The myth of invisibility ascribed to Nigerian real estate, generally perceived to operate in a virtual universe, has been shaken by the realities of

today. Contrary to a widely held belief that the real estate sector is always on an upward swing (at least for a long time to come), property

development activities slowed down significantly from late 2008. Year 2009 witnessed an almost shut down and 2010 recorded marginal

improvement.

Development companies, most of which are solely engaged in development for sale took a severe hit. Property investment, the typical mode

being direct property holding, has not faired better. Investing activities in acquisition of residential and commercial properties have dipped. Many

properties are having difficulties securing tenancy (especially quality tenants), while rental value actually slummed in some areas.

Fund to development and investment activities from the financial sector is tough to secure; and off-takers seeking mortgage are back to the era of

“cash and carry”! Real estate service providers, particularly those in property sales and letting are facing tough times, including construction

contractors and built environment professionals.

While we are not undertaking a detailed analysis of the causes of the sector’s downturn (a discussion for another time), it is useful to note that the

current economic slowdown has direct and significant impact on the sector. Depleting foreign and other reserves, dwindling revenue, lower credit

rating, weak purchasing power, rising unemployment, troubled financial system, credit squeeze, increased uncertainty and socio-political and

economic frailty are features of today’s gloomy economic climate. In view of these conditions, real estate will of course be adversely impacted.

Demand will turn south in the face of reduced purchasing capacity, virtual lack of access to credit, loss of confidence and uncertainty.

The myth that real estate value will always hold firm and its activities almost unaffected cannot be correct. Operators in the subsector must

appreciate that they operate within the context of the general economy. Thus macro-economic factors play significant roles in the determination of

their success. Failure to critically consider macro-economic factors in real estate decision-making in good and bad times will be fatal. Such was

over development leading to supply glut during good times, and poor reactions during tough times. These are indicative of failure to understand,

appreciate, anticipate and deal with macro-economic conditions as they impact and shape the real estate markets.

We hope useful lessons will be learnt.