Residential, mixed-used developments to revamp real estate sector
With the surge in second wave of Covid-19 and Work From Home (WFH) becoming an influence in space demand, residential real estate is expected to herald a revamp of the sector.
At present, transactions in that segment of the market are witnessing an increase performance with a good number of office blocks being turned into multi-use.
Also gated communities will see more demand, while a resurgence in demand for three and four bedrooms, the mixed-use projects with well planned residential components are also projected to perform best in the commercial space, while land will remain a resilient store of value and continue to attract investment.
The Chief Operating Officer of Northcourt Real Estate Advisory, Ayo Ibaru, said this at the 2021 Nigeria Real Estate Market Outlook breakfast meeting organized by Northcourt in conjunction with Dutum Construction firm.
Ibaru, who noted the adverse effect of the Covid-19 pandemic and the #End SARS protests on the real estate and construction sector also said government’s reputation for policy inconsistency and uncertainties around its response to possible macro-economic headwinds as well as weak growth, dampened demand for real estate and reduced transactions value.
According to him, the economic dynamics saw Nigeri’s inflation rate rises for the 15th consecutive month to 14.89 per cent, and Q3 Gross Domestic Product (GDP) standing at -3.62per cent from -6.1per cent , a second consecutive contraction signifying a recession.
Also, the real estate’s contribution to the GDP, declined between -3.83 per cent, -3.86 per cent to -4.18 per cent towards the beginning of the year.
For instance, he said the hospitality segment of the sector was badly hit with Transcorp Hotel losing ₦1 billion monthly in 2020 due to pandemic, while several hotels pivoted to “short-let” or ‘short stay’ type accommodation for large corporates.
According to him, the pandemic also led to significant impact on co-working spaces and drop in membership enquiries, with few operators shutting down operations.
On his part, the managing Director of Dutum Construction company, Temitope Runsewe projected a positive cut for indigenous construction firms in 2021 as government move to improve on infrastructure.
He, however urged government to privatise critical infrastructure like Lagos- Ibadan expressway that has large volume of traffic following the dwindling revenue fortune.
According to him, the private sector is the way to go to create local solutions to the nations’ infrastructural challenges.
Also, the Chief Executive Officer of Northcourt, Tayo Odunsi, a Chartered Surveyor, predicted that despite all the inherent challenges in the sector, the property will come on stream with land mark projects that will shake the market.
He stressed that many operators who were working behind the scene during the lockdown are expected to come out with topnotch developments especially with the marginal growth in the economy.
Odunsi also said the technology will continue to be deployed with more virtual meetings going side by side with physical ones, while many will turn to new technology especially the proptech to leapfrog far-reaching and expensive difficulties created by the vandalisations.