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What you most know about investing in real estate in 2019

Despite the negative narratives on Nigerian real estate market, especially about the growing vacancy rates, negative growth, falling contribution to GDP, etc, it remains a major and irresistible investment asset class.

The market is estimated at N4.7 trillion with a yearly demand of 1 million housing units where only an estimated 100,000 units are supplied, meaning that opportunities are limitless.

The market fundamentals are clear and compelling. Demographics and consumer purchasing power are strong, but people-issue or population is stronger. Nigeria has a large number of people who are very aspirational. The median age here is estimated at 19 years while the average age is 27.

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This means that the country has about 75 million people between the age of 16 and 27, implying that  the future is bright because all these people have to live, work, eat and play; they also have go to school and hospital somewhere and real estate envelopes all these and provision has to be made for them.

The implication of this is that the opportunities are there but these opportunities, according to experts, exist for investors who have the patience, and are ready to listen to, and dimension the market to understand what the market really wants and at what price.

There are particular segments of this market that investors can invest in and reap profitably this new year and these include the short-let apartments, co-working spaces, student housing and small-sized multi-family units apartments.

Short-let apartments in Lagos, Port Harcourt and Abuja have grown in popularity and according to Ayo Ibaru, a director at Northcourt Real Estate, “this growth is partly driven by the tepid return of expatriate technicians and the influence of Airbnb”, explaining that Nigeria became the fastest growing market in Africa for Airbnb, the platform that allows property owners earn income on their residential assets, growing by over 200 percent in the last five years.

To meet the growing demand in this segment of the market, landlords in prime locations are converting their assets to this use and are enjoying occupancy rates higher than standard residential building.

The vacancy factor in the prime residential market has been quite high in recent time. The rates in the standard residential apartments have hovered around their H1 2018 figures with Ikoyi recording 30 percent, Ikeja GRA, 26 percent, and Oniru, 33 percent among the highest.

Figures from a Northcourt Real Estate recent outlook report for 2019 shows that GRAs 1, 2 and 3 in Port Harcourt recorded vacancy rates of 6 percent, 11 percent and 20 percent respectively and continue to show potential principally for their security advantages when compared to most parts of the city.

Co-working space is coming up thick and investment opportunity here is huge. Demand which is driven mostly by millennials and start-up community is growing exponentially. This is despite Grade A office vacancy rates which remain high with existing 400,000 square metres stock of office space and over 40,000 square metres expected in the market in the new year.

“Millennial and the start-ups community continue to drive up the demand for co-working spaces with service providers seeking to convince traditional large-scale employers of the benefits of co-working just as corporates are in conversations geared towards putting up underutilised space for co-working use”, Ibaru confirmed.

Student housing is emerging investment frontier that guarantees investors high yields and stable cash-flow. “This investment asset gives about 22 percent returns which are more than double what commercial real estate gives, not to talk of residential real estate which gives 4-5 percent returns per annum.  For this reason, we are encouraging other developers to come in”, Abaypmi Onasanya said.

Munachi Okoye, CEO, MCO Real Estate, affirms. He explained that demand for this asset class is chiefly driven by the widening gap between a growing student population and little or no accommodation supply, especially in public schools.  “The ability to sign a long lease on land belonging to a higher institution or acquiring land adjoining a higher institution, building and charging a ready pool of student off-takers a market rent with 100  per  cent  occupancies  leading  to  a  stable  cash-flow,  sounds  like  a  real  estate developer’s dream”, he noted.

The increase in student population is a reflection of the national population growth which, as at October 31,2018, according to United Nations estimates, was 197.4 million-an equivalent of 2.5 percent of the total world population. The country’s annual growth rate is estimated at 2.6 percent.

Another profitable area for investors in 2019 is the small-size apartments including studio, one-bedroom and two-bedroom apartments. Market research shows that demand here is huge but supply is sparse.

“This is one area of housing where there is a huge gap which is not being addressed. Over 60 percent of people who are looking for houses to rent today are not looking for 3 or 4-bedroom apartments, but 1 and2-bedroom”, MKO Balogun, CEO, Global PFI, confirmed in an interview.

The demand in this sub-market is such that any available supply is taken up within one month of entering the market. Periwinkles Investment’s multti-units Oxygen Apartments comprising mainly 2-bedroom apartments sold out in two weeks of launching into the market.

African Capital Alliance is developing over 500-unit Blue Water Lagos in collaboration with Elalan Construction. The first phase of the development comprising 119 apartments is almost 40 percent sold out still at topping out stage.

These underscore the level of demand for this class of assets and, according to experts, the demand will continue to grow because “the economic recession which the country went through between 2016 and 2017 left hard lessons for families whose basic needs including housing and accommodation have to be redefined, with a lot of them favouring smaller housing units”.

 

REDAN, others establish National Real Estate Data Collation and Management Programme

Real Estate Developers’ Association of Nigeria (REDAN) in collaboration with the Central Bank of Nigeria, the Federal Ministry of Power, Works and Housing and other eleven institutions has established the National Real Estate Data Collation and Management Programme (NRE-DCMP).

The programme is to ensure comprehensive collation and management of data for planning, pre-construction, construction and post construction in the sector.

President and Chairman of Council for REDAN, Ugochukwu Chime disclosed this at a national workshop organised by the Association of Housing Corporation of Nigeria in Abuja.

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Chime, who spoke on “Real estate as an agent of economic recovery and growth”, said the sectoral information would help in policy formulation for the development of the industry and unleash the potentials in the sector for employment generation, inclusive socio-economic growth, and shelter provision in the country. He stressed the need for effective collaborative efforts among stakeholders to ensure that risks and rewards in the built industry could be redistributed with the aim of enhancing organisational efficiency.

Lamenting that the country is yet to realize the sector’s potential, he said effective demand needs to be enhanced and the impetus to create steady supply must be put in place. He emphasized that addressing the housing deficit will have a game-changing impact on the society and our communities.

He posited overtime, that there has being a paradigm shift in housing delivery approach from individual efforts to mass housing suppliers (developers) which he said, is an impetus to increasing the quantum of housing as globally acclaimed.

According to him, the development of residential housing and other forms of real estate have direct bearing on the wealth of the citizenry and their comfort as well as social status.

Also speaking, the Director-General/Chief Executive Officer of Nigerian Building and Road Research Institute, Prof Danladi Matawal said the demand for shelter is so pressing in less developed countries that it can only be met by “informal” housing often self-built, usually illegal, and almost always lacking basic infrastructure.

Such housing he said, is estimated to account for 20-30per cent of urban growth in the largest cities in developing countries which could be as high as 60-70per cent of the population of most Nigerian cities, except Abuja, live in informal housing.

Matawal also called for investment in capacity building and skills development for the existing community housing sector, particularly in governance, development financing and project management skills while governments in Nigeria need to go beyond the provision of land and the policy framework to granting incentives in the form of import duty wavers on imported building materials and construction equipment and tax relief.

“The introduction of realistic building regulations and the removal of restrictive legislations such as the Land Use Acts of 1978 should be considered and partners in Public Private Partnership housing provisions may consider converting some percentages of their equity holdings and profits into the provision of low-income housing as part of their social responsibilities”, he said.

Akwa Ibom Govt Commences Construction of Modular Classrooms

Government of Akwa Ibom state has commenced the construction of sixty modular classroom blocks across the 10 federal constituencies in the state.

The state’s Commissioner for Education, Prof. Victor Inoka who disclosed this to journalists in Uyo, noted that the government taught it wise for students in public schools to enjoy a feel of what students in developed countries who have modular classrooms enjoy.

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He said the classroom blocks regulate temperature according to the weather condition, and that the classrooms are cool when the temperature is hot.

He further explained that the classrooms are fitted with gadgets to access information across the world. Adding that there is no need for air-conditioners in the classrooms.

The classrooms he said will accommodates 30 students and a teacher, adding that it is resistant to fire.

“Sixty schools are proposed for the project. It is supposed to be 60 modular classroom blocks in the 10 federal constituencies of Akwa Ibom. This is the first phase of the project, the materials are complete and ready for use.

“We have done four in Uyo High school, Oron road, one at Etoi primary and secondary schools. There are two at Onna local government areas, we have built and completed it.

 

Others are spread across the 10 federal constituencies in Akwa Ibom.

“The essence is for the students to feel what other students in civilised countries such as America, Britain, China, Korea etc. feel. The classroom blocks regulate temperature to be moderate according to the weather condition. It is fire resistant.

 

“It can be cool when the temperature is hot without air conditioner. With the gadgets you access anywhere that is what we want to do here. The normal classroom is 30 students to a teacher.

“The equipment for the modular class room blocks were ordered from Turkey. The experts came to assemble it from Turkey; most of the equipment are in the Ministry of Education warehouse,” he said.

How to achieve your real estate goals in 2019

Every new year is another opportunity to review, re-strategise and re-launch. In order to achieve your real estate goals, you need to keep the ball constantly in front of you. The real estate investment landscape is constantly changing although it does not change as suddenly and dramatic as comparable investments such as stocks and shares.

Real estate investment is relatively stable and generally moves upwards in value over a long period of time. Nevertheless, it is imperative for you to plan and approach it systematically if you are an investor and you seek to make profit in a big way from it.

Before you begin planning for this year in earnest, I believe that you should review your real estate goals for 2018 and see how far or how close you are to achieving it, whether or not you achieve your goals. And what are the lessons that you could extract from your experience?

If you did not achieve your goal in the past year, don’t beat yourself down. There are lessons to be learnt from every failure however painful. If you achieved your goals for 2018, you can set your sight on achieving bigger ones this new year.

The key to success in any goal and in real estate investment is clarity. You need to state in very specific and measurable terms, the goals that you desire to achieve. Then spice your goals with a large dose of motivation by asking why you need to achieve those goals.

Are you interested in creating a steady cashflow that can support your current lifestyle? Are you thinking long term and considering the implication of investing in certain regions or industries? Is this your first property investment or you are an experienced property investor?

While we are all on the same journey, we are at different points on the journey. One thing that separates one person from another is knowledge. If you are new to real estate investment or you are venturing into an unfamiliar aspect of real estate investment, always start by bridging the gap between what you know and what you should know.

This does not require that you go back to school. However, what this often requires is that you associate with those with the knowledge who are willing to share with and mentor you. You will also have the opportunity to bounce ideas off them and seek guidance on your investment decisions.

A good goal should have a reasonable time frame for its achievement. Time is a very important element for success in real estate. Real estate investment is not a get-rich-quick scheme. It takes time and patience to search for and find the ideal property, if you have the capital.

It takes time and effort to find the property and the funds to buy the property. When you desire to sell, it takes time to market the property,conduct several inspections and conclude negotiation.

There are good buying times and there are bad buying seasons depending on where you are in the investment journey. If you are a seller, you are hoping to sell when the prices of properties are high. If you are a purchaser you desire to buy when the prices are low.

One of the things that could accelerate the achievement of your real estate goals is to join a community of likeminded people. This could be in the form of co-operative society or investment club. These groups usually have a fixed monthly contribution that helps you to set aside a percentage of your income for investment. A group of investors can also leverage their number to buy properties at a discount. They could also develop the property together and save lots of money. In my opinion, one of the most important benefits of belonging to groups like this is the mutual support and encouragement the participants are likely to give to one another.

As you begin to put these building blocks in place, I think it is better to concentrate your effort by finding your preferred real estate investment niche.

We are all unique individuals and understanding our uniqueness should guide our investment decisions. Real estate investment is diverse and wide.

You should start by focusing on a specific niche that you are comfortable with.

There are investors that focus strictly on buying and holding vacant land until they sense the right time to sell. There are investors that focus on rental properties and still some others are focused on commercial properties. Determine your niche and concentrate your resources on that area.

source: Abiodun Doherty

Combatting Workforce Shrinkage Industry experts discuss the dwindling talent pool.

The talent pool for commercial real estate professionals is dwindling. How can the industry curb the tide and bring in more professionals, more diversity, and more young people?

During the CCIM Global Conference in October 2018, CCIM Institute gathered a panel representing the construction, development, and education sectors to discuss the shrinking workforce and how to combat it. The panel included Dionne Edwards, CCIM, (moderator), vice president of corporate real estate, SunTrust Bank; Collete English Dixon, executive director of the Marshall Bennett Institute of Real Estate, Roosevelt University; Jeff Lyon, CCIM, CCIM instructor and chairman & CEO of Kidder Mathews; and Brian Murray, CEO, Ryan Companies.

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Dionne Edwards, CCIM: NAIOP estimates that by 2025, the commercial real estate industry will be faced with a shortage of 15,000 to 25,000 qualified leaders without a significant number of younger leaders to replace them.

We know what the stats say about the shrinking workforce, but what are you seeing and how do you feel about the current talent pool?

Jeff Lyon, CCIM: I’ve got almost 800 total employees in the company, of which 380 are brokers, and there was a lull in getting young individuals into the brokerage business. We’ve had a resurgence of kids coming out of college that actually want to get in the business. But across the board in every one of our positions, it’s a real challenge finding talent.

Brian Murray: At Ryan Companies, it’s a very similar experience. We have 1,200 employees, and about 800 of them are construction, project managers, and superintendents. There’s an awful lot of competition in the marketplace for great talent, and we need to be able to differentiate ourselves to be able to attract and retain people with these talents in a marketplace where post-Great Recession, we lost a lot of people to the construction industry, and many of them went to other industries and never came back.

Collete English Dixon: As an industry, we have not done a very good job of creating a more transparent perspective of what are the skill sets, what are the opportunities, what are the roles that young people might aspire to do. I think it can go a long way to making a difference in building a strong pipeline.

Edwards to English Dixon: For a long time, you were an investment manager. Now you are an educator. How, if at all, has your view of the CRE workforce changed as you moved from investment manager into the education world?

English Dixon: It’s the same problem. It’s looking at how young people see a path and how we get them on it, how we keep them on it, and how we hire them once they get to the other side. I’ve also been able to see through a graduate program a little bit of bias in the industry’s viewpoint about what that entry-level talent looks like and expecting that it always looks like a 22-year-old right out of undergrad. There are a lot of people coming into the industry from other [ones]. They’re going to school to get the knowledge, yet it’s very hard for them to find a spot to stand in.

Lyon: We’ve been working with the universities up and down the [West] coast who have real estate programs or business programs and using [the students] as interns to get them to understand the wide range of options in our business. They hear about the brokers, they hear about the money that could be made, and they see everybody driving the cars and all the good stuff, but they don’t understand that it takes a long time to get there. Our business is very, very tough.

We have a program where we’ll bring in a runner for a year, and they have a mentor to learn the business, to learn what’s going on in the market. We need to reach out to the young people, show them the cross-section of our business and let them figure out where they want to go.

Edwards: What are you doing to attract and retain  top talent?

Murray: Our culture is probably the most overarching attraction for people into our business. At Ryan, we have an inverted pyramid where our employees are at the very top, and we take care of our employees, who in turn take care of our customers.

From a recruitment perspective, we go to 25 different diverse career fairs at different universities. We have really made a focus in the last two years on diversity and inclusion. From the construction side, we’re probably 90 percent men and 10 percent women. On the real estate management side, it’s probably 75 percent women, 25 percent men. In our architecture and engineering, it’s probably 50:50.

We have an emerging leaders program where every year we pick anywhere from 10 to 20 of our young, up-and-coming leaders and put them through a year-long program.

Edwards: Brian and Jeff, How do culture, location, and technology impact retention within your firms?

Lyon: Our company is successful today because of our culture. We’re a very entrepreneurial company [and] have a very broad base of ownership. One of the things that retains our people is that they’re able to be a partner in the company. We’ve doubled the size of our company in the last three-and-a-half years, and we’ve attracted some unbelievable talent because of our culture and who we are.

Murray: At Ryan, our chairman, Pat Ryan, who is a third-generation Ryan leader in the business, often says that culture trumps strategy every time or culture eats strategy for breakfast, and we truly believe that. We also have integrated real estate solutions from beginning to end in the life cycle of a building – from initial design to the real estate and asset management on the other end. [That’s] another part of our culture that is unique and differentiates us in the marketplace.

Edwards: Collete, what are you hearing from your students about how factors like culture and technology influence their application decisions?

English Dixon: I think culture is incredibly important. When you have a student body like we do that’s incredibly diverse by every slicing and dicing of socio-economic demographics data, the idea that they can join a firm where they can find a comfortable spot, it is a big discussion. Some megafirms hit the mark really well, some don’t. Some small firms hit the mark really well, some don’t. That information does get around.

Technology – I think the question is new talent’s comfort [level] that a firm is cutting edge with its technology – [using it] to provide the sort of resources and knowledge that’s necessary to be successful – but not to replace people.

Murray: The construction industry is the second-worst industry in productivity over the last 40 years. If you think about the impact of construction and the challenges that we face in recruiting talent, technology is an opportunity that our industry needs to advance significantly. There’s technology out there that can make our workplaces safer.

As an industry, we’re seeing a movement toward modularization and prefabrication, but we have a long way to go. We have to embrace that, and technology can be an enabler moving forward and can help us to improve the concerns that many young people see in entering the workforce.

A big part of the challenge in the construction industry is getting people to enter the trades. We need to expose youth at a much earlier age to see this as an opportunity and use technology to create a work environment where they feel like they can thrive in, but also be safe and not take a toll on their bodies.

Lyon: We’ve been hearing for so long that technology is going to get rid of the real estate broker. But it really boils down to data – information that we have about the marketplace. We haven’t figured out how technology is really going to impact us yet. Is there an Uber of real estate out there? Is there an Amazon of our business that’s going to disrupt everything? The business really hasn’t changed that much, but technology has helped us be better at what we do. You still have to know the market; you still have to know your product; you still have to know the people – and bringing those three things together is how we do transactions.

Edwards: The commercial real estate industry is still lagging on diversity. How are your companies dealing with this?

Murray: We started in an accelerated fashion on diversity inclusion two years ago. The first meeting, we brought in our 200 leaders throughout the company to a conference, and hired an acting group to do skits describing conversations every single one of us have had in the workforce, or at home, or at a cocktail party that border on [being] offensive – what do you say or how do you interact or how do you have a perspective about people that are different than you, whether it’s a different sex, race, or sexual orientation? Those skits opened up conversations to enable people to realize that we all come from different perspectives, and we need to understand where our starting point is. The ultimate goal in our journey is for our workforce to be far more diverse than it is today.

We have probably 8 percent people of color out of our entire 1,200 employees. We’ve had every employee do an unconscious bias training. Our senior leadership group has taken an intercultural competence test that enables us to understand where we are on the continuum of understanding different cultures to help us work together as we move forward.

We’ve just begun a new organizational structure where an executive leadership team will elevate a couple of senior women in our business to have a seat at the table that didn’t exist today. We have a women’s network where women across all different functions get together to talk about women in the workforce.

Lyon: I’ve got the brokerage [side of my] business, and it is predominantly white males across the board. I look at my property management group, I’d say that 50 percent are women. It’s a real challenge to diversify in our industry. That’s one of the reasons we are going to the universities – because you go to universities and you look at the classrooms, and there’s a lot of diversity.

English Dixon: You need to start in the high schools that feed into the colleges to get some of this talent thinking about [the industry], and it means that you connect with diverse population high schools, diverse population universities. For a diverse employee base to be attracted to a firm, they’ve got to believe that the culture is accepting – it is not just diverse, it is inclusive. We tend to lump them together, but they’re very different.

Everybody in the industry who believes that diversity is important has an opportunity to help move the needle – it’s through young people we meet who are trying to figure out what they’re going to do. Let’s talk to them about the industry. Let’s consider mentoring some of them to pursue that. We’ve really got to build a house around real estate that looks hospitable and looks welcoming.

Edwards: What steps do you think educators can take to better prepare the next generation of commercial real estate pros?

Lyon: It’s easy to do internal rates of return and all the analytics and everything we learned in the CCIM courses. The biggest challenges are writing skills and communication skills. So many people get in the business and they don’t even know how to make a presentation, to make a pitch. In our business as a broker, you’ve got to be willing to make the call, and if they don’t have communication skills, they’re not going to make it.

Source: Catherine Simpson Olson

Three Things Real Estate Agents Can Do To Compete With iBuyers

iBuyers are the latest threat to agents, offering lower listing fees, faster transactions and an online-based process that’s basically made for millennials (an important fact, considering millennials now make up a whopping 36%of all home sales.)

In most cases, agents can’t compete on those things — and they never will. But that doesn’t mean they’ve become moot or are on the edge of extinction, as many would have you believe. Like the story of David and Goliath, the big guy doesn’t always win. In fact, he might not have as much of a competitive edge as most would think.

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Seeing iBuyers As An Opportunity

Despite adding another level of competition in the already difficult battle for real estate clients, the emergence of iBuyers has actually provided agents with a great opportunity to evolve and strengthen their businesses.

Though they might not be able to compete directly on some of an iBuyer’s most attractive features, they can do the following:

1. Focus on the relationships.

One of the most powerful things an agent has to offer is a personal, one-on-one relationship with their customers. And with a transaction as weighty as a home sale, where hundreds of thousands of dollars are on the line, that’s no minor thing. Naturally, many homeowners want more hands-on, personal care in this scenario — really, the assurance they’re getting the time and attention they deserve — and agents can provide just that

But even more important is the power those relationships hold over time — the competitive edge they give you. If an agent has already put time and effort into the customer relationship by delivering value across weeks, months, years and multiple transactions, those iBuyers will never stand a chance, no matter how many perks they might offer.

Think of it like Walmart coming to town. If you own a mom-and-pop shop, you’re not going to try to outprice Walmart or offer a bigger selection. You just can’t win that way. The better approach is to differentiate yourself by offering better service, more personalized care and stronger one-on-one relationships than a big-box store can ever fathom. That’s how you solidify yourself in a competitive market.

2. Embrace the tech.

Building those better relationships doesn’t have to be a huge time commitment either. It can be something as simple as sending a text or email on their birthday (services including ours can even help you automate them) or a card on their homebuying anniversary. The main goal is to take a page out of the tech-driven iBuyers’ books and use technology to build your network and nurture it over time.

Agents should also realize why customers are driven to these tech-based models in the first place. For most buyers and sellers, it’s the twofold benefit of convenience and control. Tech-based brokerages and iBuyers are just more efficient. They offer easy-to-use, online-based tools and platforms, and their closing and overall transaction times are faster. They also give customers more control and visibility over the transaction from start to finish.

Fortunately, there’s technology that agents can leverage to improve both convenience and control as well. From online title agents and digital notaries that speed up some of the more tedious parts of the closing process to 3D tours, drone videos and even interactive neighborhood apps that let clients explore properties remotely, there are tons of tech options that can improve the overall experience — while also strengthening that customer relationship in the process.

3. Hop on the bandwagon.

Finally, agents can also embrace the change and join the iBuying movement themselves. That’s what Matt Patulski and his team over at The Heyl Group are doing. At an Inman News conference I attended this year, they announed that his Keller Williams branch has actually created its own internal iBuyer program that gives sellers multiple options: get an upfront cash offer for their home, or go the traditional route and list the property on the open market.

The other option is to work with an iBuyer directly. That doesn’t mean accept a full-time job with them or switch sides, but many iBuyers actually work with agents directly, tapping them for Uber-like, on-demand home showings or even offering their clients cash offers in exchange for small referral fees. Offerpad, Knock and Opendoor all work with licensed agents in some way.

iBuyers As Inspiration

The moral of the story is simple: iBuyers aren’t the enemy — they’re the inspiration. Rather than trying to beat them at their own game, agents must instead focus their efforts internally, on evolving their approach, strengthening their relationships and leveraging technology to better serve today’s changing buyers. If they can do that, then agents aren’t going anywhere.

2019: Technology identified as key to real estate recovery

In 2018, the real estate industry witnessed general downturns due to several factors ranging from government macro economic policy to over-supply in commercial, retail as well as inappropriate supply in the residential sector.

The development also impacted negatively on the sector’s contribution to the National Gross Domestic Product (GDP). The latest GDP figure shows a negative growth of -2.68per cent at the end of October 2018, thus, the Q3 contribution to GDP dropped from 7.09 per cent in Q2 to 6.88 per cent in Q3.

In the economic and investment front, the HSBC bank and a Swiss multinational investment bank, UBS’ exited the country; this did not send the right signals to the investors’ community.

A report released by HSBC pointed out that investor spend has been affected by the political uncertainties devolving from the 2019 elections, adding that it was closing down its representative office, not entirely confident of the government’s ability to turn around the economy.

The report also suggested that deficient infrastructure and unemployment contributed to the moderated 2019 forecast growth rate of 2.5per cent.Having accused HSBC of corruption, the Federal government regarded this report as politically and physiologically skewed.

In all this, JP Morgan recorded a turnover of $45billion in the Importers &Exporters window in Q2 2018 and plans to expand its African operations.Players in the Nigerian Stock Market who haven’t liquidate their investments woke up in October to a rise in inflation figures, mindful that it could further complicate investing in Q1 of 2019.

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The influence of politics, governance and markets’ performance continues to hold as portfolio investors looked to cut their losses, opting for investment opportunities in Eastern Europe. Estimated losses in the equities market were in excess of N1 trillion for 2018.

Experts however, said the downturn in the real estate industry was more of mis-judgment on the part of operators than government policies and lack of infrastructure.

According to them, addressing the mismatch of current supply versus actual local demand and uptake in the housing, retail, office and hospitality sectors will herald a new vista for the sector.

They also pointed out the need for the deployment of technology to make Nigeria’s real estate industry more investable, increase liquidity to drive greater home ownership, as major talking point for 2019.

For instance, the Managing Director and Chief Executive Officer, Global Property & Facilities International Ltd Nigeria (PFI), Dr. Mohammed Balogun, said for the sector to grow and contribute more to national development, there is an urgent need for restructuring, not by the government but by practitioners themselves.

He added that the industry was plagued with a structural problem that stakeholders could deal with, without the government. According to him, the sector witnessed a rising trend for studio apartments as investment property.

He said, “Largely driven by developers’ response to the millennial market’s demands, blue-chip executives and expatriates are also opting for studio apartments, investors who buy bigger houses for investment purposes are now being advised to purchase multiple studio apartments to sustain portfolio cash flow. Factors influencing demand for studio apartments amongst millennials are better space management, functionality and cost of managing residential units”.

Dr. Balogun wants stakeholders in the sector to come up with initiatives, which will help to weather the murky waters.“We need to do some differently to get a better result; the recent procedure will not lead to the expected outcome because trends are changing”, he said.According to him, occupiers of luxury apartments are ready to pay a 15 per cent premium when offered quality facility management.

He also stressed the need for professionals to advise their clients appropriately so that they can make wise investment decision and not to be too profit minded.For 2019, Dr. Balogun said being an election year; the industry will continue to slow down till April when budget is likely to be passed.

“However, there will be the usual lag between economic recovery and market recovery but real estate, which has suffered from a sharp supply- demand imbalance, widening vacancy rates and falling rents, looks close to bottoming out”, he noted.

Also, in a recent KPMG Survey on 130 real estate decision makers from 36 countries, 8 per cent of respondents see digital and technological innovation as an opportunity but only 24 per cent have a clear digital and technology strategy.

For instance, the way properties are conceived and built; the way they are researched, marketed and sold; and, most importantly, what they offer to tenants in the way of energy-efficient, flexible, adaptable smart functionality are all becoming critical factors when assessing the future viability of investment properties and establishing sustainable long-term investment criteria.

Everything in real estate from how retail, industrial and office processes are conducted to the way buildings are designed, built and operated are now transformed in profound ways.

In developed countries, residential real estate is already well along in their digital transformation.

Proptech pioneer and the chief executive officer of new market entrant, ZAMA, Abdulhakeem Sadiq, said the increasing role and use of Proptech is a boon for the regional real estate sector.

Sadiq, who expressed this view during the just concluded West African Property Investment forum in Lagos (WAPI), said: “Proptech is slowly gaining momentum in developed markets, and we feel a developing market like Nigeria can learn and re-calibrate itself for seasoned investors.

“Our market has its peculiar problems and introducing a process driven technology would greatly enhance the validity of property valuation for instance, or even in the process finding a reputable agent to work with to help sell and buy properties”, he noted.

For the Chief Executive Officer/Vice Chairman of Fine and Country West Africa, Udo Maryanne Okonjo, technology is going to help in speedy decisions in the sector as it provides the transparency people need to close up deals faster.

“Technology will play a significant role, because transactions are now more transparent, with technology, you see more competitions, you can compare trends because lack of transparency usually affects decision making. If you are able to access information to make comparism, you will be better informed on what is in the offing because not all clients will be available in the location of the property meant for transaction”, she added.

For 2019, Mrs. Okonjo said though, it is an election year but it presents a good opportunity for investors.

According to her, there are rays of hope for better days ahead because some significant growth was identified in the commercial space last year.

“We saw some rays of hope in the commercial space last year. We did two major transactions, which were massive measuring about 8,000 square metres, which were quite substantial. In addition, we got more enquiries even though, the elections are near and things are hard for people especially those aspiring for residential space. “ We expect to see more activities because in 2018, we started seeing some recovery, it will continue this year and technology will definitely play a vital role”.

“ People are positive because 2019 presents great opportunities for investments in the real estate. It is better to invest when the sector is recovering than when it has fully recovered”, she added.

In its 2019 Nigeria Real Estate Market Outlook report, a real estate investment solutions company, Northcourt noted that residential market would see more partnerships involving Property technology (Protech) firms and the introduction of data-driven products and services.

Property startups, the firm said, are raising funds from local and foreign investors who are not averred to potential risks vis-à-vis the high yields obtainable.

In the report released over the weekend, the firm noted that although, the office market has continued to struggle as high vacancy rates and flexible lease terms remained paramount in many lease negotiations. Still, there were new leases signed and pipeline developments in the sector.

In the retail trends, the report said, the sector continues to support the growth of mid-sized shopping centres even though vacancies in ‘Grade A’ Malls have reduced on average with landlords demonstrating an understanding of the economy in their dealings with tenants.

It also forecast a positive outlook in the office market segment with Nigeria becoming the fastest growing market in Africa for Airbnb, the platform that allows property owners earn income on their residential assets, going by the over 200 per cent growth witnessed in the last five years.

Manhattan real estate closes 2018 as worst year since the financial crisis

Manhattan real estate suffered its worst year since the housing crash of 2009, as tax changes, stock-market turmoil and jittery foreign buyers hurt sales in 2018.

Home sales in Manhattan fell 14 percent last year, the industry’s steepest drop since 2009, according to a report from Manhattan real estate companies Douglas Elliman and Miller Samuel. In the fourth quarter, the median price for an apartment in New York City fell below $1 million for the first time in three years. And the decline in sales in the fourth quarter was the fifth-straight quarterly drop.

“What we saw was a big wet blanket thrown over the market in 2018,” said Jonathan Miller, CEO of appraisal firm Miller Samuel.

Miller said 2019 is unlikely to improve, even though the drops may not be as severe as 2018. Manhattan real estate has been hurt by a convergence of economic forces. An oversupply of high-end apartments, especially new condo towers, hit the high end of the market. At the same time, demand from foreign buyers cooled as new rules aimed at money laundering took effect and overseas economies began to slow.

The new tax law, which limits the deductibility of state and local taxes, also hurt demand for real estate in high-tax cities like New York.

 

Volatile stock markets at the end of the year are expected to keep buyers on the sidelines for at least the beginning of 2019. While prices and sales could continue to fall in 2019, the decline won’t likely be as steep as it was in 2018, Miller said.

“We’re going to see continued weakness, but it will be a more moderate decline,” he said. “I think most of the heavy lifting was done in 2018.”

Miller said that while the “starter market” in Manhattan — studio and one-bedroom apartments — was weak last year, it will likely hold up better than the luxury market, with homes priced at $7 million to $10 million or more. There is now a 16-month supply of homes in the Manhattan luxury segment, defined as the top 10 percent of the market by price.

“I don’t think the luxury market will change all that much,” he said.

But don’t expect any real bargains anytime soon. The average price of a Manhattan apartment is still just under $2 million. The average price per square foot is now at $1,684.

Source: Robert Frank

How residential real estate investment will be driven by Technology in 2019

Property technology will drive investments in real estate, especially the residential sub-sector, this year, a new report has said.

In its 2019 Nigeria Real Estate Market Outlook, Northcourt, a real estate investment and research company, said the industry would see more supply across the various sub-sectors but with varying levels of demand.

According to the report, the developments will be driven by new technologies, and both the government and private developers will be more innovative in products delivery.

Click here to watch weekly episodes of Housing Development Programme on AIT

The report added, “The residential market will see more partnerships involving Proptech firms and the introduction of data-driven products and services. Well put together property startups are raising funds from local and foreign investors who are not averse to potential risks-vis-a vis the high yields obtainable.

“The Federal government, coming to terms with the impact of housing will begin delivery from adopting a number of models.”

It stated that landlords would also be more open to nil increases and slight reductions in rent renewals as tenants wait till after the elections to make major property decisions.

“2019 will see a boom for the savvy real estate investor,” the report added.

According to the report, the provision of housing units by the Family Homes Fund and the Federal Housing Authority in Nasarawa, Ogun, Delta and Kano states and parts of Abuja is expected to be more visible this year and will assist in reducing the deficit.

It stated that land authorities would be resolving zoning infractions to create opportunities for residential development, adding that there were indications that the originally residential areas of Lekki Phase 1 in Lagos, which is fast becoming commercial, would be returned to its original use in 2019.

It added that eight states – Akwa Ibom, Benue, Cross River, Edo, Gombe, Kebbi, Kogi and Plateau were working on making homeownership easy for their indigenes, and were expected to conclude the process of adopting the Model Mortgage and Foreclosure Law soon, while Ogun State awaits the governor’s approval.

“Lagos and Kaduna states have enacted mortgage model laws unique to their circumstances,” it said.

Emotan Gardens: Subscribers Rally Family Members for More Slots

With work advancing on Emotan Gardens, the real estate project being developed by the Edo State Government through the Edo Development and Property Agency (EDPA) and Mixta Nigeria, subscribers are mobilizing their close associates and family members to snap up units in the estate to enjoy from its impressive benefits.

According to a statement by the spokesman of Governor Godwin Obaseki of Edo State, Mr. Crusoe Osagie, the 1800-unit affordable housing estate sits on a 74-hectare land in Upper Sokponba axis of Benin City and offers a mix of housing options.

About 100 units of the houses are ready for occupation, even as work intensifies on other phases of the estate project.

Click here to watch weekly episodes of Housing Development Programme on AIT

A cross-section of subscribers on the project said that they are excited about the prospect of living in the estate, which is a novel idea by the state government, adding that they were calling on their friends and family members to also snap up units at the estate.

Mr. Edmund Igbinoba said that the major guarantee on the project is the government’s backing, which forecloses any doubt on the deliverability of the project. He added that the growing profile of the estate and the actualisation of a number of promises made by the state government on the project have motivated him to encourage his associates to also take up units in the project.

According to him, “I am excited about the estate project for a number of reasons, chief of which is the state government’s support, which has been reaffirmed with the award for reconstruction of the Benin-Abraka Road. I am also impressed with the rate of development. This is why I am asking my people to join me in this journey at the estate.”

Mr . Oaikhena Osagie said that he has been speaking to a number of his relatives to join him in purchasing units in the estate because of the assurance of relevant title documents to the property, which has been guaranteed by the state governor and the developers of the estate.

“There is nothing more reassuring than when you are in safe hands. We are in safe hands with this project. I have subscribed for a unit and I am mobilizing other friends to join me,” he
said.

Source: Thisdaylive.com
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