Saturday August 15, 2020 / 07:00 AM / by NASD Plc/ Header Image Credit: NASD Plc
COVID-19 Impact Series: Real Estate Sector
Sequel to the previous series, it is a known fact that the coronavirus pandemic has had a major impact on all sectors globally and locally, the real estate sector is not excluded from this impact. Some of the aspects of the real estate sector that have been affected are highlighted below.
Commercial real estate has been greatly influenced. It has taken a major hit from the coronavirus pandemic and is taking a while to recover fully. The lockdown and social distancing regulations are severely influencing the demand for commercial properties because businesses struggle to retain their existing commercial space. The commercial real estate sector depends heavily on cash flow and is greatly influenced by low occupancy rates in the hotel sector due to the closure of commercial spaces because of the social distancing as well as the stay at home policies. Commercial real estate owners have made so much money collectively a year as the economy blossomed. Now, they are feeling the heavy blow dealt by the pandemic fuelled economic crisis and this industry might be changed by it.
Residential real estate has maintained its resilience through the COVID 19 pandemic. The need for shelter has and will always be in demand as the housing shortfall in the nation remains eminent. The need for relocation remains as online property listings companies record increased daily search for rental properties. However, the growth in demand for residential homes seems to hover primarily around affordable housing, both offered as fully constructed and off-plan packages. Even though the sector might not feel the impact of the covid-19 pandemic now, especially in the second quarter of 2020, the impact would be felt before or at the end of the year. This is because individuals that have lost their jobs or that have had their salaries slashed are likely to have paid their rents in advance. This will ease the tension for now, at least till the end of the year. By the end of the year, individuals would not be able to pay rents or buy houses as planned.
Co-working and office spaces are not left out in the struggle. Before now, the demand for coworking spaces and office space in recent years has brought about substantial return for investors in real estate. However, due to the covid19 pandemic, this demand has fallen. In the long run, the demand for office spaces would be truncated in some ways as more people work from home. It is expected that many startups and small businesses that comprise the bulk of the demand for office spaces will master the art of remote work and will find new ways to deliver their product/service offerings without physical presence. The rate at which physical offices are used will likely drop in favour of complete remote work.
Despite the devastating impact of the coronavirus on the global economy, Risk-averse investors seeking high returns on their investment still see the real estate market as viable. The net asset value (NAV) of real estate funds climbed to N45 billion as of April 24, 2020, representing a 2 percent increase when compared to the N44.15 billion reported on February 28, a day after Nigeria recorded its first Covid-19 case. There are various opportunities which are likely to arise within the post-recession housing sector. There would be more affordable housing projects with medium-term payments, residential real estate would stabilize and rent prices would increase as individuals would rather rent than buy.
NASD continues to support the real estate sector via its service offerings - the NASD Enterprise Portal (NASDeP) and VentureRamp. Our platforms provide an opportunity for real estate investors to access viable investment opportunities in the real estate sector and also assist entrepreneurs within the sector to raise funds to support their businesses.
NASD continues to support growth and development within Nigeria and deepen the capital market by facilitating capital raise and liquidity for enterprises across various sectors through innovative products and service offerings.
NASD OTC Securities Exchange Market closed on a positive note YTD as the market recorded an increase in performance. NASD Security Index Year to date return rose by 2.28%. Total volume traded Year-to-Date stands at 7,820,389,602 units in 979 deals and total Value traded is N10,537,449,927.54.
Week 33 Overview
NASD OTC Securities Exchange closed the week with a positive return on NSI. The NSI return rose by 1.05% to close the week at 713.46 points against 706.07 points against preceeding Friday, July 29 2020.
In addition, Week 33 saw NASD Investors gain N5.43 Billion in value. NASD OTC Market capitalization closed at N524.08 Billion compared to N518.65 Billion against preceeding Friday, resulting from a positive movement of prices.
There was a 106.58% increase in the total value traded during the week as week 33 saw NASD Investors trade a total of N48,138,905.31 in value compared to N23,303,017.81 in the previous week. Total trade activity for the year is valued at N10,537,449,927.54.
In the same pattern, volume traded during the week was 813,582.00 units compared to 1,606,734 units in the previous week leading to a -49.36% decrease in trade volume compared to week 32. Total volume traded for the year is 7,820,389,602 units.
Top Traded Securities by Volume
The week closed with Central Securities Clearing System Plc ranking top among five most traded securities by volume and FrieslandCampina Wamco Nigeria Plc as the fifth most traded stock by volume in week 33.
Top Traded Securities by Values
The week closed with Niger Delta Exploration and Production Plc ranking top among top five most traded securities by value and Firsttrust Mortgage Bank Plc stood as the fifth most traded Security by Value for the week.
Advancers for the week
Two of NASD OTC stocks closed the week with a positive movement in the price. FrieslandCampina Wamco Nigeria Plc, which currently holds a Market Capitalization of N124.04 Billion closes the week at N127.05 representing a 3.03 percent increase from the previous close of N127.
Niger Delta Exploration and Production Plc, which currently holds a Market Capitalization of N55.26 Billion closes the week at N275 representing a 10.79 percent increase from the previous close of N304.67.
Decliners for the Week
Week 33 closed on the NASD OTC Securities Exchange with no recorded decliners for the week.