Unlike the food market which has been very active amid the ravaging impact of coronavirus pandemic, the property market globally has remained largely quiet as investors hold back investment over uncertainties and fears surrounding the deadly virus.
In Nigeria, though lay-offs and pay-cuts are forcing some people to downgrade their accommodation needs, market transactions have dropped significantly for reasons of social distancing rules and also because people are now more concerned about their health needs.
“I think for now the worry about the virus is still paramount in people’s heads and not about investment,” noted Chudi Ubosi, Principal Partner, Ubosi Eleh+Co, hoping however that, “as we go back to work and the economy reopens fully, there will be need for discussion about investment and landlord/tenant relationships”.
“Healthcare investment has been brought to the forefront in Nigeria with pharmaceutical and redevelopments leading the way,” notes Ayo Ibaru, Chief Operating Officer at Northcourt, a real estate investment solution company.
Ibaru who spoke in an interview with BusinessDay, pointed out that the hospitality segment of the market is the hardest hit as business travel and conferences have been cancelled, adding that hotel chains are now remodeling their businesses.
According to him, “the office market is yet to get back on its feet from the 2018 recession and co-working will have to readjust its operations to succeed. Many homes will continue to double as offices,” he said.
Nigeria is not alone in this lull. Even mature markets like UK and the US are also feeling the pinch. PropertyWire, an online residential property platform, reports that there is uncertainty in the UK regarding whether property is a safe and secure asset during the pandemic.
It notes that some 20 percent of property investors were planning to buy one or more properties in 2020 but will no longer be doing so due to COVID-19, citing research from FJP Investment.
“Today’s research demonstrates just how COVID-19 has affected people’s property investment plans,” said Jamie Johnson, chief executive of FJP Investment, adding, “there is a clear reluctance to engage with the market right now from both buyers and sellers, despite the fact that real estate is still regarded as a safe investment avenue in this volatile period.
“Far from being business as normal, I believe prospective buyers and sellers will still tread with caution in the coming month,” Johnson said, hoping however that “once there is more certainty about the future, it seems likely there will be a rush of activity in the property market.”
He noted further that fewer people want to buy a house at the moment, recalling that in December 2019, 68 percent of non-homeowners hoped to buy in the future, but that has now fallen to 52 percent.
Ibaru recalls too that when the pandemic started in December last year, everyone went into panic and different people were saying different things about the real estate market.
“But as we have spent weeks under the Covid-19 circumstances, we are beginning to see market corrections, which we had seen coming in from the last recession,” he said, noting however that “even though we now see that some opportunities are opening up, investors are a bit more cautious.”
Continuing, he said, “again, there is retail; the problem with retail is that because the economy has been badly hit, people now do essential spending; everyone is very careful about what they spend money on.”
