Lucy Nnaji
The COVID-19 pandemic lockdown has become one of the biggest threats to the global economy and financial markets including the real estate sector in Nigeria.
Over the past years, real estate investments in Nigeria have generated a steady cash flow for the economy. But since the outbreak of coronavirus and the attendant lockdown in most cities like Lagos and Abuja, the reality has changed, and real estate practitioners have been hit hard across the value chain.
Many real estate developers are faced with construction delays and outright stoppages because their employees are on lockdown, observing the government’s stay-at-home order, thus potentially shrinking rates of return. Right now, many real estate agents are struggling with income, and most property owners are nervous about how tenants will meet up with their lease payments. In the wake of COVID-19, and like what happened when SARS receded in China in 2003, it is difficult to predict whether real estate sector in Nigeria will bounce back strongly.
According to the management of Milano Properties, this is an unprecedented time in the history of real estate industry in Nigeria and the world in general.
In this regard, the company has rolled out measures to assist its clients navigate and mitigate the impact of the coronavirus pandemic. “At Milano Properties, we are acutely aware of the impact this crisis is having on our clients and subsequently their businesses. Therefore, we have been working extremely hard from home to understand how we can help investors navigate and mitigate the impact going forward.
“Though, real estate is generally considered a safer asset class in a market downturn, in the current situation, investors will be wise to act with extra prudence when locating assets. We will advise that special due diligence is observed. One key step is to pay attention to the legal and operational risks caused by the virus outbreak such as lease agreements, construction or renovation agreements. For a construction-in-progress, investors should consider a potential delay in project development or repositioning and stabilization. A long-stop date may help give the investor a walk right, in the event the target is unable to resume ordinary business in the medium term,” it stated.
Meanwhile, as the real estate markets in Nigeria look set to endure a sharp but hopefully short-lived shock as a result of the COVID-19 pandemic, Milano Properties is offering exciting opportunities for investors.
