FROM THE CEO

The first half of the year has been met with unexpected challenges, and the return to normalcy seems worryingly undefined. As we find ourselves in unchartered territory, the level of uncertainty in the economy skyrockets and the recovery trajectory is difficult to forecast.

As the crisis demands the world to come together to explore alternatives, be it through social distancing, remote work access, availability of critical supplies and protective measures for all, and of course, all through effective resource management, it is critical to remain forward-looking as there are opportunities even within tough financial times.

While the pattern is familiar to a standard recession, studies have shown that historically, economic activities return to normalcy very quickly once epidemics are over. This is why beyond preparing for a harsh economy; a sustainable investment strategy is essential for long term personal financial growth and development. In the same way Nigeria needs to invest more in non-oil revenue sources, individuals need to continue to grow their investment pots despite the economic downturn.

Doing our utmost to provide unmatched guidance on sustainable investment opportunities during the Covid-19 crisis, Bilaad Realty stands ready to live up to our significant social and economic responsibility as society re-opens.

Aliyu Aliyu
Chief Executive Officer
Bilaad Realty Ltd

WITH EMPHASIS ON OUR PERSPECTIVE

The International Monetary Fund has put the economic fallout of the current Covid-19 crisis in the category of a severe recession, worse than the 2008 subprime crisis. The prices of commodities have fallen globally. Crude oil prices became so volatile that at some point, it was trading in negative. The equity markets have also witnessed extreme volatility across the world and debt investments have triggered some panic among investors due to their underlying credit risks. Commercial real estate, which encompasses the hard-hit hotel and retail sectors have also experienced a hard hit, but we still see value in residential Real Estate, despite the challenging times.

With so much volatility in the market, what should an investor do and where should one invest their hard-earned money? This situation demands unprecedented moves, but without panic. It is critical to align your investments to your risk appetite, financial goals, and corresponding returns expectations. However, when there is an unprecedented economic situation like the one we are currently faced with, it requires more effort than normal.

Investors need to understand how certain investment performance and economic down times are related. For example, the stock market is a forward-looking mechanism and economic reports are backward-looking. For this reason, stock prices often fall months before a recession begins. It also means that stock prices often bounce back up before the recession is officially over.

Real estate opportunities and stocks have been long-term rivals for the title “Best Investment Strategy.” However, after the Coronavirus outbreak, the stock market was quick to take a downward turn, and property prices have remained almost unchanged.

Opportunity in Chaos

While common investment vehicles might take a hit in returns right now, investing in a recession can actually be the best time to buy real estate because it’s less volatile than the stock market, and there isn’t as much competition from other buyers. The smartest real estate investing strategy during these times is finding properties that have a great chance for appreciation over the long term.

Tips for investing in Real Estate during and after the outbreak:  

  • Act now to gain from increased negotiation opportunities for discounts with less investor traffic, which will lead to greater opportunities for investing in high-value assets.
  • Look into long term investments that will generate ongoing passive income
  • Invest in cities with a strong workforce, vibrant business environment and many job opportunities
  • Invest in projects where you are the major investor and the completion of the project does not rely on other sales
  • Use a local partner to help you identify asset pricing cycles through the entire process

 

At a time where everyone seems wary of predicting the future, investors can pave their own way forward by taking action with confidence and looking ahead rather than looking for short-term prospects. When it comes to property interest, using a local expert is key to making sure you choose high-performing investments, especially during an economic reality with seemingly unsure footing. 

In a crisis, it is important to be aware of the dangers – but more importantly, recognizing opportunity.

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