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COVID-19 presents investment opportunities in real estate

Despite the devastating impact of COVID-19 on all sectors of the economy, experts believe it is not over for real estate, even as they reel out silver linings for investment. Dayo Ayeyemi reports

 

To conservative individuals, this is not the best time for real estate investment due to COVID-19 crisis, which, within the space of five months, has partially eroded some of the gains of the sector over the years.

 

To them, despite various government’s recovery-related financing support, the property aspect of the industrial, retail and office markets has continued to be severely challenged,, no thanks to rental payment holidays, reviewof occupancy space, closure of small and medium range retailers, high level vacancies, and diminished product and services sales.

 

But to the shrouded investors, the best time for real estate investment is now when the interest rates are out of this world and investment in treasury bill is no longer attractive.

 

Speaking with some experts on what this season holds for real estate investment, they said in spite of COVID-19 impact on the sector, there were pockets of opportunities where knowlegeable investors could put their monies without burning their fingers, describing it as “areas of silver lining.”

 

Opportunities

 

To them, investments in middle income property, rental property and low cost housing are areas of silver linings. Speaking with New Telegraph, Principal Partner, Richard Olodu and Co., Mr. Richard Olodu, said that the good thing about real estate investment was that it never depreciates.

 

According to him, COVID-19 has already dealt with all sectors and investments, pointing out that the best thing about real estate investment “is that you will get your investment back.”

 

“The yield may not be high but you are going to get your returns,’ he said. He stated that people were currently looking in the direction of real estate because of high interest rates and treasury bill, which, he said, were no longer attractive.

 

Olodu, a former spokesperson of Lagos branch of the Nigerian Institution of Estate Surveyors and Valuers, said: “Real estate investment provides the best way to keep your money.”

 

He argued that no matter the quantum of money in the hands of investors, real estate had  enough space for diverse investments.

 

“People have money but it also depends on the quantum of investment they are looking at, ranging from low income to high income,” the property consultant said.

 

As at today, according to Olodu, investment in middle-class property has the market, explaining that with N40 million or more, people could invest their money and get high returns on investment (RoI). “It is not everybody that can afford N500 million.

 

With N100million, you can buy some flats, renovate them and sell to the middle class, and make your returns,” he said.

 

Silver lining

 

According to another real estate consultant and a former President, International Facility Management of Nigeria (IFMA), Mr. Stephen Jagun,  there is a silver lining in the medium and low income aspect.

 

Justifying his stand, he said there was a serious problem in Ikoyi and Victoria Island property market now due to COVID-19 to the extent that over 1,500 expatriates officially relocated to their countries.

 

“The impact of this on Iikoyi and VI property market is enormous and many Nigerians who invested in these properties are also counting their losses,” he said.

 

As at now, he explained that many investments had been moving from the high-end neighbourhoods to middle income quarters. Jagun, who is the Principal Partner, Stephen Jagun and Associates, said: “People are moving back, putting pressure on the middle income, while the latter is putting pressure on low income.

 

“People are moving to Ikeja, Surulere and Maryland. People with spare cash are not in an hurry to spend. They can buy property now and sell later.” Despite COVID-19, Vice President, Real Estate Developers Association of Nigeria (REDAN), Mr. Debo Adejana, said that real estate investment skyline was moving, adding that the sector was becoming more relevant.

 

According to him, the best investment right now due to COVID- 19 is rental income. He enjoined investors to look for residential apartments for investment, saying, “this is winning the game over office.”

 

According to him, middle income housing is currently popular as a result of COVID-19, adding that the “smaller your size, the higher your returns on investment.”

 

Optimism

 

“This is very short term. In post-COVID-19 era, office and commercial real estate will bounce back. It’s either you go into this investment as a whole or go into it with a group of people,” Adejana said. However, Adejana, who is the Founder/Managing Director, Realty Point Limited, gave a piece of advice to would-be investors to seek knowledge about real estate investment. He said: “Whatever way you want to go, ensure proper documentation, and ensure control and security of investment. If it’s crowdfunding, you must know the exit plan, the management structure.

 

“People should not give money to developer without any documentation and clear terms.”

 

Last line

 

Real estate has the potential to generate employment, increase productivity, raise standard of living, improve social security and alleviate poverty.

 

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