As Nigerians wait for the February general election, which will determine the country’s next president following Muhammadu Buhari, the property market has been unusually calm.
This is because investors, developers and space occupiers have adopted a wait-and-see approach to the market as uncertainties heighten around election outcomes and what that will mean for the economy. Again, the usual activities arising from distressed sales by politicians are absent.
Usually, election cycles witness increased activities as politicians contesting for elective positions push assets, including land and houses, to the market intent on raising money to pursue their ambition.
But this year’s election appears to be significantly different because the market is yet to see such assets that are normally given away in distressed sales. Furthermore, because of the turn for the worse which the economy has taken, diaspora investors are being very careful.
Political analysts have described the forthcoming presidential election in the country as a watershed that will determine whether the country’s economy will continue its journey down the slope or someone will emerge from the election to stop the drift.
“All along we have been getting it wrong in our choice of political leaders. We can only hope that this time around we will get it right. So, it is understandable why investors are being mindful of where and when to invest in an uncertain environment,” Henry Eneh, a social commentator, said.
Commenting on the decision of the developers, investors and occupiers to adopt a wait-and-see attitude to the market, Ayo Ibaru, chief operating officer at Northcourt Real Estate, said it would have implications for the market.
He added that the inactivity in the market means that there is no demand even where there is supply. “This will lead to pent-up demand post-election and, from an investment perspective, capital will likely need expression as a result,” he said.
According to Ibaru, whose views were contained in a report on ‘2023 Real Estate Outlook’ compiled by his company, residential developments with strong infrastructure would see demand more from diaspora than local investors, especially sale transactions.
Post-election market will also see retail business continue to expand as local developers are already capitalising on mid-income markets and emphasising on smaller-sized projects but broad tenant mix.
“With the further establishment of e-commerce and foreign investor-interest, the growth of industrial real estate has remained consistent. There is still demand for inner city last-mile warehousing,” Ibaru said, adding that the ratio of the total population to market size remains a strong predictor of the need for more industrial real estate.
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It is also good news for investors that demand for industrial real estate, last-mile logistics and warehousing is expected to grow in urban areas and in second-tier cities. The market for small to mid-sized Healthcare real estate is already seeing more supply and demand remains.
Outside gated communities, residential sales slowed down locally as diaspora investment for sales remains the mainstay even though rental markets have remained robust. The growth in new towns and senior living centres supported by strong infrastructure currently provided by private developers has continued.
Certain nodes in Lagos, Abuja and PH have shown signs of ageing infrastructure with Yaba and Surulere as examples where rental activities have increased significantly on account of their attractive location in relation to business hubs in Lagos.
Part of the activities that will also be witnessed post-election is demand for ‘smart cities’ which, according to Udo Okonjo, CEO, Fine and Country West Africa, are urban areas that use technology and data analysis to improve the quality of life for residents and enhance the efficiency of city services.
“These cities are designed to be sustainable, livable, and economically competitive, and they are becoming increasingly popular among both residents and investors,” she said, adding that co-living spaces which are designed for people who want to live in a shared living environment but still have their own private space would gain momentum, especially among millennials.