COVID-19 and Its Impact on Real Estate in Nigeria
The impact of the COVID19 pandemic can be felt in different sectors of the economy, including the real estate industry. The Fitch Ratings revealed that the pandemic will push the Nigerian economy into recession with GDP contracting by 1%. Coupled with the diminishing oil revenue, non-oil GDP will also fall due to economic disruptions in major cities currently under lockdown.
With major cities on compulsory lockdown, hotels, restaurants, malls, office buildings, luxury spaces are currently vacant. There are a number of considerations regarding Post-COVID: Will employers be convinced to continue the work-from-home system? Will the demand for office space decrease when the coronavirus outbreak is over?
Most people are faced with two major concerns over the COVID-19 pandemic- contracting the virus and the decline in income level. The lockdown has no doubt led to the loss of jobs for many individuals while others are dealing severe salary cuts. People that depend on daily income to meet their obligations are stranded.
Concerning rental housing, experts predict that property owners could face cash crunch as there will be high default on rent. Housing advocates say the ripple effects of the coronavirus outbreak could upend housing in major cities like Abuja, Lagos, Port Harcourt and Kano reducing apartment rents by 50 per cent.
For the Nigerian real estate market, relief support from the government will play a huge role in ensuring steady rents and lowering evictions in the housing industry. While some landlords may lose a significant portion of income to retain some tenants, others may have to engage in rent discounting and rent concessions.
Despite the downturn in the real estate sector due to the COVID-19 crisis, PropTech presents a silver lining that can be maximized by stakeholders to stay active in business. Property Technology or “PropTech” involves the use of technology to create and deliver innovative real estate products and services. Though the technological innovation can still be said to be novel, it is steadily experiencing widespread reception, with more people adopting tech solutions in property transactions.
Based on the products and services offered, it can be structured into different categories which include Property Listings, Investment and Financing the construction of properties, Property and Community Management with integrated tools to help communities and homes manage their properties and Flexible Living options such as Airbnb.
Presently, there are no regulations specifically covering PropTech sector in Nigeria. However, the laws and regulations relating to real estate in Nigeria are still relevant to it.