June 10, 2009

Economic meltdown is impacting on real estate agency– Ovesuor

Against the backdrop of   the ongoing global economic meltdown which is impacting on all facets of the economy, a renowned estate surveyor and valuer, and managing partner of U. K. Ovesuor & Partner, Mr. Elias Ovesuor has noted that the impact is not too pronounced in real estate practicegenerally but on an aspect of the practice which is agency. Agency in real estate business refers to property brokerage, leases, sales and so on.

The fellow of the Nigerian Institution of Estate Surveyors and Valuers (NIESV) who is aspiring to become the next chairman of the Lagos Branch of NIESV, said the impact of economic meltdown has started showing in a significant proportion in property brokerage, leases and sales which has resulted to lull in property business. “The impact has started showing a great deal in the agency aspect of real estate practice because if it were before, say between January and May, you might have concluded between two and four property sales or deals.

“But now, I must tell you that if you find out from most real estate firms, they will tell you that this year, they have not concluded any sales.

is because property transactions in Nigeria involves paying the bulk of the cost of a property unlike in the advanced countries where their mortgage system is well defined, so much that if you have only 10 per cent of the cost of the property you want to buy, you can pay that amount in the bank and subsequently pay the balance in instalments. But in Nigeria, the mortgage system is not so defined. For anybody to think of buying a property, the person must be ready to pay cash down, and where businesses are not booming because of the economic meltdown, property business is bound to be affected.
“Here in Nigeria, our mortgage system is not yet well developed or well managed. Here, most sales that are consummated are done by outright purchase but because of the alignment of our economy to other economies, most of the people who do these purchases are captains of industries, employers of labour, even bankers who take loans from their banks in order to finance their projects. But now, most of the banks, even their correspondent banks have asked them to stop indiscriminate purchases”, Ovesuor stated.