Post on 31-Jul-2020
2020 Outlook | Tayo Odunsi
2020 Outlook of the Real Estate Market
Tayo Odunsi, CEO | Northcourt Real Estate
Real Estate & The Economy
GDP, Real Estate & Construction Growth
4.00
2.352.9
2.1
-0.36
-2.06 -2.24
-1.30-0.52
0.55
1.401.92 1.95
1.50 1.812.38
2.01 1.942.28
6.75
7.83 7.578.26
6.46
7.577.17
7.59
6.34
7.216.79 7.04
5.63
6.836.5 6.6
5.58
6.44 6.21
4.34 4.5
3.223.58
4.13 4.3
3.09 3.414.18 4.25
3.043.49
4.044.51
3.013.48
4.094.45
3.01
-4.00
-2.00
0.00
2.00
4.00
6.00
8.00
10.00
Q1 201
5
Q2 201
5
Q3 201
5
Q4201
5
Q1 201
6
Q2 201
6
Q3 201
6
Q4201
6
Q1201
7
Q2 201
7
Q3 201
7
Q4 201
7
Q1 201
8
Q2 201
8
Q3 201
8
Q4 201
8
Q1 201
9
Q2 201
9
Q3 201
9
GDP Growth, Construction and Real Estate Contributions (%)
GDP Growth Real Estate Contribution to GDP Construction Contribution to GDP
Price Growth + 2020 Forecast
10.61
1.360.94
1.91
1.02 0.85
1.541.19
4.48
0.95
2.39 2.65
0.54 0.420.94
0.62
1.320.7 0.59
1.07 0.83
3.09
0.66
1.65 1.83
0.970.56
1.250.82
1.75
0.94 0.781.42
1.1
4.11
0.87
2.19 2.43
0.94 0.9 0.8
2.1
0.6 0.8 1
1.8
0.90.5
0.9 11
1 1.01 0.91
2.47
0.69 0.931.2
2.13
0.990.62
1.07 1.12 1.11
6.306.90
7.80
4.904.30
5.40
6.30
2.70
-1.60
0.80
1.802.28
-4
-2
0
2
4
6
8
10
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
All Property Price Growth
Lagos (Total) (%) Lagos Island (%) Lagos Mainland Abuja National GDP Growth
Factors to Impact Real Estate in 2020
EFCCPolitical- Reduced political spending- Watchmen: EFCC, TSA, 100M Threshold, FIRS- 20% reduction in budget for housing capital expenditure- Directing exchange rate policy
100M Threshold
Economic
- Low, but improving purchasing power- Demand for indirect commercial real estate- Improved construction activities, resulting to higher
construction costs- Access to finance (mortgages & construction finance)
TSA
FIRS
Social- Change in taste and requirements- Reduced activity of HNIs- Emergence of HENRYs- Migrations creating more investment property and less use
property
Technology & Environment
- Sustainability requirements on the rise- Adoption of technology in construction, real estate
management and brokerage - Environmental pollution impacting Port Harcourt market
Sub-sector Forecasts:Challenges
Residential- Some regulation to enter
sector- No social or affordable
housing policy to support its emergence
Office- B & C grade office will lose tenants relocating to A-grade
- Co-working & conversions to continue to steal market-share
Retail- Few malls are getting tired and need to renew novelty
value to keep up- Proliferation to lead to apathy
in some locations
Industrial- International entrants are self-building
- Local developers lack expertise on contemporary industrial space development &
management
Hospitality- Too susceptible to economic &
environmental shocks
Industrial- Increasing demand for warehousing &
logistics facilities- Introduction of Grade A features
Office- Improved occupancy rates
- Increased migration of tenants to new Grade A office buildings
- Improved awareness on sustainability & energy efficiency
Retail- Focus on family
entertainment features- More local & international
brands to enter
Hospitality- New branded and boutique hotel
openings & starts- Room rates to increase
Sub-sector Forecasts:Opportunities
Residential- Smaller housing units
- Mixed-use developments- Student Accommodation
General Notes
§ Yields will favour operational real estate having development and business income. Example – Student Accommodation, Entertainment Centres (Family Entertainment Centres, Lounges, Co-working
§ Construction costs to rise by mid-year as development activities rise
§ More international entrants in retail, hospitality and proptech
§ Finance bill once operational to favour indirect real estate investment including REITs amongst other factors pushing for REITs
§ Recapitalisation of mortgage banks and insurance companies to create traction in those sectors which have positives for real estate
§ While Government spend on housing is budgeted to reduce (20%), activities of agencies like NMRC and FHF are expected to ramp up
§ A general shift from HNI-led market to a middle-income-led market has begun, a de-focus on oil & gas, to the real sector (Entrepreneurs, investment bankers, technology, agriculture, influencers, entertainers etc.)
2020 Global Property Growth Rates
*Growth rates are not adjusted for inflation or currency differences* Computed assuming all countries grow at Nigeria’s forecasted growth difference
between 2019- 2020, which was computed as 11% Source: Global Property Guide, Northcourt
1.37% (Canada)
1.49% (South Africa)
2.65% (Nigeria)
2.00 (Ghana)
0.46% (UK)
1.23% (US)
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
0 1 2 3 4 5 6 7
2020 Forecast Property Growth Rates
©Northcourt Real Estate
Thank YouTayo Odunsi
tayo.odunsi@northcourtrealestate.com+234 802 325 0289
@tayoodunsi
@northcourt_rewww.northcourtrealestate.com
5B Adewale Kolawole Crescent, Lekki Phase 1 – Lagos01-291 0707