Recession: Investors, others point to strategies for unlocking opportunities in real estate

When real estate industry stakeholders including investors, developers, value enhancers and economic influencers converged in Lagos recently for this year’s edition of Refined Investor Series (RIS) hosted annually by Fine and Country International (WA), the consensus was that the Nigerian economy was in dire straight, more so with the crippling impact of the economic recession in the country.

The recession which, in the opinion of Atedo Peterside, chairman, Stanbic IBTC Bank, is a product of low business and lack of investor confidence arising from poor handling of the economy by its managers, is the singular reason for low GDP growth, high inflation, declining productivity and consumer purchasing power that have affected all sectors of the economy, particularly real estate.

“What we have now is an unusual economic situation where there is a combination of high inflation and negative growth as against periods in the past when we had high inflation, but positive growth”, he said, pointing out however that there is still business in the economy, but there has been a decline and within what is left, there are opportunities for investors.

To unlock these opportunities amidst the unusual economic situation, the stakeholders said it has to be recognized that, in real estate, the music has changed such that, according to Andrea Geday, MD, Elalan Construction, developers have to creatively seek out-of-the-box solutions to the challenges.

Geday emphasized the need to involve prospective clients and take their opinions into consideration in every step of the construction process in order to give more value and avoid waste, stressing, “now, people are much more choosy, they want value for their money and they know exactly what they want”.

“We believe there are still opportunities in the market”, affirms Hakeem Oguniran, MD, UAC Property Development Company (UPDC), disclosing that out of the 170 housing units they projected to sell this year, in spite of the recession, they have sold 111 units and hoped to sell more before year end.

Oguniran however, advised that evelopers have to really think out of the box by digging deep, creating winning real estate projects through joint ventures and strategic developments.

The reality in the market, he said, was that the luxury segment of the market was very soft and challenged, and there is an oversupply; the premium category has potential for growth but requires right offering and pricing, while the classic and comfort category has great potential which is only realisable with appropriate pricing and financing support.

“Re-think your value proposition beyond the usual value drivers such as location, quality and pricing; softer issues are now critical such as flexibility in payment plan; there is need for customer leadership, project customization, financing support, post delivery management, and asset replacement”, he advised further, stressing that time is now to sit customers down and get exactly what they want.

For those involved in marketing, advisory and consultancy, the strategies to employ include early bird pricing, target marketing, flexible payment plans, creating a strong competitive demand, inspiring and creating confidence in the market. Udo Okonjo, CEO, Fine and Country, disclosed how these strategies were adopted by her company, leading to the selling of 75 percent of apartments in the Oakwood Residences on Cooper Road, Ikoyi , Lagos from August to October this year.

At a time when the level of rent default and vacancy rate are so high, the issue of facilities management and maintenance has become a struggle more so with payment of service charge by tenants who may have either had salary cut or lost their jobs. But the service providers are not going to close shop nor will property owners leave them to rot.

The way out, according to Femi Akintunde, the Managing Director, Alpha Mead Facilities Management Limited, was to go for quality projects and developments which, he explained, were about tenants attraction and retention. “It is important to clearly define your target market even before starting the project”, he advised, adding that one way to save cost was to invest in technology that promotes predictive maintenance.

CHUKA UROKO