As Africa’s biggest economy enters its first recession in five years, an expert has called on Nigerians to take advantage of the opportunity the recessionary period has provided to invest in the country’s real estate sector.
The expert who spoke at the second edition of Investors Series organised by Veritasi Homes and Properties Limited themed ‘Real Estate in Nigeria: Building a Sustainable Portfolio’ said the sector seems to be thriving despite the recession owing to low-interest rates on other investments.
He revealed that people are not buying Treasury Bills and other money market instruments, adding that the equity market is also very volatile.
“Real estate is about the most attractive currently, and we have seen a lot of traction. During recessionary times, we typically tell people to buy assets because assets are cheaper in recession. So, it’s a good time to buy real estate,” said Tayo Odunsi, CEO, Northcourt Real Estate
Odunsi said these factors include legal, physical, and financial factors, where legal factors are things like the zoning, the titles, the building approvals, and looking at the legal entities that are involved in the development.
Read Also: Housemates Technologies launches app to solve housing deficits in Nigeria
“The physical factor includes things like the location – the use, the type of the project, and those kinds of features. The financial is whether it makes sense financially. What is the ROI, what’s the payback period, and what capital is employed?” Odunsi explains.
For Tony Aspire Kolawole, managing director, Tribetta Real Estate, location is important for fast returns in real estate.
He said to make money in real estate; investors have to look at areas where development is coming out great, such that within two to three years returns will be made on their investment.
He noted the significance of government policies in driving investments in real estate.
Apart from that, he said three other things are important. “The information you’re getting, your environment, and the people you are hanging out with. These are what will affect you [in your journey into real estate],” Kolawole said.
Commenting on the event, Nola Adetola, CEO, Veritasi Homes and Properties Limited, said a lot of people do not know how to invest in real estate and have gotten their hands burnt when trying to invest in one.
He stressed that the investors series was to teach such people how to invest, how to diversify their investment across real estate assets and build a very strong portfolio.
According to him, realtors should not only focus on selling, but also on the need to advise investors.
He said investors need to be advised on where to go and when to go. “This is a very good time to advise because there is a pandemic and people don’t know where to go—whether to take their money abroad, invest in stocks, do real estate? What kind of real estate should we do?” he asked.
Commenting on efforts towards affordable housing, he said the bankers are not helping and that government policies are too harsh.
He complained that developers are given “very expensive funds.”
“The credit should go to developers because you conceptualise a project, you go and say you want to sell for N6 million or N8 million, which people can afford, but before you know it, the cement price has gone to N2,600 to N3,600 and N1,000 increase in three months, iron, granite and all of those increased. Who is supposed to pay for that? It has to be the end-users because it’s business anyway even though we want to help,” Adetola said.
He further identified raising funds, government policies, managing projects, managing people, construction cost overshooting, managing artisans as some of the challenges his organization has managed to find its way around.
