COPING WITH POST-COVID-19 CHALLENGES IN THE REAL ESTATE BUSINESS

It is interesting to know that all classes of investment including stocks and Oil have recorded down-south movements in prices but the property market has but witnessed such.

 

Eventhough, prices of real estate properties are relatively stable in the short-term, the over-arching effect of the Liquidity Squeeze that will emanate from the general slowing down of the economy and the near-zero Net Price of Crude Oil, which is the Mainstay of Government revenue/spending, will affect the purchasing power of home buyers.

 

Most buyers who played in the high-end market may eventually fall into the middle or low income market, hence the need to restrategise on what types of briefs and requests you take on.

 

As Agents or Consultants, you would need to pre-qualify briefs and requests and carry out thorough Due Diligence to be sure they are in tune with market realities as most clients, whether on the buy-side or sell-side usually send real estate consultants and agents on a wild goose chase.

 

I always emphasise that there is a crucial aspect of the job that is Advisory which means for example if your client tells you to sell his or her property for a price higher than what the market can absorb, you need to advise them accordingly.

 

In addition, a property requester (whether a direct client or through an agent) who has say a N50Million budget asking you to source for a property for him or her on Banana Island is apparently a time waster or window shopper or a speculator.

 

The foregoing scenario underscores the reason why some consultants or agents never close a transaction in a year.

 

Suffice it to say there are several classes of actors in the real estate value chain namely, Agents, Consultants, Developers, Landlords and Landladies, First Home Buyers, Flippers, Mortgage Companies, Contractors, Off-plan Buyers & Sellers, Attorneys, Etc.

 

The List is almost endless really but each of the actors has their own peculiar characteristics and their response strategy to happenings in the market place.

 

In any case, different strokes with different folks they say, each of us will need to work out their strategy plan towards mitigating against the new realities of a slow down in general economic activities.

 

In keeping with Maslow’s Law of Need, Food, Clothing and Shelter will continue to account for a significant portion of spending of the average person, however, people will begin to prioritise their spending in the foregoing order.

 

People will eat, clothe themselves and possibly rent or lease apartments before provisioning to buy a property.

 

As a company, we set out at the beginning of the year with a Sales/Revenue Target but the ‘New Normal’ has impacted negatively on our projections eventhough, to God’s Glory, we were able to achieve a few closures before things went sixes and sevens, I have realised there is an urgent need to hone our skills in being able to identify where our prospects and clients are and what category markets they wish to play in going forward.

 

The point is, we have so many properties available but fewer buyers so those who have mastered a way to know where to find the few buyers will stay afloat during the coming challenging days.

 

Worthy of note is the fact that because there will be a lot of job losses, we will see a massive incursion of people into the real estate business as agents etc. because of the relative low entry capital required to start such businesses. In light of the aforementioned therefore, each person, whatever service you choose to provide in the real estate value chain, will need to develop their Unique Selling Propositions in order to stand out in the pack.

 

Going forward, it is going to be the Survival of The Fittest & Smartest. Work Hard & Work Smart.

 

Written By:

 

Victor Akinsipe, M.D./C.E.O. Boomanage Properties.

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