Nigeria’s Real Estate Sector Significantly Plagued By COVID-19- Report

Yemisi Izuora

A report recently published CEO Report, a Philips Consulting initiative for 100 Nigerian business leaders, has revealed that the real estate industry in Nigeria is plagued due to the COVID-19 pandemic, especially, companies in the business of office rentals.

The CEO Report further stated that 83 per cent and 55 per cent of CEOs have adopted a ‘Work From Home Strategy’ and ‘Standby Model Strategy’ respectively, and are beginning to question the need for large office spaces.

“Only 46 per cent CEOs are considering retaining their current offices, while others will seek smaller and cheaper offices, shared offices, or adopt an entirely virtual working model,” added the Report.

In commercial cities like Lagos where massive high-rise office complexes are commonplace, real estate players must be ready for a shift in demand. They might be forced to repurpose their buildings or provide new services to suit the new mode of work, the Report recommended.

The survey that recently engaged 100 Nigeria business leaders on the current economic landscape and presented the insights in its “CEO Report” said, “One word that best describes today’s business environment is “uncertain”. The ‘new normal’ occasioned by the effects of the Coronavirus pandemic is gradually fading away and being replaced by what is termed the ‘next normal’.

Amidst the frenzy of realigning strategies to better position businesses for recovery after the pandemic, the Philips Consulting’s CEO, Rob Taiwo mentioned that “We have been hit with the harsh reality that the Coronavirus might be here to stay. There is no going back to normal; instead, we have a next normal that is unpredictable.”

He said, the conversation to be had now is how to prepare for a future full of unknowns.

Speaking on which industries benefit from the crisis, Taiwo, a transformational leader said, “Globally, the IT sector experienced a surge in the wake of the pandemic, as a result of the shift to remote working. This resulted in a heavy reliance (or dependence) on IT products for both personal and business purposes.

Nigeria is no exception, he stated, “From our survey, 86 per cent of CEOs reported that the pandemic led to them improving the IT infrastructure of their organizations. Our respondents predict that Nigeria’s healthcare, agribusiness, and manufacturing industries stand to benefit from the next normal.”

“They expect the professional services industry to experience comparatively minimal disruption. This is primarily due to their vast array of services, relatively low operational expense, lean and agile business model, and legacy clients.”

On the levels of preparedness for the pandemic, the Report said, only 6 per cent of CEOs reported that their organizations were prepared for the pandemic. Hence, it comes as no surprise that 55 per cent of Nigerian businesses are currently operating below 50 per cent of their operating capacity.

The 6 per cent mentioned above stated a strong leadership team as the most critical factor of their preparedness. Other important factors include having a robust business continuity plan, government support, and a well-articulated business strategy.

On forging ahead into the next normal,  the CEOs Report revealed that 57 per cent of CEOs expect that the earliest possible time for the business environment in Nigeria to normalize will be August 2021.

The CEOs are increasingly taking responsibility for their companies, and are not necessarily looking up to the government for solutions to the problems occasioned by the pandemic. As against the 79 per cent of CEOs that voted in the 2019 general elections, only 67 per cent of CEOs reported that the pandemic would make them more interested in the outcome of the 2023 election.

Taiwo said, “Results from our survey showed that the Nigerian government and business leaders should pay close attention to the post-COVID19 policies and strategies of the United Kingdom, China, and the United States of America as these will have the most profound impact on the Nigerian business environment.

“At pcl., we are committed to working with our clients and partners to build and develop people’s capabilities, technology systems and processes, effective and robust strategies, and business continuity plans. Let us work with you to future proof your business in the next normal.”

 

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