AWAKEN YOUR PORTFOLIO
Africa’s future never looked brighter than it did from 2012 through 2018. The continent was home to the world’s fastest-growing economies—a growth fuelled by high commodity prices. Free trade was becoming a reality with the rapid approach and realization of the African Continental Free Trade Agreement. Political instability was largely under control, and even during an Ebola outbreak, the continent largely succeeded in containing the worst health and economic impacts of that virus.
Today, I still see Africa’s potential clearly—a global economic driver, digital innovation hub, and model for green, resilient infrastructure. But I am also concerned about the future; conflict is on the rise, and the number of countries falling into instability is constantly increasing. The impacts of climate change are worsening each year, and while COVID-19 has affected everyone, it has not affected everyone equally: This truth is especially salient for Nigeria, which saw decades worth of economic and social progress erased almost overnight.
While the pattern is familiar to a standard recession, the combination of these factors has many wondering where to place their capital and whether to focus primarily on growing their wealth or simply preserving it. We live in a once-in-a-generation moment of possibility, and whilst pausing to reflect on these issues is important, it is critical to remain forward-looking as there are opportunities even within tough economic times.
CHIEF EXECUTIVE OFFICER
Emphasis from our perspective
The investment landscape can be extremely dynamic and ever-evolving. But those who take the time to see the opportunities, understand the basic principles and the different asset classes stand to gain significantly over the long haul.
The Real Estate Industry is a major catalyst for Economic growth and remains one of the safest and easiest forms of wealth generation. Other budding sectors like ICT, Tourism, Hospitality, Entertainment, etc. have provided a veritable platform for this viable industry to thrive as it provides homes and spaces for individuals and organizations, giving rise to various developments from both professionals and amateurs.
On one hand, investors could argue that the sector appears primed to benefit from market opportunities, however, the sector also faces several challenges; those caused by industry players and those faced by the industry in general. Some of these challenges include poor build quality, difficulty in accessing finance, volatility of the Naira value, inflation, high cost of building materials, amongst others.
One type of asset that has historically come in and out of favor, depending on the economic climate, is real estate. Whilst no formal education is required to leverage the opportunities in this industry, requisite knowledge is key.
Real Estate Investment Trusts (REITs)
REITs have consistently outperformed many more widely known investments. They are indirect real estate investments that allow both beginners and experienced traders to gain exposure to the market without having to buy their own property. Like ETFs and mutual funds, REITs contain a basket of different assets, are traded on the stock market, and pay regular dividends. They can be a good option if you don’t have a lot of money to invest and want to get started in real estate.
By purchasing shares of a REIT, you earn a proportionate share of the income they produce. Different types of REITs invest in different assets — for example, equity REITs own buildings, while mortgage REITs own mortgages and mortgage-backed securities (MBS).
One of the most significant benefits of home ownership is what it can mean for the future. Purchasing a property and leasing it, or a portion of it, is a traditional approach to investing in real estate and is frequently considered as the first step before investing in other types of real estate, as it comes with the extra bonus of increasing your net worth because you now own a significant asset.
Buying a home can help you build wealth by:
- Providing you with a stable investment that also doubles as a place to live
- Creating an automatic savings account as your home appreciates in value
- Giving you a stable housing payment so you never have to worry about rising rent costs again
- Providing you with an asset that you can pass down for generations
Industrial Real estate
Industrial real estate has been one of the top-performing sectors of commercial real estate for the past several years based on returns and demand. In many ways, the global pandemic accelerated the demand for industrial space, putting pressure on cold storage, warehouses and distribution centers, and data centers in particular. While this recent demand is likely just a temporary surge, it's very likely this sector will continue to have a strong year and opportunity for continued growth in 2022.
In addition to giving you ownership of a tangible asset (whose value almost always appreciates), real estate can effectively hedge against inflation and other market sectors. Overall, investing in real estate is one of the best ways to generate cash flow, build wealth, and increase your net worth.
At Bilaad Realty, we are invested in effecting a revolutionary change to ensure access to several untapped opportunities in the sector. The benefits of investing in real estate outweigh the cost, and buyers could be earning a steady flow of income to secure financial freedom in the long haul.