Opportunities, benefits of investing in post recession real estate market

The Nigerian economy is in gradual recovery after recession, but not with real estate. The market is still slowing and so, offers opportunity for investors who are ready to visit the market and are ready to make investment in the expectation that the market will always turn the corner.

Savvy  investors understand that real opportunities are to be found in slow and  early stage of  recovering markets which is why, at the moment, there is an increase in investors specifically looking for ‘discounted properties’. Fine and Country, one of Nigeria’s leading property marketing and leasing agents, reveals that  such properties could be found in the prime residential market in Ikoyi and Victoria Island where many sellers are getting more realistic.

The company says there are benefits of buying discounted prime properties, especially for their capital growth.  Appreciation tends to happen faster and at a higher margin in prime real estate, especially when one buys at a discount.

Buying during a recovery economy essentially guarantees good capital growth if done right. An investor could buy as an owner occupier, therefore having a great asset and collateral if needed in future.

Alternatively, he could invest as a buy-to-let investor. Many multinational corporations and top executives who make up the bulk of tenants in this space continue to require good quality rental properties but their budgets have largely been adjusted downwards.

So, by buying at a discount, the investor can attract them with a good market related rental value unlike those investors who over capitalised and have a tough time adjusting to reality. It is therefore advised that buyers always do the mathematics to see that the numbers stack up and there’s a real discount and upside.

At a time like this, buyers should also look out for motivated sellers who want to move their property stock because of high-interest rates, high stock levels and slow sales.  Returns on such investment  are always astonishing.

 There are also opportunities for buying off investors who bought at the early stage of an off-plan project and who may no longer be in a position to complete due to change in financial or other personal circumstances.

Alternatively, if  investment has already  be made and the investor has holding power and perhaps an ability to buy more, this might be the time to ask his broker for more opportunities.  Instances of such purchases abound.

Recently, 4000 square metres property in a choice location in  Ikoyi worth almost N1.2 billion was sold for approximately 35 percent of the value. It was sold within 24 hours.  It was an incredible opportunity offered by an extremely motivated seller with many issues to grapple with.

Real estate is always seen as a  safe hedge and store of value against inflation and so for investors with mid to long term funds, investing in real estate is a great bet and a good protection against inflation. With the equities and bond market going through a bullish season, and inflation still at double digit although slowing, long term funds are better invested in real estate which is fairly illiquid but generally offers solid and less volatile appreciation along with good cash flow if it’s a rental property. Land banking is known to deliver superior returns especially if within a serviced and gated residential scheme.

CHUKA UROKO