EFFECT OF COVID-19 ON REAL ESTATE SECTOR


If you have already bought a house and were waiting for possession, get ready for a delay. If you are planning to buy one, wait for things to settle down or engage a professional broker to handle the transactions because the broker has been trained on screening a client, negotiation title searches, legal forms, and the pricing market. It is difficult to think of a business that has not been impacted by the COVID-19 pandemic. However, for the Nigerian real estate sector, the impact of the crisis can be a double whammy. The sector, especially the residential segment, has already been struggling with project delays, regulatory changes and low sales for the last few years.

The quantum of impact will depend on how long the lockdown will last and how long the economy will take to get back on track. Many experts said that the situation may deteriorate into a recession similar to what we saw in 2016, if not worse. Here are the possible outcomes for the real estate sector.

Project delays
If you are among those homebuyers who were expecting to get possession of your house anytime soon, get ready for a delay for a few additional months, as project deliveries will get deferred. Given the lockdown, construction in incomplete projects has come to a complete standstill across the country.“We foresee a delay of around five to seven months in project completion on account of supply disruption due to the virus outbreak. 

The duration of project delays will not just depend on the lockdown. Even after the lockdown gets lifted, it will take time for developers to resume construction work in full swing as most of the labourers have left for their home towns. “With fear of the pandemic looming large, many may even opt to stay back in their villages longer. This will lead to a shortage of labour and further project delays. During times of uncertainty, most people defer plans to make big-ticket purchases. As a result, home sales are bound to fall.

Price reactions
Most experts and developers believe that prices will largely remain stagnant though the costs may go up. “There will be no change in prices as transactions are not taking place. The prices will resume at the same level, “In the primary market, I do not foresee any major changes. The market scenario has been ‘challenging’ for some time now, and possible discounts have already been factored into the current pricing, I do not see the option for any further rate reduction. 

Developers anticipate increase in raw material cost, but they may not be able to pass that on to buyers in the current market situation. “Nigeria is a big importer of steel and iron products, technical construction equipment as well as plastic and fibre elements from China. With production in China going down, the prices of these materials may rise, increasing costs and reducing profit margins for developers. There may be outliers though. “There is always the possibility that a few cash-starved developers with high unsold stock may sweeten deals for buyers. But this was happening even before the pandemic,"

The Recovery Path
A study by Rapid Result Realty, a property consulting firm, expects global businesses to see a surge once the pandemic dies down. “Nigeria will witness a slowdown in the current and coming quarter, however, it stands to benefit post-recovery" If you were planning to buy a house before this pandemic, revisit your budget. Check whether your investments that you were planning to redeem for a
down payment are intact or if they have suffered a setback. Ideally, you should wait for things to settle down since the prices and inventory are unlikely to change but if you have a deal currently, you can fast track the deal for you to be on a safe side.

For More Information on Property Valuation & Appraisals, Real Estate Investment and Property Management Contact Us:
https://rapidresultsrealty.estateagentsng.com
1, Soji Adepegba Close, Off Allen Avenue, Ikeja, Lagos Nigeria
Email: Enquiries@Rapidresultrealty.Com
Website: Www.Rapid Result Realty
Facebook: Rapidresults117
Twitter: Rapidresults117
Instagram: Rapidresultsrealty
Tel: 08034417191, 09026523021.


Comments

Post a Comment

Popular posts from this blog

HOW TO RENT AN APARTMENT

Image
A lot of people don’t take renting an apartment as seriously as they should. I don’t understand those people. While renting an apartment is not buying, the place will serve as your home and should be considered carefully. Not only is your home a big part of the way you feel about yourself, but it’s also a reflection of how others see you. In Lagos, an apartment market I know all too well, people often feel lucky to find anything. There’s enormous demand, and sometimes hundreds of people will charge through the streets to look at exorbitantly expensive shoe boxes that they all saw on the internet. To play in this apartment market, or any other real estate market, you have to do your homework. Have a clear idea of your financial needs and your living requirements. Going blindly from apartment to apartment will be a waste of everyone’s time – particularly your own if you are the busy type. I feel strongly that an apartment should be rented with the help of a good broker. It can ...
Read more

How to Sell Your House

How to Sell Your House If you are selling your home and there is no or little activity, or activity but no offers, you should revisit the price. The real estate is volatile, and prices change daily. I always keep in my mind the saying” Old listings, like old soldiers, never die – they just fade away” when it comes to pricing. Also, don’t worry about competition; count on it you will save yourself a lot of time. Competition may even help you by drawing in prospective buyers within the same market. If you know your property is valuable, remain patient. As long as you’re realistic about its value, there will be a buyer eventually. Just make sure what you have to offer is the best and you need not worry. If you have a broker/Real Estate consultant, make sure he or she understands what the value of the property is to you. But don’t be too bullheaded if your broker thinks the property is worth far less than you do. The broker should be the expert, and you’re paying him or her not...
Read more