BusinessDay
Nigeria's leading finance and market intelligence news report.

COVID-19: Reasons now is good time to invest in property

With Coronavirus pandemic ravaging the world economy, everybody is preoccupied with survival, leading to a slowdown in the economy and economic activities including product demand and supply.

Therefore, for those who have disposal income, analysts say this is a good time to invest in property and their reason is that everyone is playing safe now and it is actually the time for ‘big boys’ to come out to play, pick up the best deals and create wealth for themselves.

“Every investor in every asset class knows that real gains are made when the market is sluggish, when the ‘average, and mostly over-cautious investor’ is holding back investment decisions,” Udo Okonjo, CEO, Fine & Country West Africa International, confirmed to BusinessDay.

Okonjo noted that most serious investors know the present situation, especially as it affects the property market, is the best time to pick up bargains in all real estate categories, particularly prime residential real estate in Ikoyi, Victoria Island and other locations.

The property market in Nigeria has barely recovered from a prolonged recession. The slowdown in the market has been made worse by the rampaging coronavirus which has virtually wiped out market transactions due to restrictive policies put in place by the government, especially the social distancing rule.

Most of the investors in this market are edgy and are asking a lot of questions. As an investor, Olawale Ayilara, the CEO of Landwey Investment, is concerned about what would be the state of the economy after the pandemic and how that will affect the real estate business.

Though Ayilara sees transactions still taking place through the use of technology, he admits that the present situation will lead to a price fall. “Yes, there will be a change in pricing, which will be as a result of inflation, as the economy struggles to recover from the losses,” he affirms.

Okonjo noted that there are many motivated sellers and investors in the market at a time like this, advising that a wise investor should “look for motivated sellers in the current market who want to move their property stock because of high-interest rates and slow sales.

“There are also opportunities for buying off investors who bought at the early stage of an off-plan project and who may no longer be in a position to complete due to change in financial circumstances”.

She noted further that where the transaction was denominated in dollars, it may also be possible to negotiate a further discount with both the seller and the buyer for cash investors and end up with an exciting investment property with high rental yields and immediate capital appreciation.

Real estate is known generally as a store of value or wealth. At a time like this when Nigeria is contemplating devaluation of its currency, the Naira, investing in property makes much sense.

“For those with mid-to-long-term funds, investing in real estate is a great bet and good protection against inflation. With the equities and bond market going through a bearish season, and inflation still at double-digit although slowing, long-term funds are better invested in real estate,” Okonjo counseled.

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