By Kingsley Adegboye
Nigeria’s real estate sector has not remained the same since the advent of the global Covid-19 pandemic.
Following the impact of the pandemic on Nigeria’s real estate sub-sector, the sector has remained largely underperformed.
The under-performance of this sector is largely hinged on the low level of effective demand for housing.
Affordable housing remains unobtainable, and given the squeeze in consumers’ purchasing power, demand has remained low.
There is little or no access to housing finance or mortgage loans at affordable rates. At the same time, the cost of construction is very high and feeds directly into property pricing.
Developers are yet to adopt new building technologies that can assist with quality and cost advantage.
The real estate sector has been severely hit by the current pandemic. Given the impact of Covid-19 on consumers’ pockets, as well as the steep pay cuts and in some cases, job losses, new home acquisitions are becoming less of a priority.
Furthermore, the demand for commercial property is likely to remain ever low, with many businesses managing to remain in business.
Following the transition to remote work systems due to the lockdown, it is expected that businesses will incorporate more remote working options for their employees and review their space requirements at the time of their lease renewals, both in the short-term and post-Covid. Essentially, office space requirements are likely to shrink to manage costs.
As for the residential market, a few defaults have been recorded among renters particularly in Lagos, using flexible payment models.
Rental payment cycles are still largely annual in Nigeria, hence retrenchment and lay-offs are unlikely to have an immediate effect on the market performance.
London property market bounces back after Covid-19 pandemic — Daniel Ford boss
The world has gone through a once in a generation systemic shock that has upended and confounded what our sense of normality is. However, after almost 20 months due to the miracle of vaccination, the end seems to be roughly insight,” says Yemi Edun, CEO, Daniel Ford, a UK-based property advisor.
According to Edun: “As your trusted property advisors, it is our duty to show you how the property world has emerged from this long night.
The property market is currently on course for its busiest year since 2007, which comes on the back of data showing that the sector as a whole has defied expectations to generate double-digit price growth over the past year.
“This has been fuelled by a number of factors, but chiefly a supply squeeze across most regions, with London being the least squeezed region.
“This is chiefly a creation of the pandemic as buyers and sellers alike reassessed where and how they lived during the three national lockdowns.
“This has inadvertently raised the demand for property with outdoor spaces and proximity to greenery. The stamp duty holiday also came to an end on June 30, leading to a rush to complete purchases by the deadline.
“Now that you have a picture of the market, we have received a lot of questions on what to do now the pandemic is over, and we feel that advice is best categorised based on where you are in your investment cycle.
“For seasoned property owners, before acquiring any further investments, this may be the best time to review what and how you’re holding your investments.
“How short are the leases on your property? Are your property still fit for purpose or do you need to downsize, and for those with enveloped dwellings, have you had a review into whether your structures are in good standing?
“These are all important things to consider and in the case of an enveloped dwelling, could de-enveloping or liquidating the structure to a more tax-efficient vehicle be a better solution for you?
“For those selling, they have to be realistic with prices. While we’ve seen record sales volumes, it does not cut across board.
“The numbers seen may not be a true reflection of the overall market as new buildings come tops as government helps to buy and in some cases, particular price points that were achieved were a fallout from the stamp duty holiday.
“For those buying, keep a keen eye out for the EWS1 because of cladding, according to Barry Kyte of Hadley Kyte Solicitors. The winds of a historical low interest rate fly in your favour with a current rate of 0.1 per cent.
“A great positive for Nigerian buyers is the fact that there are a record number of banks available to provide mortgage options with an equity contribution of 30 per cent. These banks are both Nigerian and international banks.
“The next generation of upwardly mobile buyers have sought to learn lessons from the mistakes of the older generation. Low property stock is still a hindrance, but in the search of ways to affirm their global international standing, a second passport is also now an important acquisition.
“Primary focus hotspots for such buyers are the U.K, Cyprus, Greece, Malta, and some Islands like St. Kitts and the Dominican Republic.
“For the most mature of our investors, one thing we’ve identified is people downsizing due to children completing their education. They are now focused on the important matters of Legacy and Estate Planning.
“However, whatever your position or current standing, we at Daniel Ford International are always available for a no-fee non-obligatory conversation.
“We are open to the various means of reaching out like zoom and any other comfortable medium and are able to give tailored advice”, Daniel Ford boss noted.