Covid-19 pandemic and real estate sector
Nigeria’s real estate sector has not remained the same since the advent of the global Coronavirus referred to as Covid -19 pandemic.
Following the impact of the pandemic on Nigeria’s real estate sub-sector, the sector has remained largely under-performing.
The underperformance of this sector is largely hinged on the low level of effective demand for housing. Affordable housing remains unobtainable, and given the squeeze in consumers’ purchasing power, demand has remained low. There is little or no access to housing finance or mortgage loans at affordable rates. At the same time, the cost of construction is very high and feeds directly into property pricing.
Developers are yet to adopt new building technologies that can assist with quality and cost advantage. The real estate sector has been severely hit by the current pandemic. Given the impact of Covid-19 on consumers’ pockets, as well as the steep pay cuts and in some cases, job losses, the new home acquisition is becoming less of a priority.
Furthermore, the demand for commercial property is likely to remain ever low, with many businesses managing to remain in business.
Following the transition to remote work systems due to the lockdown, it is expected that businesses will incorporate more remote working options for their employees and review their space requirements at the time of their lease renewals, both in the short-term and post-Covid. Essentially, office space requirements are likely to shrink to manage costs.
As for the residential market, a few defaults have been recorded among renters particularly in Lagos, using flexible payment models.Rental payment cycles are still largely annual in Nigeria, hence retrenchment and layoffs are unlikely to have an immediate effect on the market performance.
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