COVID-19 Pandemic And The Potential Impact Of Lockdown On Real Estate Operations
The outbreak of the Covid-19 virus and the consequent lockdown of major cities to mitigate its spread will have both short term and medium impact on businesses, both locally and through external pressures. Businesses are no longer operating locally, meaning revenue is not being generated and income is not being earned, works have also grinded to a halt on major projects. The potential impact of the crash in crude prices is yet to be felt but we can all agree that it is coming very soon. For companies operating in the real estate sector, the different facets of business we are engaged in will be affected, some adversely than others. Its impact across various areas of operation is further examined.
More than any other department, management interfaces with people who would be affected by the lockdown, firms should endeavor to be in communication with their tenants showing empathy and educating and enlightening them where possible across the different channels of communication employed by individual organizations. Landlords should also be brought to speed on the reality of present times, as there might be delays in rent retrieval attributable to income loss. Also, where possible, the surveyor should help to secure structured payment plan for a few deserving tenants with landlords should they need a bit of time to fulfill their rental obligations, this can be done for tenants who have always abided by their obligations and have indicated they will act in good faith as agreed upon by the parties. More than anything, upward review of rent should be avoided during this period.
Execution of most valuation jobs have been put on hold due to the lockdown, it should be anticipated that there will be an increased flow of valuation briefs as soon as soon as the lockdown is lifted. This might however happen at the detriment of professional fees, it should be anticipated that there will be stiffer negotiations on downward reviews of fees from pre-lockdown rates as most businesses, organizations and individuals with whom business is done will bring it up when negotiating fees, firms should brace up to adopt stern but fair measures in negotiating fees. However, cutting cost of job execution where possible will go a long way in reducing the impact of income loss. The HR/Admin department should devise workable solutions in this regard; air fares, lodging, stationaries among other costs can be cut. More briefs will also be secured for valuation as commercial banks will continue to lend and the CBN set to roll out a substantial amount accessible for businesses, valuation of assets and liabilities will be one of the requirements in securing such facilities, valuation marketers can expect to have a field day.
The hospitality sector has been one of the hardest hit by the lockdown, this may lead to investment diversification and a flooding of the market with briefs for sale. Larger chains that are more solvent will be looking to expand and acquire some of these, and enter new markets. In offering advisory services to clients, this is one of the best times to buy and individual firms that are financially able should also take advantage of this. Investment in healthcare is expected to witness a significant boost, therefore demand for properties that fit the criteria is anticipated to be on the rise in coming months.
In summary, to meet set goals at the beginning of the year, every department will have to be ingenious and think up new ways of achieving targets, also firms will have to factor in the changing needs of clients and work along with them in coming up with bespoke solutions to meet specific challenges. In the very least, the unexpected pandemic which was never envisaged at the beginning of the year should spur us to take the concept of thinking outside of the box very seriously. One key thing however that we must add because we are in the service industry is the concept of value addition. Because we are not selling physical products so to say, then value addition could be a very key concept for all the departments in our various firms. Only through this, will we be able to sail through this period successfully. In all of this, the supremacy of God is certain and real and so whilst we do all the above, we must also understand that the ‘Horse is prepared against the day of battle BUT safety is of the Lord. The place of God and prayer MUST not and SHOULD not be neglected.
ESV OLUSANJO STEPHEN FAWOLE
UBOSI ELEH +CO