Notwithstanding its global scale, the impact of the Coronavirus pandemic on real estate sector in Nigeria was not as devastating and pointedly far-reaching as the EndSARS protest which was hijacked by hoodlums, leading to destruction, vandalisation and looting of public and private assets.
Analysts therefore see that protest as a major watershed in the country’s real estate sector that changed predictions, projections, expectations and investment decisions in the immediate term.
A report by the Nigeria Police estimated that 205 critical national security assets, corporate facilities and private properties were razed down and vandalized during the protest. A conservative value of the destroyed assets was put at N700 billion.
Similarly, Lagos State which was the epicenter of the protest and the worst hit, released a pictorial report which showed that buildings were the greatest casualties of destruction as almost 50 buildings comprising 12 private and 11 public buildings, two public property and 14 police stations were burnt by the hoodlums, thereby deepening the state’s housing deficit burden.
Some of these buildings, residential or commercial, were more than one floor, meaning that they had several occupants, including families, single tenants, businesses, corporate tenants, etc—all rendered ‘homeless’ one way or another.
“For a sector that has consistently recorded negative growth in many quarters including the third quarter of this year, this is a huge blow. The sector has, by reason of this massive destruction, been plunged into a hopeless situation that will push it further into negative growth territory,” Peter Ogunyemi, an estate manager, noted.
MKO Balogun, CEO, PFI Global, added that the large scale destruction meted out on retail malls, public and private buildings posed a huge challenge to the real estate sector, coming at a time when construction cost has escalated due to the impact of Covid-19 and the sector’s peculiar problems.
“This is not healthy for a sector that is still struggling with high demand-supply gap; these destructions mean housing stock has reduced and rebuilding these assets have high cost implications for governments, businesses and the economy at large,” he said.
He observed that Nigeria could not afford this wanton destruction of its assets now, especially residential buildings, when it is battling with low home ownership level and high housing demand-supply gap estimated at 25 percent and 20 million units respectively.
Damola Akindolire, managing director, Apha Mead Development Company, affirmed, saying it was going to be tough for the sector and its investors. “The retail sector is the worst hit and that is going to affect so many things in that sector,” he said, noting, “this is a sector that is still smarting from the impact of Covid-19 which has reduced not just patronage but also footfall in the malls.”
The easing of the lockdown as a result of the pandemic which almost dried up market transactions, marked a gradual return of investors’ interest and confidence in the real estate sector. But this was automatically dampened by the protest. The retail sector was the worst hit.
“What has happened has grave implications for this sector. What it means is that, for a long time to come, retail sector will find it difficult to recover and grow. Again, it will be difficult for the sector to attract fresh capital because security of assets is not guaranteed. Investors have to consider all the risk factors before investing in this space,” Ogunyemi noted.
However, though that remains to be seen, some analysts argue that the protest had its benefits. “Sometimes, people think that a protest like this leads to the bleeding of businesses; yes, temporarily it does, but in the long term it, it leads to confidence. Foreign investors and Nigerians in Diaspora will be aencouraged to come in and invest because they know we now have a government that is accountable to the people,” Stephen Akintayo, CEO of Gtext Homes, said.
John Oamen, Co-Founder of LiveVend.com, a real estate price discovery platform, agreed. He added: “We know that Nigeria is a very appealing country for investors, and just knowing that they can be safe and not affected by the issues of insecurity, to a large extent, would go a long way to send signals that our country is open to investment.”
These analysts expected investment inflow into the sector amid hope of a more secured Nigeria and a government that will be more accountable to its citizens, noting that an increase in investors’ appetite and confidence would mean a surge in market transactions, leading to higher assets value.
