•What They Told City People
Right now, very many real estate players are lamenting how they’ve lost billions to the COVID-19 Lockdown in Lagos & Abuja, and each of them is plotting strategies to make them bounce back, once things return back to normal in May, reports City People Publisher, SEYE KEHINDE. While the big players, who have lost money, can still absorb the shock, the small players are not finding it funny at all. Read on.
The Easter season is usually one season when many top real estate companies make big money, via their sale of Land, Flats and Apartments. Usually, they would put up promotional adverts in the newspapers, TV and Billboards across Lagos, with mouth-watering promos.
It is the same thing during RAMADAN. The Moslems are not left out. The real estate companies usually come out with special promos, specially targeted at the Moslems, inviting them to buy plots of land and apartments. But that has not been the case this year. Easter has just ended and Ramadan is about to start. Many real estate companies have not done promos, all because of the Coronavirus pandemic which necessitated the shut down of Lagos, Abuja & Ogun State.
With the Lockdown, potential customers & clientele can’t go out to buy land & properties because of the uncertainties surrounding the Economy. The widely held belief is that Nigeria, like most countries, is set to enter a Recession and many doomsday predictions have been suggested. As it is, many people are not in a spending mood. All they are doing is taking a Lets-Wait-And-See attitude.
And in some cases, getting clients to meet up with the weekly and monthly servicing of the debts they owe, due to purchases they made in recent past has become an issue. Not only that. Many of the Real Estate companies have shut down and gone on enforced break, in compliance with the lockdown order.
When City People asked many Real Estate CEOs what they feel about the effect of the COVID-19 lockdown on Real Estate business, they all told City People that the industry is currently going through a rough patch, but they are all optimistic that once things return to normal, they will bounce back. Already, many of them are plotting strategies to help them bounce back.
Adron Homes GMD, Aare Adetola EmmanuelKing who was one of Real Estate CEO’s who promptly reacted to the COVID-19 outbreak by giving out relief materials, says the current lockdown will definitely affect the real estate sector. But he sees the situation changing soon. According to him, “The COVID 19 pandemic will affect Real Estate business during the lockdown. Absolutely. Yes, real estate business will be affected, because human needs have shifted to basically Food and survival strategies. Businesses are grounded and fewer business actions and activities all around the world. Real estate business strives amidst commercial and industrial activities”.
“But immediately after COVID 19 pandemic, things will get better because a lot of businesses revolve around real estate. All business activities are carried out on real estates. So there is going to be an upward surge in the demand of real estate products, either for high ends or low ends; High ends for those that made money during the lockdown, professionals like face mask makers, relief materials package makers, sanitizer companies, fumigation experts, medics, etc or those who lost money during the lockdown and now want low end properties. This applies to commercial and industrial markets too. Either which way, there is going to be Upward and down ward buyers and realtors and real estate developers will be the actors and the gain earners. It’s going to be a very busy year for realtors and real estate developers after COVID 19 pandemic globally”.
Does Kennedy Okonkwo , the CEO of MEDOMAK, a big real estate player in Lekki, Lagos think Covid-19 crisis will affect real estate business this year?
“Yes, it will in the short term, he says. “I am looking at maximum 3 months because people want to drop price to guarantee instant Liquidity which doesn’t mean they can reproduce at the same price afterwards because the cost of production is really very high now. Raw materials are expensive and unavailable.
Dr. Bamidele Onalaja, the dynamic GMD of RevolutionPlus Property also agrees that in the short term, COVID-19 crisis will affect Real Estate business this year. “Absolutely yes,” he says.
Ayobami Kareem, a top-rated real estate Queen also agrees. “Of course, Yes. The COVID-19 Lockdown will definitely affect Real Estate. A potential buyer will inspect any property he or she is buying. We can’t do that now. We can’t do inspection now because of the lockdown. We know things will get better,” she explains.
Otunba Olumide Osunsina, the GMD of Megamound Properties also agrees. Megamound is a big real estate company. “COVID-19 will definitely affect Real Estate business across Nigeria, he says. “Customers are not investing. They are holding back for obvious reasons.
Builder, Mrs Modupe Ogunbanjo also agrees that the COVID-19 Lockdown will affect Real Estate business. She says, for instance, a Client that indicated an interest in the purchase of 180plots of 648sqm sent a letter explaining that due to the COVID-19 LOCKDOWN, he won’t be able to bring his draft for the Initial deposit, as agreed earlier before the LOCKDOWN.
He promised that upon resumption of normal work, the transaction will be closed appropriately.
We agreed to intensify our Telework Contingency Plan. Digitization of our Products and Services. What are the CHALLENGES, SOLUTIONS &SUGGESTIONS TO OVERCOME?
“Effectively, Viewing which precedes buying and selling a Property/Land has stopped completely because the Buyer avoids contact with the Seller or Agent and vice versa.
“The Coronavirus Pandemic continues to impact the Real Estate Industry and ability to close transactions. Prospective buyers are not able to go for inspections for obvious reasons, such as social distancing and mobility. In some instances, some prospective buyers may want to ride in the same car with the Seller or Agent but not for now.
Our prospective Clients are mostly Corporate organisations and all of them have shut down because of the Governments directive.
Both Institutions and Developers that can afford what we are offering have all shut down.
Some of the newly identified prospects are hindered due to lack of movement for inspections and access to funds.
From the look of things generally, most inspections can only take place when the lockdown is over and normalcy returns. However, the Websites can be used as an additional marketing channel. Buyers seem to have decided to put everything on hold. There’s a lot of uncertainty with how their down payments will be affected and job uncertainty. Lenders on the other hand worry over Mortgage loan defaults.
Many Developers will not be able to project the Real Estate market accurately due to this disruption and as a result of this, the market will become unpredictable and many will be mindful of investing in the sector until they get a clearer picture of the recovery process. There will be an increase in Joint Ventures. The valuation will thrive as Values will change.
Those in hospitality will have to observe better hygiene to attract more customers as many will be mindful knowing how highly contagious the COVID-19 virus is.
It is expected that the rate of buying properties and land will drop generally.
Many business owners will suffer the impact and there will be an increase in people wanting to sell their assets (Distress Sales) to raise quick funds for recovery of their business and general operational costs. In this instance also, Prices will drop. On the other hand, Agency which is another area may experience a happenstance where more people from the areas that experienced a high level of violence and unrest during the COVID-19 lockdown may want to relocate to safer and more peaceful affordable areas”.
“We have decided not to capitalise on the COVID-19 pandemic, Mrs Modupe Ogunbanjo explains “But rather take it as a Wake –up call to reconsider if our previous business model is able to survive the changes that will come from the lockdown”.
“How do we expect customers to behave moving forward, such as financial complaints from them etc? What will and won’t matter to them, and how we can accommodate the likely issues with customers? We wondered how we can Digitize our Products and Services, and start offering them online?
Can we implement Technology to balance any loss of earnings by offering new ways to connect with customers?
According to her, “when exposed to fast-changing information in the time of crisis, we have a systemic tendency initially to overlook weak signals, then to overreact to emerging issues before we take a more calibrated view to avoid looking indecisive or misinformed, it is our “Best Current View”.
Mr Tayo Sonuga, a real estate guru and founder of Havens Home, (an upscale real estate company) on the Island, in Lekki, Lagos, agrees that the real estate sector will most likely suffer a setback. “As with the impact of every recession, the real estate sector would also feel the brunt. But the unknown factor right now is how much impact would be felt. I think there could be a post-COVID reality impact, in the sense that companies have now discovered the possibility of more people working from home. They may, therefore, opt to reduce their city office spaces and rent overheads. But then again, we don’t know how much of that will happen yet”.
“I think the state of the economy after the lockdown in terms of inflationary pressures, exchange rates etc will determine a lot of things as well”
“In the UK and other advanced countries, they’ve set to repair their economies and buffer the shocks for businesses but your guess is as good as mine, as to what the Nigerian government is doing or not doing”.