Many shopping malls, residential properties and offices are now shadows of their former selves as the vandalisation and looting by hoodlums have left property owners, investors and insurers with damages running into billions of naira.
With a growing culture of mistrust built over decades, most Nigerians are still puzzled about why the government will shoot its own citizens or why the dreaded Special Anti-robbery Squad (SARS) continued to operate with impunity despite being previously disbanded in 2017, 2018 and 2019. According to analysts, the protest which was eventually hijacked could have been prevented.
While the property destruction and economic losses are the opportunity costs of government’s inability to successfully deliver on the stalling police reform, it has however left players in Nigeria’s real estate market with some hard lessons
“A central theme that is reinforced with regards to property investment and development is the case for added security, property insurance and enhanced risk assessments,” Ayo Ibaru, COO / Director of Research at Northcourt Real Estate said.
From the hallowed streets of Ikoyi, Lagos most affluent neighbourhood, to Cross River, Enugu, Kogi state, Abuja, etc. the unrest and restiveness caused by hoodlums was felt in several geopolitical zones in Nigeria.
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Shopping malls, commercial centres, supermarkets, government buildings, banks, police stations, hotels, schools and notable private properties were some of the casualties that were either looted, burnt or damaged by the hoodlums.
The disruption caused by the hoodlums who hijacked what started as a peaceful protest of good breed Nigerians demanding an end to police brutality and bad governance is a big hit for Nigeria’s fragile economy which was already suffering from the double challenge of COVID-19 and low crude oil price. It is even worse for the property industry which has been struggling to exit recession since 2016.
The medium-term implication of the vandalization could lead to capital flight as investors may consider liquidating real estate holdings with plans to move to safer climes, relocate to western cities and pause on investing in Nigeria’s real estate market, as compiled from the ‘Impact of Recent Vandalisations on Property Investment and Development’ report by Northcourt Real Estate.
Research analysts at the Lagos-based real estate firm expressed optimism that property developers, financiers and investors will now return to their strategy rooms with a single aim to generate deft ideas that reverse any losses suffered.
While many players in Nigeria were taken by surprise by the damages from the vandalisation, the event has however thought the stakeholders some hard lessons.
Security
According to analysts, the recent incident was a wakeup call to industry players to tighten and invest in security as some facilities with heavy security were left untouched by the hoodlums.
“Higher security votes represent the logical and responsible thing to do under the circumstances – this can be expected in both public and private quarters,” analysts at Northcourt said.
The expected demand for security also means business opportunities for existing and potential players in the security field.
Insurance
Recovering from the vandalisation may not be entirely difficult for some real estate players who had their properties and investment insured but for those without any form of insurance, it will be a bad nightmare turned reality.
While claims are expected to be very high as the damages are expected to run into billions, analysts believe some insurance companies may have a hard time paying claims. An issue that may serve as a catalyst to the longawaited consolidation of the insurance industry is here.
Risk assessments
Analysts believe the recent event which largely affected the retail segment of Nigeria’s property market will be an eye-opener for investors and property developers in terms of assessing possible risks in a chosen location for real estate development.
“Going forward, real estate players will see the need to hire experts for risk assessment,” a Lagos-based real estate analyst said.
