Experts predict tough time for real estate sector
Real estate practitioners in the continent say, coronavirus impacts on the industry may be the biggest in history and could take two to three years before a revamp could take place.
This assertion was made by experts from Nigeria, South Africa, Botswana, and Ghana during a webinar themed, ‘The effect of CoVID- 19 on real estate in Africa: The impact of Foreign Direct Investments (FDIs) and palliatives organised by the Nigerian Institution of Estate Surveyors and Valuers (NIESV), Lagos State branch through its resource centre.
Setting the tone, the Managing Director, CBRE Excellerate, Nigeria, Jemil Dawodu said the current experience could take the sector back to a similar situation in 2005 during the global economic crisis, lamenting that the effects of coronavirus appear to be a little more severe than that period.
Companies, he observed are struggling financially and Nigeria is moving towards a situation where people can’t pay rents amid possible wage cuts. He predicted a 50 per cent reduction in revenue or even more to the real estate sector.
According to him, regardless of the gloomy economy, FDIs will still come into Nigeria as the nation is an emerging market as witnessed in the last recession.
“There might be a reduction in FDIs returns. There is hope and foreign investors would still come in because opportunities lay within Africa and we haven’t started to scratch the surface. If you take co-working, for example, is a new concept in Africa and come outside COVID 19, you are going to see a huge number of investment in co-working spaces. People are going to change in line with the dynamic of the market.”
Lagos NIESV Chairman, Adedotun Bamigbola said African real estate market is not immune from the shocks of COVID 19, stating that the impacts is being seen and hitting the high-end tourism/leisure, commercial and residential real developments in the short to medium term.
He said it was obvious that most proposed developments in this direction will either be suspended for 12 to 24 months in different parts of Africa especially in countries where oil contributes over 60 percent of their gross domestic product.
To cushion effects of the pandemic on real estate investments in Africa post-COVID 19, he said different African governments through their central banks and mortgage financing regulatory agencies must urgently work out different palliatives for real estate industries in order to sustain investments, save millions of low-income jobs and sustain the production of housing for low to medium-income earners.
To him, the commercial and retail ends can also enjoy sustainability if FDI is encouraged with one form of incentive or the other. However he said, it’s necessary that the ease of doing business index in the economy can be substantially improved if the ability to obtain a registered title for development and the planning approval processes in each African country is made easier and less cumbersome than it was before COVID-19.
The Chief Executive Officer, Tespest Gold, Botswana, Neltah Mosimanegape, explained that the Covid-19 pandemic has been a double shock to the industry and real estate professionals are very worried about the obvious effects especially the Foreign Direct Investment coming into the country.
Contributing, the Managing director, Landsdowne Properties, South Africa, Mr. Jonathan Kohler said the effect of Covid19 in the real estate sector is huge, especially in the residential space.
Earlier, the Chief Executive Officer, Estate link Limited, Mr. Gbenga Olaniyan, said the Covid-19 is not the best of time for practitioners maintaining that in a situation whereby the financial gains made last year, two or three years ago are been ridiculed and simple projections are becoming unrealistic due to the scourge of Coronavirus.
Olaniyan, a fellow of the NIESV noted, “African government’s purse is running dry and that is indeed a point in time to re-strategise irrespective of the level of social strata a person belongs.”