The future of real estate in Nigeria is its youth. But not in the way that you think.
With rising concerns over Nigeria’s exploding population growth, we are seeing an emergence of a more dynamic, technologically savvy young working population. Young people are becoming more nimble, and increasingly embracing risk by establishing their own startups; from tech companies to new-age restaurants. Young professionals are shunning traditional and expensive office and residential arrangements, and embracing the flexibility and cost savings provided by shared living and working spaces. The real estate industry is being forced to innovate and redefine its value proposition, as mobile technology has put greater power into the hands of consumers.
However, there remains a significant supply-demand gap in the various real estate sub-markets: residential, office, retail and hospitality. Decent housing options for university students and young professionals are limited and often unsafe; and secure, affordable office spaces in proximity to the central business districts remain scarce. Plugging this gap has proven difficult, as developers continue to focus on delivering luxury apartments and Grade A offices, despite high vacancy levels and falling prices.
Whilst real estate investments provide an opportunity for citizens to participate directly in the economy, the traditional means of doing so are too far out of the reach of many, and the system needs to evolve. Lack of access to affordable financing; cumbersome title registration processes and a go-it-alone culture, are just a few of the factors that have served to limit participation. In order to re-energise this sector and boost the economy, Nigeria’s government must start to aggressively push policies which encourage public and private sector financial institutions to provide innovative, affordable financing options; unlocking dead capital and restoring access to the industry.
Nigerians continue to look to developers to meet their individual needs, tastes and preferences. Our youth are responding to affordability constraints and technological advances which are changing how they live, work and shop. As Nigeria’s real estate market rebounds and stabilizes, what is evident is that the future of the industry rests on a redefinition of what value means. This will involve developing new strategies to meet the growing demand for flexibility and delivering them seamlessly – whilst maintaining sustainable returns on investment.
The need for alternative real estate options for a new peer-to-peer based economy: – student housing, co-living, co-working and even crowdfunding – is an emerging trend that cannot be ignored. The players that will survive the coming paradigm shift are those best able to adapt and remain flexible enough to respond to these needs. UACN Property Development Company (UPDC) is fully embracing the need to innovate. With its upcoming recapitalisation, the company is reinforcing its faith in the real estate industry in Nigeria and standing firmly behind it. Having already established a position as one of Nigeria’s leading indigenous real estate companies with a strong track record for successfully completing landmark developments; UPDC aims to build on that track record – leveraging the recapitalisation which will put us in a sustainable financial position. Unencumbered by significant short term debt, we will gain more operating flexibility to access new sources of capital and strengthen our market position.
Energising the industry will be a collaborative effort. Today, the world and Nigeria in particular; face an urgent demographic challenge. An appropriate response to the current and impending real estate infrastructural needs of nearly 200 million people, is a matter of national priority, and will determine, and directly impact the dividends we reap from an increasingly youthful population. The Nigeria story is promising; however as we write it, we must take stock of the mistakes of the past and ensure we are well positioned to avoid them by delivering properties and services which are physically, financially and fundamentally fit for the Nigeria of tomorrow.
Deborah Nicol-Omeruah, Chief Commercial Officer, UPDC