The retail business, globally, is about the worst hit of the various segments of real estate market by the ravaging coronavirus, otherwise called Covid-19 pandemic, a recent survey by CEBRE has shown.
CEBRE, an acronym for Czech Business Representation to the EU in Brussels founded by three most important cross sectoral Czech entrepreneurial and employers organizations, notes in the survey that as Covid-19 is shutting down shops and causing millions of people to lose jobs, property owners’ ability to collect rents has also been limited.
According to the survey, in Dubai, arguably the home of real estate, just 10 percent to 20 percent of mall retailers paid rent in April and many not until the end of May, noting that the paying share was higher for other assets like multi-family apartments which recorded 89 percent, though not all in full.
In Nigeria, the retail business had seen what looked like a revolution, leading to the development of Western-styled retail malls such as The Palms in Lekki, Ikeja City Mall, Novare Lekki Mall, Jabi Lake Mall in Abuja, Festival Mall in Festac Town, Lagos, among others.
These malls, apart from the convenient and comfortable experience it offered, retail business also created a lot of jobs for many categories of workers, including mall attendants, farmers, manufacturers, and even middle-level manpower who worked as centre managers, company lawyers, etc.
But today, with the drastic drop in consumer purchasing power and the social distancing rule, both footfall and occupancy rate have dropped considerably and with that retailers income has also dropped, limiting their capacity to pay rent.
Fabian Ajogwu, a professor and senior advocate of Nigeria (SAN), is the chairman of Novare Equity Partners, developers of the 22,000 square metre Novare Lekki Mall in Lagos.
Ajogwu disclosed at a real estate Webinar n Lagos recently that retail business was really going through tough times as a result of the rampaging coronavirus pandemic and governments’ reactionary measures.
“What we have witnessed in all of this is a drop in what we call footfalls in the mall for obvious reasons; the impact is not necessarily from COVID-19, but from the reactionary measures that has come from government across states and regions,” he said.
Continuing, the professor explained, “what that has done is to shut down demand. When you shut down demand, then there is a drop in footfall in the mall and we have witnessed 30 percent drop in the first three weeks of the lockdown measures and subsequently a gradual rise coming back.”
The CEBRE survey affirms this, pointing out that real estate services firms expect rent prices to decline for even the strongest sectors. It notes that recovery may take, at least, 12 months for warehouses and, at least, 36 months for shops, restaurants and hotels.
“The pain is universal. But as is often the case, the biggest companies may be best positioned to control their fates—and many of the world’s largest property owners have already announced steps designed to speed up the comeback,” the survey noted.
It recalled that, in early May, real estate powerhouse, Brookfield Asset Management, said it would spend $5 billion to invest in struggling retail businesses, pointing out that Brookfield owns 152 million square feet of retail space and another roughly 300 million of offices, hotels and apartments.
“We believe this is a critical component to getting the economy moving again, and we would like to partner with companies and entrepreneurs that can draw on our capital and expertise to stabilize and grow their business,” said Ron Bloom, head of Brookfield’s private equity division and leader of this retail initiative, in a statement.
