Business

Obih-Obuah: COVID-19’s impact’ll lead to new operational models

Ruth Obih-Obuah is the Founder and Chief Executive Officer of 3Invest, a real estate investment company in Nigeria. In this interview with Dayo Ayeyemi, she speaks extensively on the likely impact of COVID-19 on Nigerian real estate sector and other issues

 

 

The global economy today is bleeding from the impact of a disease that the World Health Organisation (WHO) has described as a pandemic. What is the immediate impact of this disease on real estate?

 

 

I must state that Covid-19 epidemic is not an unpredicted pandemic. The disease itself is novel but the pandemic is not unprecedented. The world is facing multiple health challenges.

 

To address these and other threats, 2019 was the start of the World Health Organisation’s new 5-year strategic plan, the 13th General Programme of Work. The first three threats to global health was air pollution and climate change, non-communicable diseases and the global influenza pandemic. Good health underpins almost everything that people want – to be free of illness, to escape poverty and hunger, to work, to secure independence, to gain fulfilment through education and learning, to be treated fairly and without discrimination, and to live in a safe environment.

 

Good health is a precondition for an outcome and measure of sustainable development. The United Nations 2030 agenda for sustainable development embraces these aspirations. The Sustainable Development Goals (SDGs)3 are the objectives of a programme that aims to be a comprehensive blueprint for human development. The largest impact of COVID-19 is undeniably human and all sectors of real estate are affected.

 

The impact and aftermath of COVID-19 will most likely lead to new operational models. The question is, will this have enhanced integration of technology across all aspects of life and business? Will air pollution reduction and reduced air travel improve productivity and shift the need to travel and bring to fore the importance of sustainability.

 

From a demand perspective, how are Nigerian and global property markets responding to this pandemic? What are your concerns as this disease becomes an economic problem?

 

Thank for the opportunity to address the built environment with this question. There is an urgent need for the sector to embrace sustainable development. Sustainable global action is at the centre of a better future where humanity will enjoy peace and prosperity while protecting the planet and bringing an end to poverty and health crisis.

 

For an inclusive, economic growth and shared prosperity, the built environment must begin to take the lead to plan, design and manage more resilient and sustainable communities. The built environment and related activities have traditionally been notorious for depleting natural resources and adversely affecting the environment, economy and society, thereby compromising future generations.

 

The sector impacts either directly or indirectly on the implementation of almost all United Nations (UN) Sustainable Development Goals (SDGs). We advocate for preparedness, sustainability and resilient infrastructure and operations.

 

If you were to advise the government, what would you tell them to do for the real estate sector in this crisis period, considering that the sector can impact the economy positively?

 

As an industry, the responsibility for tackling global issues especially climate change lies in our hands. We have an opportunity to improve our efficiency and environmental impact through sustainable practices.

 

The government should deliberately partner and collaborate with the private sector in order to find solutions to secure our future. The government should review and build sustainable policies that can encourage sustainable practices.

 

Some analysts say that because of the social distancing rule, transactions in the property market have dropped significantly. What has been your experience so far? Do you foresee that affecting house price too?

 

Although it is straightforward to assess the immediate and direct real estate impact of COVID-19 – with the total global shutdown. The indirect effects are yet to be fully realised. The largest impact of COVID-19 is undeniably human. This is certainly a call to embrace sustainable human development. This outbreak will further highlight the evolution of how we live, work and invest.

 

Clearly human, economic and business impact is inevitable, but new measures, policies and procedures, and investing in the right infrastructure, will help mitigate risk in the short and longer term. I personally see a slow down due to fear but my advice would be: Buy but don’t sell. A good investor knows this is a good time to wait then strike.

 

In the face of everything, coronavirus, falling oil price, the economic slowdown, etc, what are your growth projections for this sector?

 

I believe it is too early to make a projection. Like I stated earlier, we need to experience this phase then we can make clear projections. Anything I say is a mere function of my thoughts from my perspective.

 

Your company has partnerships with some overseas developers where the impact of COVID-19 is severer. Tell us how this virus has affected all that?

 

These projections are mere speculations. I took some time to study some forecasts and reports, and my conclusions are, we lack empirical data. One thing I certainly took away from my short time at the MIT Centre for real estate is how not to wear the rose-tinted glass when gathering data.. Empirical data implies that the information is based on experience, not just speculation. There is a strong relationship between real estate and science, so when making predictions we must consider all major factors including threats and uncertainties.

 

How prepared are we for climate crisis being the greatest threat to human life?

 

In 2019, air pollution was considered by WHO as the greatest environmental risk to health. We expect short-term slow investment activity in the global real estate sector this first half (H1) of 2020.

 

However, a bounce-back is anticipated in H2, 2020 if the virus is contained with more cautious investors. Overall, we must embrace the reality of not such a positive 2020. My greatest fear is not just climate crisis but our unpreparedness.

 

What is the solution?

 

Its simple, embrace sustainability and that’s why we at 3invedt has recently changed the focus of our annual Real Estate Unite event to Unite Sustainability Summit and this was driven not only by personal experience but through thorough research.

 

Your company has partnerships with some overseas developers where the impact of COVID-19 is severer. Tell us how this virus has affected all that?

 

I believe you are referring to our partnership with Houston EB5. I’m not sure if you are aware, the U.S EB5 programme was hugely affected by two US government policies: Increase of minimum Investment threshold from $500,000 to $900,000 and the recent January Immigrant temporarily travel ban.

 

However, nothing beats a foreign exchange transaction in times like these. Part of our resilient approach to business is to develop  multi-currency revenue models. So back to your question immediate effects look blurry but positive long-term implications.

 

Apart from being a difficult business environment, Nigeria is also a very competitive market where competitors go all out to out-do and outwit. What has been your experience and attitude to competition in this crowded market?

 

 

3Invedt has a dynamic business model. I started this company shortly before the 2008 downturn. We have been hit severally. In 2011, we digitised our model, we developed resilient business models that can thrive in any business condition. In 2014, we were directly hit by Ebola.

 

So, our first reaction to this COVID19 back in January was clear internal communication, education and readiness. We were the first to shut human operations long before the announcements. Our mantra at 3Invedt is live well, work right, invest wisely. Well being and healthcare are our greatest approach.

 

Our competition is hugely internal and that challenges us to develop business approaches that become a direction for competition in the market.

 

Proptech, blockchain and online marketing are aspects of technology that are increasing, narrowing the space for professional practice and real estate service providers like you. What experience do you have to share?

 

If you can recall 3invest was a catalyst for digital operations in Nigeria. We digitised our business models since 2011 when we launched 3investonline portal. We actually shut that platform a few years ago to launch another online platform which has been in the pipeline. We are also using this period to push out projects in our pipeline and we will be making announcements soon. I believe technology will play important mitigator and plans for new online transaction platforms will be accelerated in 2020. I’m a great believer in proptech and I believe blockchain will close a lot of gaps in the sector but must be approached with the right resources.

 

To what extent do you leverage technology in your operations? What benefits have you seen, especially in your return on investment and overall bottom-line?

 

3INVEST is a tech-based company. We have a lot of digital media operations currently running like our syndicated real estate radio show and podcast. Like you know, we also own Lagos Cowork, although the space industry will be affected by this outbreak, the business model still remains Proptech and you don’t need to physically be a tenant. So, good use of tech will give industry player an edge.

 

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