Project – The impact of Covid-19 on real estate market in Nigeria
CHAPTER ONE
INTRODUCTION
1.0 Background of the Study
Real estate involves the land along with any permanent improvements attached to the land, whether natural or man-made including water, trees, minerals, buildings, homes, fences, and bridges. Real estate is a form of real property (Chen, 2020). It differs from personal property, which are the things not permanently attached to the land, such as vehicles, boats, jewelry, furniture, and farm equipment. In understanding the real estate, people often use the terms land, real estate, and property interchangeably, but there are some subtle distinctions between them (Chen, 2020).
By definition, real property implied one of the two main classifications of property such as the interests, benefits and rights inherent in the ownership of real estate. Broadly speaking, real estate include the physical surface of the land, what lies above and underneath it, what is permanently attached to it, plus all the rights of ownership, including the right to possess, sell, lease, and enjoy the land (Dungeri, 2011).
Credence was given to this assertion by Dungeri (2011) that described the property market as the complex processes in which property rights of diverse forms are exchanged among owners, users, developers, and investors directly or through other media in a given society or state. A major deduction from the definition is that there are stakeholders involved in real estate transactions in the property market.
Akinbogun et al. (2014) described the property market as an imperfect market with sets of constraints on information and demand and supply flow. The study posited further that property market constraints vary across country. Property market is an imperfect market with a lot of difference from the conventional market and the stock market. The imperfection of the property market necessitates the need for expert opinion as a requisite for participating in the market (Oni et al., 2012).
Binovska et al. (2018) asserted the need for analysis of trend and prospect of the real estate market as a tool for decision making in the property market. The essence of property market assessment, analysis and valuation is to fill the gap of paucity of information which is the major cause of imperfection in the property market and negatively affects stakeholder’s decision making. Real estate transactions are affected by different factors that have bearing on property demand and property supply with resultant effects on value (Thontteh, 2013).
This study therefore assesses the impact of Covid-19 on real estate market in Nigeria using Lafia, Nasarawa state as a case study.
1.1 Statement of the Problem
The global outbreak of the Covid-19 affects the real estate market in many ways. The managers and owners are concerned how to maintain the value from dropping while facing increased requirements by the government measures to keep the premises safe and clean, including the tenants residing in them. As the phenomenon is ongoing, potential impacts and consequences are difficult to be measured and foreseen, because, the Covid-19 outbreak was an unpredictable event.
The pandemic by limiting the movement and visitors has also blocked tourism in many countries, thus decreasing the interest of the buyers/sellers for potential transactions in resorts and related real estate. In this way, the pandemics is not a problem of health but also of many other sectors and professions such as housing, investment, settlements, and it has disrupted almost all economic sectors and even the system (Nicola et al., 2020).
Apart from what is actually in place as real estate, construction has also slowed down out of the fear that the prices of future real estate may fall as it is not yet known how long the pandemics will last and what its potential consequences are likely to be. However, it is possible to track the initial impact which this study aims at discussing by focusing on the real estate market.
The above stated problems and others necessitate the study of the impact of covid-19 on real estate market in Nigeria with a particular reference to Lafia, Nasarawa State.
1.2 Aim and Objectives of the Study
The major aim of this study is to assess the impact of Covid-19 on real estate market in Nigeria with particular reference to Nasarawa State.
The specific objectives are:
- To examine the real estate demand based on the briefs received by Estate Surveyors and Valuers during Covid-19 pandemic in Lafia, Nasarawa State.
- To examine the real estate available for occupation based on professional briefs received during Covid-19 pandemic in Lafia, Nasarawa State.
- Assessment of real estate capital value in Lafia, Nasarawa State.
- Assessment of real estate rental value in Lafia, Nasarawa State.
- Examination of problems associated with real estate transactions during Covid-19 pandemic in Lafia, Nasarawa State.
1.3 Research Questions
The following research questions were used as a guide to study the impact of Covid-19 on real estate market in Lafia, Nasarawa State.
- What is the real estate demand based on the briefs received by Estate Surveyors and Valuers during Covid-19 pandemic in Lafia, Nasarawa State?
- Is the real estate available for occupation based on professional briefs received during Covid-19 pandemic in Lafia, Nasarawa State?
- How is the real estate capital value in Lafia, Nasarawa State?
- What is the real estate rental value in Lafia, Nasarawa State?
- What are the problems associated with real estate transactions during Covid-19 pandemic in Lafia, Nasarawa State?
1.4 Scope and Limitation of the Study
The research is undertaken to carry out an in-depth assessment of the impact of Covid-19 on real estate market in Nigeria. The study is limited to Lafia, Nasarawa State which is the case study.
1.5 Significance of the Study
The outcome of this research work will be of immense value to several interest groups namely; the academia, financial institutions, investors/investment analyst and public authorities.
The outcome of this study will satisfy the needs of investors who may want to venture into real estate market in Nasarawa State as will educate them on the impact of Covid-19 on real estate market in Nasarawa State and Nigeria at large.
Findings from this study will be a useful guide for the policy makers and the government of the day on how real estate sector can contribute to the nations’ development and how the housing policies can be implemented effectively to boost economic growth in the midst of the pandemic.
This study will also contribute to the wealth of knowledge, hence researchers and students who want to study further on the research topic will find this research very relevant.
1.6 The Study Area
The study area is located between latitude 8020N – 8038N and between longitudes 6034E – 7030E. it shares boundaries with Nasarawa Eggon and Wamba Local Government Area (L.G.A) in the North, Obi Local Government Area (L.G.A) in the South East, Doma Local Government Area (L.G.A) in the South-West, Kokona Local Government Area (L.G.A) in the West and Plateau State in the East respectively (Figure 1).
The climate exhibited in the area under study shows no difference from that experienced over other parts of the Nasarawa State, which is characterized by a sub-humid climate with two distinct seasons; dry and rainy season (Akwa et al., 2005).
The study area has population of 330,712 according to National Population Commission Lafia (2006). The area falls within the guinea savanna zone characterized by scattered trees and grasses. The geology comprised of the basement complex formation of North Central Nigeria with undulating low lands and network of hills developed on granites, magnetic rocks which are believed to be plutonic in nature but later exposed to the surface by geomorphic processes.
Project – The impact of Covid-19 on real estate market in Nigeria