DESPITE the slowdown of activities in the real estate sector due to inflation, investors/players have been urged to take advantage of the opportunities to deepen investment in property development value chain to reduce cost and also develop new revenue streams.
Besides, they should engage in partnership with other firms and different levels of government on projects.
They are to deepen engagement and participation in the market.
Those were the words of the Lagos-based estate surveyor and valuer, Mr Fawole Olusanjo Stephen, while speaking on “Real Estate Investment in an Inflationary Environment” in Lagos.
According to Fawole, while inflation might slow down activities in the market, it could also constitute opportunities for savvy investors and players in the market to rejig/rejuvenate their activities in the market for better outcomes.
He enjoined players in the sector to carry out market studies and analysis in order to determine areas of need to ensure there is an active demand for the products while harness the potentials of digital marketing and other tools in accessing a bigger client base.
Players, he said must make market information more accessible for potential market entrants to make more informed decisions thus making the market more transparent.
Noting that real estate accounts for two-third of the value of all global real assets, the expert emphasised that property investment remained a key driver of economic growth and development.
Defining property development as the “process of buying,improving, selling buildings and land and arranging for new buildings to be built,” Fawole described property investment as “all investment types in property that are geared towards generating financial returns for the owners or investors.”
According to him, property development is an all-encompassing term refers to the use, ownership, management and transfer of existing buildings and the creation of entirely new ones.
On the need for people to invest in property development, he said that real estate has been noted to have a hedge against inflation.
“The more there is an increase in the general prices of goods and commodity, the prices (rental prices) of properties also goes up.
“Investment in property might not be as high in an inflationary environment, most especially investment in new residential units which are not owner-occupied. Investment in land receives a higher proportion of investment in such environment,” he said.
According to the expert, property investment remains a major catalyst for economic growth and development, adding that it also provided revenue generation and stable casflow.
“It constitutes a significant part of the wealth of a people. A key piece of an investment portfolio that allows for diversification,” he said.
He adduced increase in the price of oil globally, depreciating value of the naira, high cost of production, fiscal policy of the government , and devaluation as causes of inflation in Nigeria.
Despite the challenges posed by inflation in the market, he maintained that opportunities still exist, pointing out that Nigeria still has a housing deficit of 20million units, with a major market like Lagos having a deficit of between five and eight million units.
This demand, according to him, needed to be met, saying there had been higher demand for smaller residential units devoid of extra rooms and increase in sales of building carcass that prospective buyers could finish based on their finances.
As part of the opportunities, he enjoined players to partner with finance institutions to give structured loans to prospective buyers, adding that they could also explore local technology and materials for property development.
“Adoption of designs, fittings and fixtures that will have a reduced maintenance cost in the long run,” he said.
He identified lack of access to long term finance, poor institutional framework and regulatory environment, limited number of skilled artisans/workers, and lack of infrastructure as challenges of harnessing full potential to the inflationary environment.
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