In Nigeria, two guaranteed effects have already been established: people generally worried about contracting the virus and a consistent decline in income. While individuals are getting more concerned with survival, the willingness to invest in real estate is shrinking.
The commercial and hospitality sub-sect seems to be taking the first-hand blow. With compulsory lockdown enforced in the major cities, hotels, malls, restaurants, luxury homes, and office buildings are currently empty. A very important question is whether employers will be convinced to continue the work-from-home system even after the global health crisis. Another important factor that will determine office demand is if the Coronavirus decides to extend its stay, the demand for office space will definitely falter.
Moving on to rental apartments, property owners are bracing themselves to deal with tenants who have either lost their jobs or are currently experiencing acute salary cuts. In France, the government is cushioning the effect of the COVID-19 by suspending rent payment, this doesn’t look like a reality for Nigerians. In the long run, Landlords will have to manage rent-relief requests.
What happens to Landlords who solely depend on proceeds from their properties for survival? The answer to this question can only be determined by how long social distancing will last.
With the pandemic forcing more economies to focus on their health sector, importation of building materials will slow down. In the case of Nigeria, where foreign exchange is becoming a bigger challenge, importation will be costlier. An ensuing fact will be that home builders have to observe social distancing, which leaves property development hanging. Although this hasn’t happened yet, the Nigerian government still allows a maximum of 15 men on any building site.
Home shoppers/developers, on the other hand, are already pausing on purchasing decisions too, considering a possible crash in the stock market.