Before now, no one would have imagined a period of total collapse or suspension of global economic activities. But we are now confronted with the realities and shock from the dreaded Coronavirus (Covid-19) which became a Public Health Emergency in January 2020 with Nigeria recording her index case by February 28, 2020.
The situation which was initially perceived to be curtailed in a matter of weeks spiraled into months of lockdown and downturn in economic activities. One of the sectors of the Nigerian economy greatly affected by the lockdown is the real estate sector.
The real estate sector in Nigeria is one of the neglected sectors of the economy; attracting little or no attention from the government in comparison with other sectors such as agriculture, oil, energy, aviation, tourism and mining.
Unarguably, the sector shares huge potential as the latter but absence of government intervention, declining consumer disposable income and deficient mortgage facility contributes to its poor performance.
Furthermore, the sector is yet to recover from the 2015/2016 recession which rocked the boat of the Nigerian economy as the sector suffered an average of -4.48% contractions.
Indicators affirming this position show that among Saharan African nations, Nigeria ranked among the lowest in home ownership (25%) compared with countries such as South Africa (56 percent) and Kenya (75percent).
The emergence of the Covid-19 pandemic has not made life any easier for real estate operators as the initial lockdown posed a unique blend of challenges and opportunities in the sector.
On the challenges, the lay-off from jobs and non-payment of salaries in some states of the federation has posed a threat on the ability of tenants and estate owners to fulfill their mortgage obligations.
According to the President, the Nigerian Institute of Estate Surveyors and Valuers (NIESV), Emmanuel Okas Wike, in one of his recent media parleys, “Covid-19 has had a very serious impact on real estate.
Some tenants were laid off from their jobs; making it difficult for them to pay their rents. Estate developers on the other side are not able to access funds to continue their building projects as a result of non-payment of rents from existing estates.”
Furthermore, real estate practitioners are faced with decline in the demand for residential, commercial and retail spaces. It was reported by Proshare that housing represents 17 percent of consumer income in Nigeria. This percentage is likely to drop as a result of job losses caused by the pandemic.
Furthermore, the adoption of a skeletal work model or remote work model will likely reduce the demand for office spaces and affect the decision for the occupation of new office spaces.
In addition, concern for public safety will further advise retail outlets and malls to reduce the frequency of physical sales options in support of a switch to online platforms. This will drive down the need to acquire huge office/retail spaces and reduce high maintenance cost leading to low income generation for real estate operators.
Covid-19 exposed real estate players across the value chain to the possibility of exploring the potential marketing communications offers in meeting the needs of clients. With more people exercising caution on public safety, taking advantage of marketing communication options such as emails marketing, social media, newsletters, branding, and advertising would improve the profitability of real estate practitioners in Nigeria.
Social media in Nigeria has become a huge market coupled with the growing influence of e-commerce platforms. The Nigerian e-commerce segment is enjoying a growing attraction with its project 2021 revenue to hit US$6,128m.
This is a viable marketing model practitioners could tinker to survive in the fast changing business environment. The onus falls on real estate practitioners to reinvent their operations to survive in the new normal created by Covid-19.
Lastly, more collaborative opportunities could be harnessed through membership of associations such as the Nigerian Institute of Estate Surveyors and Valuers (NIESV). Membership of the NIESV will encourage inter-agency collaborations, knowledge sharing opportunities, partnership and continuous career developments across the real estate value chain.
Emmanuel Inyangudoh, an Estate Surveyor and Valuer, writes from Uyo, Akwa-Ibom State.