There was no gain saying that many businesses in Nigeria had indeed suffered in 2020 due to the global impact of the COVID-19 pandemic with Nigeria stumbling into its worst recession in 25 years.
From entering its worst recession in four years at -21.99 percent in the second quarter of 2020 fuelled by the impact of COVID-19, Nigeria’s property industry, which was also affected by the property vandalism from the hijacked EndSARS protest, is one of the sectors of the Nigerian economy that was badly hit by the challenges of 2020. But it also brought some gains for some of the market players operating in the residential, industrial and construction arm of the sector.
Before the pandemic, Nigeria’s real estate challenges bordered on slow economic growth, lack of liquidity, dampened purchasing power, and high cost of land fuelled by unreviewed 42-year old Land Use Act.
Despite its large-size population and the self-acclaimed biggest economy in Africa, Nigeria is crawling behind its peers in terms of homeownership level.
Whereas, homeownership level is 84 percent in Indonesia and 75 percent in Kenya, Nigeria with the largest population in Africa estimated at 200 million stands at 62 percent. Going by United Nations’ projection, the country’s population will be as high as 400 million in 2050.
However, Latest release fron the National Bureau for Statistics have shown that real estate developers were able to not only stay afloat but make more money during Covid-19 pandemic.
The real estate developers explored the headwinds to make a profit that is highest on record.
A poll of some real estate developers in Nigeria shows industry players made more money in 2020 than they did in the past years, thanks to investors who trusted them with cheap capital amid scarce investment opportunities.
“We made more money in the pandemic than ever before. I guess the case is the same for others, maybe they are not just talking,” Wale Ayilara, CEO, Landwey Properties, said.
According to Ayilara, a recession, like the one reported in the third quarter of 2020, when Nigeria’s economy contracted for the second consecutive quarter to September by 3.6 percent, does not mean that money has disappeared, instead, it moves from one sector to another.
With that understanding, the real estate developer said his company had to re-strategise and channel its resources to develop products that were in high demand.
“Before the pandemic happened, we were about to start a project, but we had to move the funds to a different location,” Ayilara said.
Issues around naira devaluation, economic uncertainty and high investment risk, which forced many investors to adopt the watch-and-see position, were some of the reasons also highlighted as to why investors redirected their funds to the property industry in 2020.
Interest rates on the less risky government instruments like Treasury Bills and Bonds touched a low record last year, as a policy by Central Bank of Nigeria (CBN) crashed yields on investment, a development that led to high liquidity in Nigeria’s financial system.
According to Jide Adekola, lead partner, HomeWorks Consultants, a lot of investors observed players in the real estate industry and gave their funds to those they believe stood the test of time; “I think that helped us as well.”
“It was shocking to know that we made the most during the pandemic,” Adekola said.
“I will join my colleagues to say that surprisingly, 2020 wasn’t a bad year, business-wise,” a top executive at Mixta Nigeria, a subsidiary of Mixta Africa, a real estate development company, said, adding that the industry players also “went through a tough time.”
Also, report from abuja property market conducted by housing development advocacy network shows leading real estate developers like urban shelter,cosgrove ,bilaad, paradise, ochacho among others gained more under the period of review.
The credibility and trust built by them over the years enabled them to scale through. Some of these developers had virtual tour in place of physical visit of subscribers to the site as part of the new normal.
Reacting to the development, the Chief Executive Officer of Abuja International Housing Show, (AIHS), Barrister Festus Adebayo said it is true that many estate developers did better in 2020 than previous years.
According to him, most of the developers that had problem of credibility and trust were most affected by the pandemic.
” Go to Lagos and see what eximia realty,octo5 ,adron homes, Revolution plus, Haven homes are doing .
“Go to south east and see what Copen Group is doing . “
The CEO of AIHS however called on the Federal Government to fulfill all its promises of intervention in the Nigeria housing sector.
“I must tell you, Nigeria needs more houses now than before because of this pandemic ,” he said
Adebayo who is also the Manging Director of Housing Development Advocacy Nwtwork (HDAN) also stressed the need for government intervention as the pandemic has seriously impacted negatively young real estate companies, which is not so good for the country’s quest to achieve affordble housing for all