Due to the fact that the practice lacks empirical acceptance, it has refused to follow the global trends in the sector. From all indications, 2019 has been one of twists and turns for the real estate market in Nigeria, shifting in an instant.
For this reason, real estate professionals need to keep their eyes open for the next up-and-coming trends to hit the market and cause a stir. Knowing in advance what to expect in terms of market trends for the real estate industry will not only give you an edge over your competition, but helps you serve the customers better. You will be ready and able to implement, react to or inform on the ways the market is shifting for the rest of the year both for good and the bad.
With the development in the sector in Nigeria and world over, people can share what real estate trends or market shifts they have been most surprised about since 2018, from blockchain advancements to the return of co-ops, rising home prices and more. With that at the back of our mind, one can analyse 2019 and make favourable forecasts for 2020 and beyond. It has become very clear that real estate practitioners in Nigeria are not leaving anything to chance as far as technological advancement and development are concerned. With that, the new trends and expectations creeping into the sector in other economies are sure to be received and domesticated in the country.
The advancement of technological innovation in the real estate industry has been changing rapidly and all agents should adapt to this to maximise exposure for their listings. Real estate firms in the country have been changing the way sellers and buyers perceive the market and it is crucial for agents to quickly adapt to this new reality for the next level they expect to be in tandem with what obtains in other climes. Not to belabor the already highly-trending topic of blockchain changing the world, but this is the reality of the industry. Blockchain-based applications are changing the way buyers, sellers and investors interact with each other and the properties they have interests in. Practitioners should welcome Nigerians to the new world of unleashed liquidity, transparency and disintermediation that the sector is ready to supply. The real estate world is rapidly changing and Nigeria must do so too to be able to follow the trend or it will fall by the wayside.
For the past several years in some developed countries, people have seen the downtown new development condominium market take a big bite out of the co-operative resale market. Now that there are so many new (and more expensive) projects, we are seeing buyers actually return uptown to purchase co-operatives because the prices are more moderate in comparison. What hasn’t changed is that some of the boards remain difficult to pass.
When a home price growth is discussed, the New York City (NYC) real estate is always in mind. The NYC real estate market indicates that home prices might rise more slowly in the months ahead. During the years 2012-2015, operators saw 12 per cent 15 per cent growth. They did not have any surprise during the year 2018. Average home price growth over the last few decades is somewhere between 5 per cent and 10 per cent per year. So, perhaps what the operators are seeing now could be a normalization within the Manhattan part of NYC real estate market. Fully stabilized, non-value-add property have softening cap rates as much as 25 basis points.
This is due to flatter rent projections, volatile interest rates, and in some areas, rising property taxes or what Nigerians call double taxation. We all know online sales are killing malls, but we’ve seen few attempts at adaptive reuse. Many of these struggling retail locations have excellent economics for multifamily redevelopment. I’m shocked we haven’t seen more mall-to-multifamily conversions. Operators have seen article after article saying millennials do not want to buy a home or cannot afford it, yet homeownership for this age group is on the rise. Fortunately, this age group is still a significant portion of the luxury rental market, and the baby boomers who just sold their houses are an increasing renter base.
The top trend the operators have seen so far has been a steady stream of new construction, which is keeping rent prices mostly in check for 2018. But, this stream of new construction in Nigeria is not doing anything in the direction of checking price rates. A stable pipeline of new buildings means we will see the impact of lower rent growth but still above long-term averages when it comes to rent across the U.S.
The drought of available inventory has been the most surprising trend, by far. Whether the underlying reasons are demographic, economic, regulatory (i.e., zoning) or a combination thereof, the operators are not seeing as many homes hit the market as we should. Agents have to do a better job in prompting inventory and explaining the current seller’s market to homeowners. A clear trend that has emerged is the importance of online presence and branding.
Real-time management of your online presence has become even more important than predicted and can impact your business if it isn’t diligently managed. So, too, is the influence of Gen Z in the marketplace. We have already seen their influence in how real estate is designed and marketed, and this will only grow. What surprises me is the overwhelming lack of transparency and hidden agendas of the industry. We have an abundance of technology that could serve consumers in extraordinary ways, but the old guard remains steadfast in their fight to protect themselves. Another new trend the Nigeria operators should also take note of is profit taking. In the real estate market and in every market, what the traders seek is the bottom line. This is the profit that gingers any business person to continue in whatever he is doing.
Another of the trends that operators have seen is profit taking by investors and homeowners in several of the key markets we follow. These listings have usually started 15-20 per cent above market and slowly work themselves back, seeking an elevated pricing floor. What we have yet to learn is whether this profit taking is working to establish a new pricing floor for the overall market.
Also operators are seeing a huge uptick in agents recognizing the value in using professionals for all their visual marketing needs virtual staging, drone video and photography, virtual tours, interactive floor plans and more. Hiring the pros to help will continue to be less of a “nice to have” and more of a “must have” for agents, homeowners and home seekers alike. The rise in single families is another trend that is capable of increasing real estate market. A total of 3.6 million single-family rental homes (SFR) have been added from 2006-2016.
The SFR industry has risen to the challenge to escape a “mom-and-pop” dominated market.