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Experts explain why real estate investors should rethink strategies amid Covid-19

Fundamentally, the world has changed, no thanks to  coronavirus, whose ravaging impact has brought hardship and dislocation in the economic and social lives of individuals, households and organizations.
Given the massive hit on the pockets of people and on the finances of businesses, discerning and smart minds are already reinventing themselves and rethinking their respective situation.
The current situation has not only compelled people to rethink, but also to re-imagine and refocus their strategies. Experts are, however, of the view that the situation also offers opportunities for informed investors who also need to rethink and re-imagine the future or work and of business.
The experts who spoke at a Webinar hosted by Fine & Country West Africa in Lagos, noted that, in tune with present realities, certain tailors and fashion designers are now making masks for people; caterers  and restaurants are actively delivering food and chemists  are even considering drug manufacturing.
The Webinar with the theme, ‘The Impact of Covid-19 on Real Estate Investment’ was an online version of the company’s annual Refined Investors Series which, according to the authorities of the company, is a conversation they have put together with their knowledge partners.
“We are in an unusual time which has lots of uncertainty, complexity and anxiety; at a time like this, it is important to inspire confidence in investors by providing information and market intelligence so that they can make informed decisions, Udo Okonjo, the company’s CEO, explained in her opening remarks.
The CEO stressed that now “is the time to rethink, re-imagine and refocus,” adding, “we are here to advise and provide a roadmap for investors on how to navigate not just real estate but other sectors too.”
But in making their investment decisions, the investors owe it as a duty to themselves to think and imagine things differently to reflect current market and economic realities.
“If tailors or fashion designers, caterers and chemists are rethinking their strategies in line with the opportunities Covid-19 has presented to them, there is no reason stakeholders in the real estate market should not also be rethinking their strategy in the direction of the opportunities that may also lie in the sector,”said  Bola Adesola, Vice Chairman for Africa, Stanbic IBTC Bank.
 Adesola explained that many businesses would still need offices despite work at home;  manufacturers would need factories and warehouses while e-commerce companies would need logistics such as sorting and dispatch centers and  this is why  developers should still build commercial premises.
But she has a piece of advice for such investors and/or developers. “When we rethink the real estate sector, the starting point would be to explore the key typical drivers of the sector. These drivers include market forces (demand, supply and pricing), economic factors and business confidence,” she said.
The  subset of these drivers, according to her, weigh heavily on profit margins and they include interest rates and access to finance, unemployment and real income, government policies, infrastructure, yields on investments, population, demographics location, occupancy rates, quality of properties, etc.
She noted that all these factors  influence demand and supply side of the sector and the real estate ecosystem as a whole, advising further that smart thinking investors on residential properties should take a holistic view of the entire market.
Adesola noted that the further the Covid-19 pandemic persists, the greater its impact on the world economy, believing  that the extent of the aftermath would most likely be kindest on individuals and businesses that are seeking more opportunities to tap in the midst of the crisis.
“Therefore, whilst we focus on our lives and our livelihood and even our liberty in the midst of the lock down, we need to think smart,” she advised, stressing that “opportunities exist even for tenants and property transactions will always happen even in this trying time.”
Andrew Nervin, Chief Economist at PwC, agreed, saying that what Nigeria needed now was ensuring that the business environment was enabling and also to do economic restructuring which, he noted, seemed to be happening  with oil subsidy taken away and exchange rate  going in the right direction.
“Now is the time for people to prepare to participate in the real estate market. And there are opportunities in Lagos as the largest city in the country. After this crisis, we are going have a new approach to real estate. Nigeria has a very strong economic potential and Lagos which is projected to be one of the world’s largest cities presents incredible opportunities in real estate despite the scarcity of land,” he said.
Fabian Ajogwu, chairman, Novare Africa Real Estate, developers of the Novare Lekki Mall, was full of concerned about the impact, not of Covid-19 per se, but what he called “the  reactionary measures that has come from government and across the state and regions” on commercial real estate.
 Ajogwu, a Professor and Senior Advocate of Nigeria, explained that what the government measures had done was to shutdown demand. “When you shutdown demand, then there is a drop in footfall in retail malls and we witnessed a 30 percent drop in the first three weeks of the lockdown measures,” he said.

 

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