Whether you are looking to invest in real estate, buy or sell a home, get an office space, open a real estate company, or find the perfect rental in 2019, it helps to know what you will be up against.
Nigeria’s real estate market is constantly shifting, with investment approaches evolving as consumers’ demand shape the trends and choice of investors in the industry.
The real estate experts polled in a BusinessDay survey say small size apartments, co-working offices, community malls and property technology (proptech) are the way to go in 2019, as they are the various areas that meet consumers’ demand.
As such, real estate investors who stay rigid and play by old rules may be outpaced by their more flexible, informed and relevant industry counterparts.
Olurogba Orimalade, Chairman of the Nigerian Institution of Estate Surveyors and Valuers (NIESV), Lagos State Branch, said movement into smaller size investments in real estate is already taking place.
“Going into next year, small unit investment is the way to go. Even for those that are used to the big size property investments and all of that, if you talk to them now, they are looking at going into this kind of development, Orimalade told BusinessDay.
He said this is because the “highest population in Nigeria is within a certain class, so why stress yourself to build to a class that is less,” he queried.
The opinion of Modupe Anjous, MD of Rydal Mews Limited, a real estate firm, was not different as she said 2019 will be the year of disruptive innovation in Nigeria’s real estate sector, considering there will be a lot of cohabitation and co-working space as against the large and more expensive spaces and investments.
“There is higher number of millennial who are below 50 years of age in the working industry; definitely you have more young families,” she said.
“Whenever two bedroom apartments are developed, it goes faster than three bedroom and the former is less expensive; putting that into consideration, going into 2019, although it is already beginning to happen, smaller spaces, which has been imbibed in other countries, will start happening in Nigeria”, she said.
Rising income and low unemployment rates give renters a high spending ability, that is however not the case in Nigeria considering the country’s minimum wage has been constant for the last 8 years and recent figures by the National Bureau of Statistics (NBS) shows that unemployment rate was up 23.1 percent in Q3 2018.
As such, investors and developers see a lot of Nigerians relocating to smaller units instead of the normal 2-3 bedroom apartments owing to insufficient income and declining purchasing power.
Nigeria with the highest population in Africa has one of the widest housing deficits in the region, amid high mortgage rate and insufficient income.
The commercial office space is also not left out in the forecast by the industry experts. For the sub-sector, co-working space initiative is the direction the players are projecting as the future for the country’s commercial office space considering that it is less expensive.
With evolving technology, more people tend to imbibe the idea of working from home, and as such large office space will soon become a thing of the past.
Responding to the expectations, Adeniyi Akinlusi, President of Mortgage Banking Association of Nigeria (MBAN) and CEO of TrustBond Mortgage Bank, said this generation does not mind sharing things coupled with the fact that sharing is more affordable than a single person occupying large spaces.
“Even those who want to live large and occupy big spaces can no longer afford it; so a lot of people will share cost by co-working and living in small unit spaces going forward,” he said.
For the retail sub sector, various stakeholders see community malls as the way to go and not the 20,000 square metres malls which have above 50 percent vacancy rate, as BusinessDay survey reveals.
Dolapo Omidire, Founder of Estate Intel said “definitely smaller malls are going to be constructed.”
Technology is also seen as a disruptive agent in retail as more consumers are now shifting their shopping online, and as a result more online shops and vendors are springing up in different online platforms.
The incentive of delivering the products shopped online to the consumers’ door step has made online as a shopping destination more attractive to Nigerians, but the conventional malls still remain preferable to mostly the elderly and not the young, as the latter makes more use of smart phones that the aged.
Technology is also projected by industry experts as a factor that will impact Nigeria’s real estate sector going into 2019. Already the use of the internet in searching for properties to acquire or rent is a platform that has carved a niche for the companies in that space.
The online platform is welcomed by many players in the industry as it has made transactions among developers, property owners, prospective buyers, and potential tenants easier, compared to the cumbersome processes witnessed few years ago.
Some of the benefits of the online property platform include the fact that it is time and money saving as against the conventional moving from one location to another in search for properties.
This sub-sector of the property industry has given birth to firms like Propertypro.ng (formerly ToLet.ng), Hotels.ng, myPadi.ng, and Nigeria Property Centre. Through the online platform they are able to render different services like leasing of landed property, house & office acquisition, hotel accommodation, and provision of hostels for university students.
“Think back to the 80s and 90s; if you were going to purchase a property, you would spend many days trying to find a decent agent who will charge you high fees to take you from property to property in only a few locations -meaning he was limited,” Yemi Johnson, the COO of Hotels.ng told BusinessDay.
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