Nigeria’s underground market in real estate looming
• Agents adopt online sales method
With the economic lockdown in more cities in Nigeria, there are fears among industry watchers that an underground market may emerge for estate agents to promote their properties.
The worst hit by economic shutdown due to COVID-1 is home sales. Industry watchers argue that such a market, which is unprofessional, will lead to lower prices due to fewer buyers and a frozen inventory.
In fact, the onslaught by the pandemic and lower oil price as well as the weakened economy has generated deteriorating real estate market fundamentals.
The Federal Government’s battle against the coronavirus has further grounded the industry to a halt — and since real estate sector is not considered an essential industry — face-to-face sales ended.
But members of the Nigerian Institution of Estate Surveyors and Valuers (NIESV) didn’t see such bad practice springing up among the professional stock. They say, their firms are complying with the stay at home order and social distancing.
However, estate surveyors are finding creative ways to continue connecting buyers and sellers. They believe the availability of technology such as online and virtual tours of properties has simplified their work during the lockdown and may also help avert an underground market in real estate.
“Even as we are on lockdown, most agents are working from home and online and are still promoting their properties. For most agents, there is never really any down time. There is always work to do or work that can be done remotely even if it is simply just building an emotional bank account with your clients such as at a time like this,” according to Chudi Ubosi, immediate past President, Africa region, International Real Estate Federation (FIABCI).
Ubosi continued: “Clearly, beyond this period there will be a lot of recalibrations for a lot of people and organizations. Add to this, the numerous forecasts of another economic recession on the horizon, it is obvious that there will be fewer buyers. But as Nigerian real estate goes, despite the fewer buyers, prices may only drop marginally – five per cent or thereabouts, even the prime areas.
“It definitely will again be a buyers’ market but it’s important to always remember why the Nigerian real estate market weathers a lot of storms – less than 10 per cent of the properties on sale have mortgage or loan deadlines to meet. So many time sellers simply withdraw their properties from the market or just simply fix a price and wait it out.
“Every vendor wants to get the best and maximum price for their property. Every buyer wants to pay the least minimum possible for the property being purchased. You cannot get that kind of match with trying to sell the property in an underground market.”
NIESV Chairman, Lagos Branch, Mr. Dotun Bamigbola, also shares the same view with Ubosi when he said, “A lot of professionals across various fields, including real estate, have taken the lockdown as an opportunity to work from home. It is ideal in this situation knowing that the disposable income of many people was almost non-existent before the lockdown.”
Bamigbola argued that the market would respond accordingly to the available opportunities, noting, “With fewer buyers, limited transactions will take place and possibly at fair rates or prices. Mostly, it may be transactions, which were nearing conclusion prior to the stay at home order.”
He stated that “if people cannot do business now it also means that the property supply in the market is not a lot and with limited buyers, mostly due to capacity to transact, it means prices may be generally stable till this is over, or few people may be ready with what they can get now depending on their financial needs. General, a lot of people will wait. The prices at the end will also be affected with consideration for the falling value of the Naira in foreign exchange market.
“This is the time to improve your website as a business, not just as an estate firm. The key thing is that we will not do business as a whole the way we used to do it; everything has changed going forward. Those who are at advantage are some of us who have been ahead in online marketing, social media and virtual tours and all that.”
For an estate surveyor and valuer, Mr. Sola Badmus, “there will be no need for agents to engage in the underground market. The pandemic has limited agents to promote their listings through technological means. As long as the lockdown stands this is the best alternative for agents so they don’t put their lives and also that of their clients in danger.
“The world is a global village and Nigeria is part of the growing technological world. The lack of traditional means to promote property may necessarily affect the market drastically. Technological advancement allows agents to interact with their clients through various social media platforms and messaging applications.”
Badmus noted that the major challenge would be the lack of physical inspection, adding, “most prospective clients prefer to have a feel of the whole neighbourhood and see the major and connecting roads. They also want to see the various landmarks in proximity to the property.”
In his submission, a professor of estate management, Obafemi Awolowo University, Olusegun Ogunba, don’t see the underground market existing, noting, “with lockdown, people are not allowed to move, hence I do not see the market existing.”