Analysts have argued that although Nigeria’s economy is considered to be out of recession, the nation’s Real Estate market is still struggling to put the 15-month economic downturn behind it. This is evident, for instance, in the Office Space market where Business Day newspaper recently reported that in addition to the estimated over 300,000 square meters of empty space the market suffered in 2018, an additional estimated 400,000 square meters space will further put a strain on the market in 2019.
For other segments of the industry such as residential, hospitality, retail, industrial, etc; the story doesn’t seem to be different. This is putting landlords and investors on their toes to devise strategies to retain existing tenants and attract new ones. To either retain tenants or attract new ones, the asset must be seen as either adding value to the lifestyle or business operations of the occupants, or both.
Therefore, for real estate investors of who want weather the storm in 2019, here is how to stimulate demand in real estate market.
1. Pay Serious Attention to the Maintenance Strategy: Either you’re at the development planning stage, construction or your asset in already on the market, having a solid maintenance strategy will sift the boys from the men this 2019. Having a good maintenance strategy works for both investors and occupants because it can keep the investor’s overhead low, yet put the asset in very marketable condition. Also, it is value for the occupants, as it enables productivity, enhances efficiency and support the lifestyle of the occupants. A good maintenance strategy will optimize costs for both landlords and occupants.
2. Build or Remodel for Purpose: Facilities that are built-for-purpose are usually more functional, cost-efficient to run and deliver better returns than those force-fitted. Force-fitted facilities are higher in cost of running, either in form of cost of remodeling for the occupants or productivity for the occupants. Converting a residential building for office purposed for example will have the challenge of space utilization, facility capacity, etc.
So, one of the winning strategies for 2019 will be building or remodeling for purpose. For example, report says giving the growth of startup businesses, co-working spaces will do better than office spaces over the next few years. For new investors, it might be time to take a deeper look at the start up market and for existing investors, it might be time to consider remodeling for the demand in the market at the lowest possible cost.
1. Renovate and Facelift: As simple as this sounds, it has been proven to be amongst the most cost-effective ways to increase the value of your real estate assets. If you have a property business, routine maintenance exercise can go a long way in increasing the value of such property. Regular or periodic painting, repairs and renovation works will give your property a facelift that will help to increase value. Beautifying the environment in and around your property, de-cluttering the living space, etc., are sure ways to increase your property value, both in the long and short run.
2. Pay Attention to Location and Environment: Some have argued that the three most important factors in Real Estate is location, location and location. Whatever side of the fence one belongs, there’s no doubt that location plays an integral part in attracting value from Real Estate market. The primer the location, the higher the value the asset commands. For those at the developmental stage of Real Estate, you might still have control over location and environment. Pay keen attention to economic indices before you site your project. For those with existing asset, it might be time to relook at alternative strategies of creating the type of location that we add value to your asset. An example is the recent surge in fun activities around malls because neighborhood stores are beginning to erode the value of shopping at the malls.
3. Retain your Tenants: One of the ongoing debates in the market today is who pays the service charge for unoccupied spaces. While some tenants bear the burden of paying for a service they don’t use, there are clear examples, of tenants who had to move out to occupied facilities to reduce their service charge. With the current economic condition, more tenants will tilt in the direction of occupied assets to reduce their overhead or avoid the “who should pay the service charge of unoccupied spaces” altogether. The truth is assets with occupied spaces stand a better chance. Therefore, if you want to stimulate the market for your asset in 2019, it might be time to consider taking up the bill of unoccupied apartments or spaces in your asset.
In all, there is approximately about 700 square meters of office space in the market, putting serious strain on investors’ money and interest. However, investors that will win in 2019 are not those who will keep lowering price, there are those who will earn the right price by increasing value.