Why now is good time to invest in real estate amid bad economy

Despite the poor state of Nigeria’s economy as reflected in a galloping inflation that peaked at 19.64 percent in July, high exchange rate, local currency devaluation, among others, now is a good time to invest in the country’s real estate and expect good return, experts have said.

Nigeria and Nigerians are currently passing through challenging times when high food prices, unassailable energy costs and general uncertainties in both the polity and economy have conspired to make consideration for investment a false-foot for individuals and households.

But the experts advise that, even though other assets classes such as government treasury bills, stocks, bonds, etc have become no-go areas at the moment, real estate stands out from the crowd because, historically, investment in it has proved valuable protection against high inflation rates.

The experts note that savvy investors participate in the real estate sector because it can provide passive income and a way to gain from investing in it without operating or financing properties.

“Real Estate investment offers exposure to a hard asset that typically provides a high rate of return, and if the asset is held in the long-term, there is a guarantee it will appreciate over time,” Laide Agboola, Co-founder/CEO, Purple, explained in an interview with BusinessDay.

Investment in real estate for savvy investors is timeless and, according to Udo Okonjo, CEO, Fine and Country West Africa, time to invest in real estate is always right provided there is a solid understanding of the key fundamentals.

“Every astute investor understands that there are pockets of opportunities in any economic cycle, and if those opportunities are aligned with your unique objectives as an investor, then you take the opportunity on board,” Okonjo, who is an investment, advisor, said.

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In the current market, she advises, “if you are in the market for an owner-occupier home, if you already have the funds, waiting for a few years to buy with our galloping inflation, local currency devaluation and global construction supply chain delays, chances are it will get more difficult, and so if you are ready, make it happen.”

Okonjo noted in an interview with BusinessDay recently that, in real estate, average investors would always make average returns whether the market was up or down, adding that it took having a refined, accurate and intelligent insight, matched with uncommon clarity of vision to make great returns in any economic cycle.

Agboola, too, sees opportunities in the sector despite the economic downturn, citing Lagos where he noted that the market for residential property has been in a perpetual state of undersupply, such that property demand continues to outpace supply.

“A sector where demand outruns supply offers compelling investment opportunities,” he said, adding, “the opportunity to invest in Nigeria’s real estate sector is a matter of creating a solution to trends in urbanisation and the unmet needs of many Nigerians.

“At Purple, we have spotted an increased demand for high-quality experiences and the need to broaden access to affordable housing and prime commercial space. We are dedicated to being a reliable partner who can fill the gap wherever there is a need,” he assured.

To achieve this, he said, they would, among other things, leverage the disruptive influence of technology in the market, stressing that technology was gaining traction in several areas of the market.

“We have noted the rise of digital rental platforms, property management, and recently the rent now, pay later (RNPL) model, a spin-off of the buy now, pay later (BNPL) credit solution gaining popularity in our sector.”

Nigeria’s digital transformation has helped reach a vast chronically underserved population. In Nigeria, digital financial services increased financial inclusion from 21.6 percent in 2010 to 64.1 percent in 2020, signalling how the rise of technology can impact a sector.

“As fintech products become increasingly integrated into different proptech offerings in the market, we see an opportunity for technology to further our customer base and enable more access to property ownership.

“We want proptech to be leveraged to increase access to housing and property ownership through a suite of intuitive investment solutions that can be accessed digitally in a way that is safe and easy to manage,” Agoola said.