On Saturday, February 16, 2019, which is just a few days away, Nigeria will be going to the polls to decide who becomes its next president after four years of President Muhammadu Buhari.
By the last count, there were over 50 ‘patriotic Nigerians’ (presidential candidates) who want to be president of the country but, of this number, only two are critical and they are the incumbent president, Muhammadu Buhari, who is seeking re-election on the ticket of All Progressives Congress (APC), and Atiku Abubakar, the candidate of the main opposition party, the People’s Democratic Party (PDP).
All speculations, permutations, apprehension and even prophecies that Nigerians have heard and seen on this election centre around these two dramatis personae who, in their own right, are formidable characters in the epic drama that defines the upcoming election.
There are many uncertainties right now. The first is on how the election will go. When the elections are through, all things being equal, if it comes and goes smoothly, the next cycle of fear will be on who wins.
Then comes the fear around risk of policy reversals, as there is already a path the government is treading. If another party wins, there are feelers of major changes and policy reversal that will be made.
But the question on every lip now is what the victory of an Atiku or a Buhari means for the various sectors of the economy, especially real estate that, despite the exit of the wider economy from recession, has continued to record negative growth and low contribution to GDP.
“So far, Buhari’s government has demonstrated that it is anti-business which is why the business community does not want him back,” experts have noted, arguing that if he wins the 2019 elections, more young professionals and businesses will leave the country in search of friendlier business environments.
Femi Akintunde, CEO, Alpha Mead Group, recalled in an interview how it took the government up to six months before it could form its cabinet. “The business community was worried about this such that if a new government comes in today and is not ready with its economic blueprint, structure and strategy; if it takes a long time before government gets running, it will be another major issue for businesses and that will ultimately impact on the real estate sector,” he stated.
Besides policy reversals, which an Atiku presidency may embark on, there is the fear, especially among apologists of public sector driven government, that his government will not support social housing and the occasional intervention government makes in the housing sector.
But given that as a result of Buhari government’s anti-business stance, many businesses and young professionals are leaving the country to other countries; the argument is strong that his return to power in the aftermath of the election may not be in the best interest of the economy.
An expert who does not want to be named notes that apart from locals who are leaving the country, relocating their children and putting them in schools abroad, many expatriates, especially those working in oil and gas, telecoms and other service companies, are either returning to their home countries or relocating to other African countries.
The fear here is that these developments might increase in tempo if the status quo persists beyond May 2019 and, for real estate, this has grave implications for the sector, which is, at the moment, struggling.
“The implication of these developments for the property market is that the high vacancy situation in the market will become worse; more buildings will be empty and that will affect their market value,” Roland Igbinoba, president/CEO, Pison Housing Company, affirmed in a telephone interview.
It is estimated that over 300,000 square metres of commercial and 200,000 square metres of residential real estate space are unoccupied and, according to Broll Property Services Q3 2018 Viewpoint on the office market, about 40,000 square metres office space will be coming into the market in the next 12 months.
Igbinoba stressed that there would be increased vacancy rate in the Grade A office market and his reason was that the expatriates who were leaving the country coupled with those who may live in the aftermath of the general elections are the ones that rent such office space.
“The upper residential market will suffer the same fate because it is only the corporates and expatriates that rent houses in that segment of the market,” he said, adding that even retail market would continue to struggle because of the drop in consumer purchasing power which is affecting that space.
However, what is happening or is going to happen, according to Igbinoba, is beyond election or Buhari as president. “What we are looking at here is political risk, but it goes beyond that. Macro-economic factors also play a major role and so focus should be more on them,” he posited.
Akintunde points out that the current state of the economy is very fragile, adding, “The risk of going back to recession is high. At 1.8 percent GDP growth, the economy is really walking a very tight rope. Any little mistake can make it slip.”
He advised that, for whoever comes in as next president, the focus should be on how to diversify the economy to be able to withstand the present pressure. “We cannot take this for granted and any government that comes in should address this quickly,” he added.
