No doubt, these are trying times for different sectors across the Nigerian economy and the nation’s real estate segment is not insulated from the aftereffects of the COVID-19 pandemic.
Some operators and stakeholders have expressed their fears that if the Federal Government does not intervene, more real estate companies may be forced to shut their operations.
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The experts have lamented that despite the challenges facing the real estate sector, especially with the pandemic, the Federal Government has not paid due attention to the sector.
The Managing Director, Infinity Trust Mortgage Bank Plc, Dr Olabanjo Obaleye, explained that the government is yet to provide financial succour and other structural support to mortgage banks and the housing sector, even in the heat of the pandemic.
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According to him, the government appeared to be only concerned with raising taxes to boost revenue but has not provided the required succour to cushion the impact of the pandemic on businesses in the country.
During an Earnings Conference Call, he said, “Many companies affected by the pandemic had folded up, as housing subscribers were finding it difficult to service their mortgage payment. There are two companies that have just collapsed due to the inability of their owners to get foreign exchange for the importation of raw materials.
On the level of government support on COVID-19, there is nothing visible we have seen. We have read so many pronouncements on that from the government but we haven’t got any palliative in that respect. We have made proposals to government through our relevant authority but there is a need for certain funds to be set aside for this.”
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A real estate practitioner and also the Vice President, Lagos Chamber of Commerce and Industry, (LCCI) Gbenga Ismail, explained that the impact of COVID in real estate would be felt by stakeholders and property owners because of the tenancy/rent structure of the sector.
Unlike what is obtainable in other climes like the United Kingdom (UK) and the United States of America where rents are renewed on a monthly or quarterly basis, Nigerians will feel the pressure now, as rents are paid in one or two years advance.
According to Ismail, who spoke in an interview monitored by Nairametrics, most people that have either lost their jobs or whose salaries are slashed will feel the effect more now compared to last year.
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He said: “Now, people won’t be able to pay rents or buy houses as planned. We are not sure of where the monetary issues are going now and not sure if lending will continue into the real estate sector. We are yet to see some of these things going on.
“Even in inventories, where developers have put houses out for rent, the concern is who is going to rent them? Before COVID-19, we wait 6 months before houses get rented or leased but now it may not be less than 12 months.”