The housing and real estate sub-sector: Hitting it big at the season


By AKHIGBE Dominic M

THUR, DECEMBER 29 2016-Housing certainly, is not seasonal. Every second of a day, seven days a week, twelve months of the year, man needs housing. This is aptly captured in elementary economics. Therefore, what has Season got to do with Housing? A lot! For the man whose interest in Real Estate and Housing goes beyond subsistent occupation, the man whose business in Real Estate, Season is of the very essence. Like every other subsector, the Real Estate & Housing subsector also has its peak and off-peak seasons. This may not be as pronounced obtainable under other subsectors, but it certainly does have its high and low ends.

A few weeks ago, I was in a Housing Conference in Abuja, the capital city of Nigeria. Major stakeholders were gathered to brainstorm; to think of how to keep the business of Real Estate booming all year round. This is a clear testimony to the fact that there are times in the year when activities are at the ebb for those in the Real Estate sub-sector. Ideas were muted, experiences were shared, opinions were canvassed; all of these were in the direction of keeping the candle burning all year round for the Real Estate sub-sector.

It is great to know that the Real Estate sub-sector is a subset of the larger economy. As important as its key role of providing housing solutions for its clients, it also shores from the ups and downs of the larger economy. If the larger economy booms, the Housing sub-sector booms; if the economy dips, so it goes too. It is certainly not immune from the general economic variables. It does not exist exclusive of the total outplays of the economy. It indeed; a microcosm of the total national economy. The big question is; or better still, the questions are; what are those economic interplay that determine whether the Housing sub-sector booms or dips? The answers are as varied as the reasons themselves. For the purpose of this medium; we are going to streamline these reasons to two broad categories of Policy and Economic.

For the purpose of readers clarity again, we may not necessarily take these two categories in the order I presented them above; I would rather reverse it. So, let’s look at the Economic reasons that could positively or adversely affect the Housing and Real Estate Seasons: Demand: this is a major factor in the interplay of indices that determine the ups and downs in the Housing sub-sector. Demand cannot be wished away. This is actually the bane foundation for the health position of any economic endeavor. Demand has existed to accentuate supply.

The truth is; there is no need for the production of what will not be used. Therefore, demand has to be sufficiently in place to elicit the intrinsic interest of the discerning investor with investable fund in any chosen sub-sector. Demand itself is also a function of certain salient factors; ability to purchase, need, taste, class, pears influence, capacity, affordability and many more. For an individual to have the Demand button pressed, the foregoing factors must have been adequately addressed. These factors are certainly interwoven. None is taken in isolation. Let’s take the first most critical factor of Need. It is basic, indisputable and real that there has to be a need. For every man, the Need for shelter is as important as man’s existence.

The absence of a shelter, no matter how uncomfortable it is equals, man to animal. In fact, there are arguments in certain quarters that Housing is also a need to animals in their own rights. The bird needs a nest; the goat needs a Pen and the Horse needs a Stable. These are all Housing needs met in various ways. So, it goes to make a man less than animal without a suitable Housing solution.

Closely following the Need factor is affordability. This is key. It is a function of the Economic well-being of the man that needs Housing solution. A man gets what he can afford. So, in an economy where the citizens’ income level is at the ebb, it goes to conclude that the demand for decent Housing solution will certainly not be at optimum.

As much as the citizens would want to continuously meet the Housing need, this would be done not by choice but by necessity. Decency may then be the exception. This becomes an adverse situation to the sub-sector. Affordability is the capacity to conveniently access that Housing solution desirable for a decent living. This is not negotiable in economies that have advanced working solutions such as Mortgage in place. In the last few years, Mortgage is taking roots in Nigeria though with its tilting challenges. This is the option that makes a suitable Housing solution available to a subscriber in advance of his current state of available resources. In very advanced economies, considering the capital intensive nature of Housing, Mortgage is actually the preferred option. Housing solution is not a cash-and-carry affair. The advantages inherent in this are enormous.

The option of taste is also not fully-detached from affordability. Taste specifically describes the individual’s choice suitable for his specific need. In some cases, this also bothers on value, acquisitiveness, glamour, luxury and much more as they distinguish him from the others. This cannot be isolated from the economic realities of the citizenry. In a booming economy, tastes are more conveniently sustained.

Other factors such as Pears’ influence class are also addendum to the Affordability factor. They all revolve round one thing; ability to afford. The aggregate of the inter-plays of these factors make up a Season. In this part of the world, the beginning of the year; mostly the first two months are heavily dreaded. These are almost closed months. Months when no new venture must be contemplated. In business circle, it is off-season. Those that readily smile to the banks this period are landlords and school owners whose fees must be settled at all cost. Not a great number of people think of buying houses of their own or lands to develop. It is basically a period of subsistence. So, this cannot be said to be a booming season for the Core Real Estate sub-sector. This may favor a section of the property market called Rental which is basically not a focal point for Mortgage or Housing policy focus.

The next few months after these first two months, citizens are beginning to settle down and probably cool-off from the heat of the January-February fever. They are not the core booming period still, but things may just start looking up. So, March till sometimes July are preparatory period. In these months, patronage efforts are gathering momentum. A handful of citizens are contacting their lawyers and property consultants with Briefs to start looking out for their affordable housing choices.

The August-September season is an interlude. Capacities are most-likely built but rains may be a huge deterrent. This slows down accessibility, mostly in up-coming areas such as developing estates and traditional lands. However, better-developed facilities start to get attention since they are likely better accessed despite the rains. The October-December window is the hit period. This time, so many factors come into play. Citizens, mostly the employed are having access to funds in the form of upfront, co-operatives and other sources of funds. Those that can afford dedicated Housing solutions and would not want to renew rents are desperately determined to get their own. This is season for the sub-sector. Players smile to the banks. Consultants are busy and financiers are executing MOUs with beneficiaries. Every investor looks forward to this season.

However, there are other factors that could punctuate these calculations. These are basically policy decisions. Policy decisions are Directives, pronouncements, actions or inactions, financial regulations, laws and other endeavors that the government of the day puts in place to control, regulate or promote the Housing sub-sector.

AKHIGBE Esq is CEO, Property Logic Incorporated/Business coach & Seminar speaker/expert in business and property law. Tel: 2348034846284


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