GOODWILL MESSAGE BY MRS. TOKI MABOGUNJE, THE PRESIDENT OF THE LAGOS CHAMBER OF COMMERCE AND INDUSTRY AT THE 14TH NIGERIAN INSTITUTE OF ESTATE SURVEYORS AND VALUERS (NIESV) LAGOS STATE BRANCH HONOURS NITE HELD ON THURSDAY, MAY 20, 2021 AT THE CIVIC CENTRE, VICTORIA ISLAND, LAGOS
Protocols
Chairman of the Occasion
Hon. Rasheed Makinde
Chairman, Committee on Housing,
Lagos State House of Assembly.
Royal Father of the Day
Alayeluwa Oba Kehinde
Gbadewole Olugbenle
Olu of Ilaro
President, Yewa Traditional Council,
Ogun State
ESV Sir (Chief) Emmanuel Okas Wike
President, NIESV
ESV Adedotun Bamigbola
Chairman NIESV Lagos State Branch
Distinguished Ladies and Gentlemen
I would like to appreciate the leadership of the Nigerian Institute of Estate Surveyors and Valuers (NIESV) Lagos State Branch for the kind invitation to deliver an address at this auspicious gathering.
I congratulate the executives and members of the association for the successful hosting of the 14th Honours Nite.
I would also like to extend my hearty felicitations to all the awardees present here today. This special recognition affirms your invaluable contributions towards the advancement of the Nigerian real estate sector. You all have done well amid disruptions to business activities in the real estate sector occasioned by the pandemic.
Distinguished participants, as you may be aware, the covid-19 pandemic disrupted life and performance across most sectors including real estate. The impact of the pandemic was broad-based in the retail, commercial and residential segments of the property market. In the retail space of the property market, foot traffic to malls and shopping centres reduced significantly, with consequent impact on the retail sub-sector already challenged with higher maintenance costs and lower disposable income. Demand for residential and commercial spaces weakened drastically at the peak of the pandemic on account of remote working structures adopted by most corporates, uncertainty about future of work, and low consumer disposable income.
Over the years, the growth performance of the real estate sector has mirrored the state of the broader macroeconomic environment. According to the Q4 and full year 2020 GDP report published by the National Bureau of Statistics (NBS), the real estate sector expanded by 2.8 percent in the fourth quarter of 2020 following six consecutive quarters of negative growth since the last positive growth (of 0.93%) which was reported in the first quarter of 2019.
The recovery of the real estate sector in the fourth quarter after a tough second and third quarter characterised by covid-19 disruptions, implied the reopening of the economy supported the re-commencement of several residential and commercial projects in the sector.
The Nigerian real estate sector has been facing both demand and supply challenges in recent years. On the demand side, challenges range from dwindling consumer income and high cost of mortgage financing, among others. These constraints have continued to impact home-ownership rate in Nigeria. According to the World Bank, the country’s home ownership rate currently stands at about 25 percent, one of the lowest in sub-Saharan Africa and poorly compares with Kenya (75%) and South Africa (65%).
The supply segment of the market is facing its own unique trials. One major difficulty is the low level of government’s attention in the sector. Unlike agriculture and manufacturing, real estate has not been recognised as a critical non-oil sector that could be of immense benefits to the current diversification efforts of the Federal Government.
In a post-pandemic world, virtually all sectors will have to reinvent themselves if they are to have any chance of surviving the tide. The real estate sector is not excluded. The major trends that will have an impact on the sector in the post-COVID era:
- E-commerce and the retail sub-sector: E-commerce is currently a bright spot of the pandemic. Malls have been replaced with online marketplaces forcing even more brick and mortar stores to close shop. While this trend is good for consumers and retail businesses, it will have an adverse impact on mall owners and occupants alike as the pressure to shut down brick and mortar shops will grow.
- Remote Working Culture: As you all may be aware; technology has become the order of the day. A large number of organizations have embraced remote working culture as way of containing cost, which would impact demand for commercial properties. As such, real estate professionals must be prepared for this in the post-pandemic environment.
The confidence of investors in the Nigerian real estate sector could be impacted by the weak fundamentals of the Nigerian economy characterised by foreign exchange uncertainties, high inflation, and high interest on mortgage facilities etc. Similarly, consumer income is severely impacted by inflationary pressure and foreign exchange devaluation, with a significant proportion of households’ budget going into basic needs – food, transport, shelter. This leaves consumers with almost nothing to save or invest and would definitely impact demand for ownership and investment in residential properties. Nonetheless, there are investment opportunities in small-size units within the residential space.
Before the pandemic, there was a call for the government to get more involved in the real estate sector as growth remain fragile. The sector has a limited chance of surviving the tide without appropriate and adequate government intervention.
A good starting point for the Federal Government of Nigeria is to develop its mortgage financing structure. As more consumers record job losses, their willingness and ability for home ownership dwindles. Easing the financial strain from potential homeowners involves developing schemes that cater for a diverse target audience. Poland, for instance, has introduced several credit schemes such as “Family’s Own House” which was targeted at married couples and single parents and increased home ownership in the country. For Nigeria, the target should be reaching the Nigerian population using different schemes rather than a one size fits all.
However, in a constantly evolving world, even a traditional sector such as real estate changes and innovates. In my view, the future of real estate is directly linked with innovation. Incumbent firms that want to not only survive but also thrive, should constantly follow developments and trends of these innovations.
I charge members of this great institute to engage with these new trends of technology development in your sector. Some examples of these trends are:-
- The Internet of Things (IoT) which includes smart home technology which could be used to promote homes for sale through blue tooth devices.
- Cloud technology benefits the sector in a variety of ways. In terms of real estate, cloud platforms can make lending and closing processes simple, faster and more streamlined. Data can be securely managed and stored.
- Virtual reality can be used to take people beyond on line photos and offer immersive 3D views of properties from whatever device they are using.
- Big Data and machine learning could enable practitioners to gain knowledge quickly about pricing and return on investment and make accurate evaluations for sales while creating smarter deals for everyone.
The Nigerian Institute of Estate Surveyors and Valuers should encourage innovation and creative thinking outside the box. The Institute should prepare its younger members and start-up firms for the future of work in real estate, while refreshing, updating and up-skilling older practitioners to enable them remain relevant. With innovation and technology this traditional sector will be positioned to make the best of the future.
Once again, I felicitate with the Lagos State Chapter of the Nigerian Institute of Estate Surveyors and Valuers for the successful hosting of this event. I congratulate all the awardees for being considered worthy of the prestigious recognition by the Lagos State Chapter of the Nigerian Institute of Estate Surveyors and Valuers.
Thank you for listening. Happy celebration.
MRS. TOKI MABOGUNJE,
PRESIDENT, LAGOS CHAMBER OF COMMERCE & INDUSTRY,
THURSDAY, MAY 21, 2021