Real Estate: Unlimited opportunities for investors to explore in 2021

January 12, 2021
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As people are looking for where to invest money in 2021 and make returns on their investments, housing professionals and analysts advise that real estate sector still holds the aces. DAYO AYEYEMI reports.

It’s no longer news that Nigeria’s economy is in recession for the second time in four years.

The economy is further challenged by the effect of COVID-19 pandemic, which cuts across all sectors, including real estate.

However, as people are looking for where to invest and make profits in the year, housing experts and analysts, who spoke with Nigerian Tribune, are of the opinions that real estate sector offers best investment’s opportunities.

According to them, investment in middle income accommodation, studio apartments and warehouses can give high returns on investment for daring investors.

Irrespective of the economic situation, they tasked government on policies that would move the sector forward.

Speaking,  former President, Nigerian Institute of Building (NIOB), Mr Chucks Omeife, boasted that  real estate sector was full of  opportunities at all times irrespective of the prevailing economic or global circumstances, especially in countries with  high deficit of housing stock.

According to him,  despite the economic recession and COVID-19 pandemic, demand for housing especially residential accommodation, has kept increasing, adding that individuals would continue to strive to access the limited housing stock available.

As a result of this, he stated that middle class and mass housing provisions in the urban areas would provide opportunities for investors.

He said “The opportunities that exist in real estate are to be found in the middle class/mass housing provisions as these are in very high demand, especially in urban areas with high population.

“Investors must concentrate effort in the provision of middle class/mass housing which is affordable. This period is not the time for the type of luxurious and high class housing priced at millions of naira as those who could afford such will rather start small on their own due to economic unpredictability.”

Despite recession, the erstwhile president of NIOB stated that real estate still holds the aces, depending on the clients/groups being targeted and the housing type being provided.

“I think the real estate is a serious contender for best returns on investment if investors will employ strategic planning in their operations to assess the current situation, market requirements and direction for optimum result and good returns on investment,” Omeife said.

While urging government to work more on ease of doing business in the real estate sector to enhance investment, Omeife  explained that factors to be considered should centre mainly on strengthening of statutory requirements which include ease of dealing with issues of construction approvals and permits; availability of  power, electricity; and easy process of property    registration.

Others are ease of getting credit facilities, protection of minority investors, friendly tax regime, ease of trading across borders, enforcement of contracts agreement, ease of resolving insolvency issues; and availability of strong foreclosure law to protect investors and funders.

Director, Valuation Office of the Lagos State Government, Mr Kunle Awolaja, was opmistic about real estate rebound, saying they would be light at the end of the tunnel for the sector in 2021 despite the resurgence of COVID-19 as well as the recessed economy.

“The real estate sector will surely rebound especially considering the dynamic nature of the sector and its players.”

On segment that promises good returns, Awolaja, who is an estate surveyor and valuer, urged investors to focus on mini residential apartments, adding that in commercial segment, investment in warehouses would hold higher yields.

“In the residential segment, mini or two bedrooms residential apartments will hold higher yield for investors, while the commercial segment will have warehouses holding higher yields too,” he said.

However, he advised government that fiscal and monetary policies that would enable the development of a virile real estate sector should be entrenched.

Besides, he stated that an efficient land administration programme that would enable ease of doing business should be worked out by the government.

Chairman Nigerian Institution of Estate Surveyors and Valuers, Lagos Branch, Mr Dotun Bamigbola, noted that health challenges created by COVID-19 pandemic were very serious ones, adding the effect was the economic recession that followed.

In 2021, he said it would take a few investors, who wanted to make something happen, to do whatever that is possible to achieve what could be achieved under the current circumstances.

“Some may hold back to watch what direction the economy, particularly the financial sector, will be moving,” he said,  adding that there were projects which have been ongoing since 2019 or first quarter of 2020, with the hope of completion this year.

With commercial office currently being affected by social distancing and public gathering restrictions under the COVID-19 safety protocols, Bamigbola stated that  residential and commercial retail would  still enjoy considerable higher investment inflow in 2021.

He said “These are real estate segments of need for people now with  the stay at home order, less social gathering or office work as you are required to work from home more and shopping for groceries and other basic needs will be essential. Warehousing will be closely behind those.”

On government’s side, the chairman of Lagos’ NIESV said the authority should streamline the regulations and give tax breaks on real estate development for enable ease of doing business, particularly in the real estate sector.

He said “This is not the time to bring up new or increased regulations or tax policies. The economy is too fragile to support the few developments coming up. It is more of sheer will on the part of the investors now.

“Moreso, government’s capacity for implementation or enforcement is currently hampered by the reduced man power with the Levels 1 to 14 officers compulsorily off work due to COVID-19. However, it does not mean standards like construction in accordance to the planning approval, building codes and others should be set aside. They must be maintained, and that is a collective responsibility, not just for government.”

A fellow of the Nigerian Institution of Surveying, Mr Olufemi Odetunmibi, said that COVID-19 pandemic and economic recession have provided a very good opportunity for the real estate sector to flourish “provided the players know the right thing to do.

To boost investors’ confidence, he urged that access to land should be simplified.

“Government also needs to put policies in place that ensure equitable distribution of available facilities. A good data base will help in this direction,” Odetunmibi said.

Contrary to others, Chairman, HOB Estates Limited,  Chief Olusegun Bamgbade, said  there was no hope  for real estate sector in 2021 considering COVID pandemic and the recession in the economy.

“There is no particular segment of the real estate sector that can promise high yields for investor in 2021,” he said.

He advised government to prioritise openness in all ramifications to enable ease of doing business and virile real estate sector.

 

Mortgage sector 

Omeife bemoaned Nigeria mortgage sector, saying it is not yet prepared for serious business in the housing sector due to lack of data and information.

“Despite this the interest on mortgage loan is still very high and beyond the affordability of many people. The mortgage system itself needs to be reactivated to meet the needs and expectations of Nigerians in such a way that repayment will not constrain and compromise standard of living.

According to him, the process of accessing mortgage must be made friendly and requirements minimised in line with global best practices to encourage individuals to access the facility.

“Yes there is hope for the mortgage sector as housing ownership is based primarily on mortgage not cash and carry as it is presently done in Nigeria. The only way to close the gap of housing deficit is to have a robust mortgage system in place which can drive the home ownership and acquisitions. The only direction that can make Nigerians own their homes with ease,

On mortgage, Awolaja said “There is hope for the mortgage sector but there’s the urgent need to conduct adequate property and demographic data to get on workable mortgage system.”

Bamigbola said the mortgage sector would also react to the second wave of the pandemic like other businesses.

“Depending on whether government’s policy is to lockdown or otherwise, mortgage will also so be slower and lesser in existence. This may also be as a result of the fact the government or the mortgagees will be requesting moratorium due to loss of business time due to the pandemic restrictions,” he said.

According to Bamgbade, there is hope for the mortgage sector if parties could agree to restructure the mortgage facilities otherwise “mortgage bankruptcy may collapse the entire mortgage structure.”

“You can’t force a mortgagee to oblige his mortgage bills in the period of COVID-19 pandemic when you know he is not working. If your tenant is not working, you are indirectly not working as well. Where will he get money to pay his rent?”

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