How to make real estate valuable in a crisis.Oluwakemi Adeyemo
At the inception of the COVID-19 pandemic, no one envisaged it would endure for so long or spread as far and wide as it has. Now, the whole world is plunged in an undeniable economic crisis. A crisis is any circumstance that negatively impacts and influences the life of an individual or group of people, which they did not cause and over which they have no control.
While some developing African countries have not been so hit by the spread of the virus as other countries have, economies have been badly hit. COVID-19 began in a place you might want to call the market hub of the world, a country from which almost every other country sources one commodity or another.
For instance, Nigeria trades a lot with China. According to the United Nations COMTRADE database on international trade, the value of Nigeria’s imports from China in 2018 was estimated to be US$8.35 billion.
The real estate business, in many ways, depends on trading relationships with some of the currently halted economies. The building sector consumes iron, steel and other materials which are largely imported. Only a small fraction of these materials are locally manufactured. The building industry relies heavily on imported materials for finishing. This makes the impact of the current economic meltdown both massive and profound.
Nigeria’s economy is also heavily dependent on oil revenue. Oil fuels the energy sector to which many other businesses in the economy are intricately connected. Besides, the oil and energy sector arguably employs a sizeable number of middle-class citizens. This is one reason why it’s difficult to effect a total lockdown. Even if it is enforced, it cannot hold out for too long.
Dear investor, while it is near impossible not to panic, it is important that you promptly convert that energy into taking precautionary actions – precautionary actions as recommended by the WHO, NCDC and other credible sources of information. Then, engage a thought process that helps to put in perspective, things that are peculiar to your investment(s) or business(es).
Businesses and investors in real estate should conduct investment reviews at this time, holding in perspective the object of investment, the people involved and the projected stakeholders’ return on investment.
The object of investment: In a crisis, some things change while some don’t. Real estate assets fall largely in the category of things that don’t change. Land especially remains as it is although the price value may change. The changing value may require some adjustments in the use of land space to maintain premium value.
Clients and partners in the business: The needs of clients and business partners during a crisis often change. A real estate business can create certain comforts for clients and partners while maintaining business values. In Nigeria, rent or lease is paid yearly or a lump sum paid, to cover a minimum of three years. Scheduled virtual communications and meetings between stakeholders, to check for the functionality and convenience of the property, will convey care and value in a time like this.
The values that drive the business: The business of real estate thrives majorly on quality services and people management. While businesses are set up to solve problems and make a profit, people drive the business and consume the end product. Between the back-end and front-end processes of a real estate investment, values and culture are communicated. Investors now more than before need to see the values and culture that drives the business entities that they have entrusted with their money.
It is very important to note that while the value of money may reduce, money does not leave the planet during a crisis. It will simply be redistributed. Projecting and communicating strong positive values and culture now, positions your business to benefit from redistributed currency after a crisis.
Crisis does eradicate traditions. For real estate businesses whose clientele base has not mattered before the crisis, here is the chance to strengthen communication and convey positive values. Crisis offers you a second chance to build stronger business relationships. A simple yet effective communication plan will help your business to re-connect or establish and strengthen communication with your clients during this period. To request for a free communication plan, send CP to firstname.lastname@example.org