As Nigerian businesses begin to recover from the Corona virus pandemic lockdown that paralyzed commercial activities, another variant of it recently emerged, with many governments threatening another lockdown, putting pressure on the already diminished real estate industry.
It is glaring that many of those whose business and jobs were significantly affected are facing rent defaults, which piled up while they were temporarily closed due to months long lockdown to curb the spread of the deadly virus.
Many Nigerians lost their jobs as many businesses were not operating and those lucky to retain their jobs are finding it extremely difficult to meet up with their rent.
Not only is this happening in the low rated areas as tenants in the highbrow and high-density areas that suffered setback in their businesses or got laid-off by their employers are also having hard times in paying their rents. Artisans and self-employed individuals are also affected.
These have prompted property owners to make hard choices on the type of tenants to rent out their houses to. Some of the landlords have to deal with their own mortgage obligations and defaults which accrued during the pandemic.
Those worst hits are commercial landlords and retail tenants as well as operators of event centres, restaurants and clubs. Some landlords are exploring eviction moratoriums for certain small business, commercial and residential tenants while some tenants are already facing eviction.
Investigations show that the current economic prevalence has made tenants be paying either in instalments or monthly and this has made some landlords to reduce rent on commercial and residential residence.
Right now the landlord can’t even be picky. Priority is to rent out at a lower rent so that quality tenants could be attracted
Reacting to this development, the FCT chapter chairman of the Real Estate Developers Association of Nigeria (REDAN) Mr Osilama Emmanuel Osilama exclusively told Africahousingnews.com that the Coronavirus pandemic has disrupted the usual business, market plans and profits in the housing sector. Osilama who is also the CEO of Nuel Osilama Global Investment Limited opined that everybody has to create his/her own innovative ways of doing business as the pandemic has slowed down the business due to low patronage.
The FCT REDAN chapter chairman said a lot of people right now are just saving for survival as a low number of people presently go into homeownership, except those who have adjusted completely.
He said it is not only home buying that is on the low side as rent paid by tenants is also of concerns to many developers, who are mostly landlords, reducing their capital to build more houses.
Osilama said, `So, I will describe the period or the year as one of those years that we just have to stay alive and go through it. But for a very few developers, it is the year to make money because they are innovative and have taken advantage of what others are crying over, may be, they already have a ready market and everything is going well for them. But for most of the developers in places like Abuja where the governments policies determine market forces and all that, it is pretty well you have to think and plan very well before you can really do anything.’’
Also reacting to this development immediate past chairman, Faculty of Estate Agency and Marketing, Nigerian Institution of Estate Surveyors and Valuers (NIESV), Mr. Sam Eboigbe, said: Professional estate agents have also devised strategies in response to challenges caused by COVID-19 by ensuring that comprehensive due diligence in profiling clients contemplating and negotiating leases are professionally executed.
“This is to curtain and nip in the bud rent defaults as one of the fall-outs of COVID-19 since the business environment has been negatively imparted with job losses, salary cuts and delays in earnings of the citizenry.
“So it is expected that sitting tenants who are a product of the system and are affected by the system currently being ravaged by the effects of COVID-19 will have challenges in meeting their rental obligations.”
For those practising in Lagos, practically all locations are affected since the effects of COVID-19 cut across boundaries in terms of businesses and it applies to property locations.
The past president of, International Real Estate Federation (FIABCI), Mr Chudi Ubosi, disclosed that virtually every location and commercial development type is affected by rent default. “The fact is that the adverse effects are hitting every business, so all businesses are reviewing strategy on their operations as income is negatively impacted.”
Ubosi said there is no discrimination in the industry, rather real estate professionals reject tenants that do not meet the “diligent standards” of the property owner.’’
But the chairman, NIESV’s Faculty of Estate Agency and Marketing, Mr. Kayode Ogunji, admitted that rent defaults have increased due to COVID-19 and property owners now prefer the working class than others.
According to him, professional estate agents adopt background checks to forestall or reduce rent defaults.
