For estate developers whose business of developing housing is activity-based, this is not the best of time as coronavirus lockdown and stay-at-home order have crippled them considerably. Same for estate valuers for whom social distancing is a spanner in the works.
“It is a sad period for professionals because everybody is just sitting at home and because the development side of our business is activity-based, nothing is happening,” Adetokunmbo Ajayi, CEO, Propertygate Development and Investment Company, said in an interview.
Like operators in other sectors of the economy, developers have their concerns. They are concerned about what comes after the pandemic; what will be the state of the economy and how it will affect their business. They are also worried about how they will recover from the pandemic, especially with all the noise everywhere about an impending recession.
Hopefully, there will still be life after coronavirus and developers are, therefore, thinking of what measures to put in place to ensure that their investments and that of their clients are secure. They are also thinking of how they will innovate their business to ensure that the economic impact is minimal.
“We will carry on with our business when the storm (COVID-19) is over and so, this period offers us the opportunity to be thinking about our funding strategy. For those who have projects that are still on the drawing board, this is the time to perfect the design and align it with market realities,” Ajayi said.
For estate surveyors and valuers, the situation is really dire. But technology is helping out. The lockdown and the social distancing directive make it difficult, if not impossible, for valuation jobs to happen. For the same reason, physical inspection of facilities and houses for sale or rent cannot be done.
But Frank Okosun, CEO, Knight Frank Nigeria, has his way around all these. “We still do valuation job,” he told BusinessDay in an interview, adding, “but we put a clause to it stating that the valuation was done but we never visited the property.”
“What we are doing now is arm-chair valuation, but we do that without putting our stamp to the report. That has to be done after the lockdown and we have gone to see the property physically,“ he explained.
Ajayi expressed worry over losses incurred by developers in terms of delay in projects funded with bank credit and deals that were about to be concluded now put on holds due to uncertainties, adding that even after the lockdown, developers will still have challenges with building materials which are imported mainly from China where the rampaging virus originated from.
Olawale Ayilara, Founder and Chief Executive Officer of Landwey Investment, a frontline property development company, shares Ajayi’s concerns, but revealed that it has not been an entirely dull moment for them at Landwey.
“We’ve been able to leverage the use of technology over the years to prepare us for such a time as this. We have been using VR technology to create a unique experience for our clients and for this period,” Ayilara disclosed in an interview in Lagos.
According to him, the virtual tour function on their website has become very useful for their sales team to hold virtual inspections with clients, right from the comfort of their homes and without missing out on the opportunity to invest.
Ayilara believes that Proptech has come to stay and they are always looking for novel ways to transact business, while still delivering value to their clients and so, it has been quite beneficial to them.
“It has helped us think of complementary services outside of the traditional real estate business. Through it, we have launched subsidiaries like Alausa.ng and Crowdownership, with more still in the pipeline,” he enthused.
Real estate market in Nigeria has been the most traumatized sector, always at the receiving end of any economic downturn. Nigeria passed through a 15-month economic recession between 2015 and 2016. Real estate sector did not recover from that recession until the first quarter of 2019.
“Between 2016 and 2019, real estate performed poorly as an asset class. Unfortunately, at a time when it seemed as if it was coming up, coronavirus came and it has gone down again,” Ajayi noted, sharing Okosun’s view that post-COVID-19, both the residential and commercial segments of the market will struggle.
“We expect rent default in the residential market that may arise from pay-cuts and job losses; there will also be increased vacancy rate in commercial office space; most offices are empty today because everybody is working from home and that is likely to continue post-coronavirus,” Okosun posited.
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