Challenges in global opportunities for

From Dubai to United Kingdom or United States to South Africa and Nigeria, the property market is struggling, still smarting from the impact of the global economic downturn that hit the real estate sector like a thunderbolt

However, analysts say savvy investors should see the potential in the present challenges, insisting that these challenges present opportunities for investment that hold promise for fabulous returns on investment (ROI).

In Nigeria, it is a story of glut in the midst of high demand, as the market is top heavy with upscale properties asking for unaffordable prices while the bottom, where demand is, is empty in most cases. The investment potential is, nonetheless, quite high.

Olubiyi Ayodeji, managing director, Acuity Assets (UK) Limited, the UK Partner Company to Estate Links (Nig) Limited, notes that the global economic crisis led to declines in the cost of the average UK property by as high as 30 percent in some Northern parts of the country, pointing out however that the London market, which drives the entire UK property market, suffered slight reverses with some parts having no decline at all.

Ayodeji, who spoke in a paper titled ‘Investing in the UK Property Market: Opportunities in a global downturn’ in Lagos recently, recalls that the UK property grew by 393.3 percent in the 20 years from the first quarter of 1986, before the start of the 90s recession, to the peak of the boom in Q4 2007.

He advances a number of reasons why London and UK is the next haven for savvy investors, saying that London is UK’s largest city and one of the most diverse cities in the world with huge rental demand.

According to him, buy-to-let segment of the rental market was upbeat, explaining that a house bought with a naira equivalent of N13 million has the potential for a N1 million annual return on investment.

“There is an increasing number of single person households. A significant percentage of migrants to London from abroad or from within other regions of the UK are either single persons or young couples, both of which are prime rental candidates”, he said, adding that there has been reduced number of first time buyers, and 750,000 willing first time buyers locked out of the market due to economic conditions have no choice but to rent.

He adds that there is huge shortfall of rental properties with the Department for Communities and Local Government, predicting that the number of households in the UK will rise by 252,000 a year between now and 2031. “Less than 100,000 new homes were built in 2012. This chronic shortfall underpins the relative resilience of both house prices and rents,” he says.

Also in his presentation titled ‘Potentials of the US Market,’ Damola Awosika of Estate Links Limited in US, says global economic bubble affected many parts of the US with house prices decline hitting some regions by more than 70 percent loss in value, some more than others.

He discloses that low purchase price and high rental returns makes US an ideal buy-to-let investment market, adding, “the investment will yield good rental returns in addition to a strong resale value on exit; Detroit, Orlando and Atlanta are currently some of the strongest US markets in terms of growth and rental return and there is huge demand for rental properties, with rent rising.”

Ayodeji says further that Estate Links and Acuity Assets work for investors, assuring that they source and buy properties for their clients in carefully chosen areas of London and the rest of the UK, renovating the properties, if necessary, before letting.

Awosika also reveals that Estate Links plays a beneficial role for investors in US through research and analysis, due diligence before making offers, facilitating handover and letting and providing realistic exit strategy and sales support.