Investor apathy, distress sales, subdued demand are some of the reasons close market watchers say election season is the best time to go to the real estate market and buy, especially for investment.
The property market in Nigeria has been particularly dull in the last six months as investors adopt wait-and-see attitude because of the general elections in the country which start in the next couple of days.
“Potential investors refrain from investing in the real estate market during elections as they sit on the fence anticipating major changes in government policies and compounding drag in the macroeconomic climate,” Ichechi Okonkwo, CEO of Victoria Crest Homes, said.
Okonkwo said this was fuelled by the volatility experienced in 2022 and the pre-election year panic, adding that investors were also restrained by the growing inflation that has shot up construction cost across all indices.
This season is also the time when political office seekers usually visit property market with products to dispose off on distress sales, although Gbenga Olaniyan told BusinessDay that the market was yet to see such products in the open market in this 2023 election season.
“That does not, however mean that pockets of transactions involving politicians giving away their properties at less than market value are not taking place. People are buying these assets from them at reduced prices and they do so for investment purposes,” Olaniyan said.
“Some properties are sold for less than their prices to raise funding for electoral campaigns,” Okonkwo confirmed, adding, “in today’s era of ‘Japa’, smart investors capitalise on the rush to buy-out distress sales.”
According to her, the present stiffening liquidity which leaves real estate developers short of cash is typically the best time for savvy investors because lack of liquidity drives property developers to sell below market value.
According to her, with reports of inflation and interest rates rising, mortgage rates still on two digits, increase in construction costs from 70 – 200 percent minimum, growing population, decline in purchasing power and affordability, even the mid-income and low-income houses are fast becoming unaccessible for average citizens,” she said.
This creates a good opportunity for buyers who, she said, want lower prices as the developers struggle to stay afloat. “Instead of watching and waiting for lower prices, it is safe to buy now based on the budget and needs,” she advised.
Okonkwo said that despite the election season and the investor-apathy, Lagos property market continues to attract investors because of its dense population consisting of mostly upwardly mobile individuals, rising urbanization, and government initiatives to transform the city into a megacity.
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She said that because of the market’s potential for a secure and higher return, some people are eager to invest in its real estate.
She advised that buying a house or property in any economic situation was a personal decision as that represented one of the most crucial purchases people made in a lifetime. “It’s good to find the best-suited property to meet the need. Trying to wait to see the outcome of things might not be the best strategy; these buyers waiting at the side-lines today might get disappointed,” she noted.
On the flipside, some players in the market say that election seasons are good time to sell. According to them, the 2023 election presents a good opportunity for the real estate sector, adding that despite the popular view that an election year comes with challenges, it is not always the case as this particular season brings opportunities into the sector.
“I see more opportunities because this is the time people who do politics as business will be awash with so much money and if you position yourself very well as a real estate practitioner, you will be able to harvest such money,” said an player who did not want to be named.
The player added that real estate was good business because those who have the money won’t take it elsewhere given that real estate is the only safe haven where they can put the money. “So this year is a good one because career politicians will make a lot of money and they have to invest it,” he said.
