Will your real estate business survive the pandemic?Oluwakemi Adeyemo
What aspects of the real estate sector an investor should invest in, or not invest in, during and post-COVID-19 remains an ongoing conversation. It is still believed to be unclear what the new reality of the pandemic will be to economies around the world. Most focused on, are aspects of real estate that meet the essential human needs such as shelter, food, health, mobility, logistics, storage and security. It is believed that in short to mid-term periods, hospitality, education, events and commercial real estate may take a big hit.
A missing element in these conversations, and a very vital one, is why a particular aspect should be preferred. Of course, profit-making readily comes to mind as the ‘Why’ of most investments. While it is important to discuss and evaluate aspects of real estate with the highest potential for profitability post-COVID-19, it is also important to have a clearly defined ‘Why’ for every category of investor, end-users and investment project, irrespective of size.
The pandemic and responses from around the world have revealed how empathetic humans can get and how much of interconnectivity still exists – people are looking beyond profitability to a bigger ‘Why.’ It has also shown how essential design thinking is and will become to businesses going forward.
“Design thinking is a human-centred approach to innovation that draws from the designer’s toolkit to integrate the needs of people, the possibilities of technology, and the requirements for business success.” —Tim Brown, Executive Chair of IDEO.
Design thinking is an approach to creating solutions to a problem by seeking to understand the users of the would-be solutions and redefining the problem. Five phases are involved in the design thinking process: Empathize, Define, Ideate, Prototype and Test. It is most useful when you want to tackle problems that are ill-defined or unknown.
The problems in the real estate sector in Nigeria are ill-defined. If building more houses only would solve the problem defined as housing deficit, we should not have un-occupied and abandoned buildings. If population size means and translates to proportionate purchasers of real estate products, the housing construction industry will be productive and profitable year in year out with customers waiting in line. There would be fewer homeless people, slum dwellers and congestions.
Steering the wheel of the real estate sector effectively and for prosperity on a greater level during and post-COVID-19 requires design thinking – a different way of thinking about problems. This helps to be strategically effective, efficiently solving real problems and creating the desired end game for all stakeholders. Surely, understanding and addressing the current shelter or housing needs of the populace on a large scale will require an unusual approach.
More subtly, design thinking also helps to get around the human biases, status quo, traditional or behavioural norms that would normally impede creative imagination, improvement or innovation. Redefining problems as an approach to solving real estate challenges drastically reduces the duplication of ineffective models serving the shrinking middle-class segment. There is no other way to get around the behavioural norms inherent in real estate without employing empathy and emotional intelligence.
For instance, it is common for people to resign to a property in a certain location where they become permanently resident, even when that location no longer supports their lifestyle and wellbeing. Such people seem to be confined to that location for two major reasons. One is the fact that they have developed a strong affinity to the property and have become cultured in that location. The second reason is the lack of financial strength to move to a different location.
A real estate business that makes empathy its first rule of engagement, as prescribed by the design thinking process, can offer location or property type exchange amongst subscribers. Also, a real estate business, as well as other stakeholders, which employs the design thinking approach, can have more consistent engagement with stakeholders and clients. Carefully crafting questions to capture and understand client experience working from home while also having children learn from home; their wish for a soundproof portion of a building – for those who must effectively work from home; or a collective effort to facilitate a stronger internet network, might be what sets your product apart.
Executing design thinking in real estate would, no doubt, be exerting. Especially when there are few or no professionals who can play the multifaceted role to capture and present the expectations of all stakeholders in the face of visible and hidden changing behavioural patterns. However, it helps to establish an inclusive bigger ‘Why’ early on, which is essential to securing client loyalty, commitment and profitability.