interest in renting apartments resonated with the intent of maintaining apartments by 12.3%, while the intention of buying houses reduced the consideration of investing in the real estate industry by 14.2%.
These results have several implications. It is clear that like what Covid-19 brought to the industry, the protests also contributed to the decisions made by prospective home buyers, investors and apartment users, most importantly in Lagos, Rivers, Kano and Abuja, the Federal Capital Territory. It is also obvious that public engaged players for maintenance services during the first waves of the protests. Our analyst further questioned and analysed the data. The results show that when the public intent in maintenance was over 60%, it was beneficial to the industry by 3.70%. The same percentage was found for investing in the industry and purchasing houses. With the same percentage of interest, the usefulness was 5.40%. As the industry bleeds, it has emerged that there are prospects for it in the future if the country does not experience second waves of the protests.
A number of facilities, houses and business premises were looted and destroyed during the protests. From government and business leaders, to rebuild destroyed facilities and restock looted items or goods, it has been estimated that between N700 billion – N3 trillion are needed.
Businesses and governments of states with the highest impacts have called for support. When this comes, the industry is expected to be changed and leave its decline stage at the end of Q1 2021, according to analysts.
“Some of the discouraging factors in the real estate sector has been bad governance and the system, policy but as the system is beginning to fix itself, you will see a new Nigeria rising,” Stephen Akintayo, CEO of Gtext Homes said in a recent media interview. “Sometimes, people think that protest like this leads to the bleeding of businesses, temporarily it does, but in the long term it, it leads to confidence. Foreign investors and Nigerians in the diaspora will be able to come in and invest in fixing this.’’
From November 3 to November 9, 2020, the interest in the industry picked by 14%, indicating a 8% increase from the previous period. During this period [November 3 to November 9, 2020], interest in which segment of the industry is appropriate to invest in was huge. If the second waves of Covid-19 and ENDSARS protests are not averted, our analyst notes that the industry is likely to be hit harder in the next few days.
Perhaps the nation`s real estate industry will pick up and play a critical role in revamping the economy in the year 2021, judging from expert predictions.
Experts in the construction industry at the Real Estate Market Outlook event, held recently in Lagos, unanimously predicted positive growth for the sector in 2021, saying that the industry would be a significant driver for the Nigerian economy this new year.
One of the attendees and construction industry expert, Temitope Runsewe, noted that with over N3.85tn budgeted for capital expenditure by the federal government for the year, spending on infrastructure would help to drive economic growth.
He added that though the coronavirus pandemic had affected economies and businesses globally, the medium to long term outlook for the industry remained positive, given that the construction industry increased its contribution to Nigeria’s Gross Domestic Product to N572.9bn from N513.6bn in Q2 2020.
According to him, the National Bureau of Statistics had projected the construction industry to record a Compound Annual Growth Rate of 16.6 per cent to reach an all-time high of N13.2tn by 2024.
This, he said, makes it imperative for players in the real estate and construction industry to exploit the attendant opportunities for growth that will be presented.
Another expert in the construction industry, Ayo Ibaru, noted that the demand for real estate increased nationwide.
He, however, warned that if Nigeria failed to adapt to economic realities, ends its policy inconsistency as well as curbing insecurity, it could lead to the country losing Foreign Direct Investment to less volatile neighbouring economies.
The NorthCourt boss emphasised the role technology and innovation would play in the future of the real estate industry, just as he said that the adoption of virtual viewings of properties and other property tech offerings are increasing despite cultural.
concerns.
But for Hakeem Ogunniran
Founder/CEO, Eximia Realty Co Ltd, he said that last year (2020) is realistically a continuation of the new year (2021).
The real estate expert, in an exclusive interview with africanhousingnews.com said, “ I am optimistic about life generally. But, when it comes to business, I have learnt to always test hope against the realities. Let no one be deceived, 2021 is nothing short of 2020 plus! Business men will have to tackle the enormous carryovers of 2020 and also prepare to deal with the inevitable challenges of 2021. It is highly unlikely that the external and unforeseen factors will provide the right momentum and motivation this year. The signs are all there already.’’
Oguniran hinted that, in his recent business chat sessions with stakeholders, told them to expect the unexpected in 2021, saying his pessimism is based on the fact that this year will test human character centred on strength, determination and resilience.
The Eximia Realty Co Ltd CEO said, “ You may not get so much comfort in any motivational factors. Self-motivation and resilience will be the rule of the game. It’s a year that calls for well- tailored business decisions, knowledge, agility, and proactive measures to surmount all challenges in the real estate sector the new year.’’
He reminded fellow players in the real estate sector that the “Wait and See” cycle for the 2023 elections will start from about mid-2022 when electioneering campaign would have commenced.’’
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