Post-Covid-19 Pandemic and the Emerging Rental Housing Market in Nigeria

Abstract

The novel coronavirus (Covid-19) was first notice in Wuhan, China, the epicentre of the dreaded disease, in December 2019 but was declared a pandemic in 2020 by the World Health Organization (WHO). Its spread went beyond local and national boundaries to intercontinental levels. Attempt to curtail its further spread has led to measures as partial or total lockdown by nations, quarantine, work from home, social distancing, among others. These measures have, in one way or the other, adversely impacted businesses and other human activities across the globe. One of the worst-hit sectors by the pandemic is the built environment, in which the rental housing market is a subsector. Therefore, the paper evaluates post-Covid-19 pandemic and the emerging rental housing market in Osogbo, an emerging state capital in Nigeria. To achieve this, twenty-five top estate surveyors and valuers practising in Osogbo were randomly selected, and their opinions analysed and ranked. Findings of the study revealed that while the demand for residential rental accommodations is on the increase despite the outbreak of coronavirus pandemic, the demand for office and hospitality accommodations are fast declining due to the effect of the pandemic. The study, therefore, recommended the extension of people friendly palliative measures, proactive and sagacious policy formulation and implementation by the government.

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ISSN 2522-9400 European Modern Studies Journal Vol 5 No 3
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European Modern Studies Journal, 2021, 5(3)
Post-Covid-19 Pandemic and the Emerging Rental Housing Market in Nigeria
Ankeli Ikpeme Anthony[1], Nuhu Muhammad Bashar[2], Saheed, Jelili[3],
Akinremi, Adenike Rukayat[3], Tinufa Abbey Anthony[4]
[1]Department of Estate Management and Valuation, Federal Polytechnic, Ede, Nigeria
[2]Department of Estate Management and Valuation, Federal University of Technology,
Minna, Nigeria
[3]Department of Estate Management and Valuation, Osun State College of Technology,
Esa Oke, Nigeria
[4]Department of Estate Management and Valuation, Federal Polytechnic, Idah, Nigeria
Abstract. The novel coronavirus (Covid-19) was first notice in Wuhan, China, the
epicentre of the dreaded disease, in December 2019 but was declared a pandemic in 2020 by
the World Health Organization (WHO). Its spread went beyond local and national boundaries
to intercontinental levels. Attempt to curtail its further spread has led to measures as partial or
total lockdown by nations, quarantine, work from home, social distancing, among others.
These measures have, in one way or the other, adversely impacted businesses and other
human activities across the globe. One of the worst-hit sectors by the pandemic is the built
environment, in which the rental housing market is a subsector. Therefore, the paper
evaluates post-Covid-19 pandemic and the emerging rental housing market in Osogbo, an
emerging state capital in Nigeria. To achieve this, twenty-five top estate surveyors and
valuers practising in Osogbo were randomly selected, and their opinions analysed and ranked.
Findings of the study revealed that while the demand for residential rental accommodations is
on the increase despite the outbreak of coronavirus pandemic, the demand for office and
hospitality accommodations are fast declining due to the effect of the pandemic. The study,
therefore, recommended the extension of people friendly palliative measures, proactive and
sagacious policy formulation and implementation by the government.
Keywords: Post-Covid-19, Emerging Rental Housing, Housing Market, Nigeria
Introduction
The coronavirus pandemic's consequential impact on the global economy is a bitter peal
for many to swallow as it led to the lockdown of economic activities and every other aspect
of human activities. The worst-hit sector in Nigeria is the real estate/construction sector.
Though the pandemic's impact in the real estate/construction sector was not immediate as the
sector is highly fragmented; hence stakeholders in the sector usually feel the negative impact
of the pandemic differently. Like the economic recession of 2015 and 2016 with its
consequential adverse effect on the real property sector of the Nigeria economy, the money
market volatility, the problem of insecurity, and the recent addition of coronavirus pandemic
(Covid- 19) has tremendously affected transactions in the property market. Proshare (2020)
argued that the real estate subsector of the Nigeria economy contracted by an average of -
4.48 in the previous four years, hence making the subsector to be facing the challenges of
housing demand and supply.
The effect of the Covid-19 pandemic has been described in the literature as brutal.
Construction efforts have been disrupted and real estate investment plans distorted, making it
challenging for numerous families to pay for housing, thus hurting the housing sector
(OECD, 2020). The array of measures used by the Nigerian government to protect her citizen
from catching Covid-19 in a way contributed to the current volatility experienced in the real
property market transaction. The trend has affected Nigeria's property ownership by about
25%, while South Africa and Kenya share 56% and 75%, respectively (Chiwetu, 2020). The

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possibility of the drastic decline in the real estate market transaction could be associated with
the dwindling property users' disposable income, which has invariably affected their demand
capability. The deteriorating property user's disposable income and the weaken naira has
negatively disrupted the property market's demand chain, leading to depression in property
supply and project abandonment.
Though the suddenness and consequential impact of the pandemic on every aspect of
human being became more pronounced after the first index case in February 2020 in Nigeria,
by March the same year, the country commenced lockdown and quarantine exercises in line
with medical and scientific guideline and advice. The Policy Guidelines for lockdown by the
Nigerian Presidential Task Force Team on Covid-19 stipulate, among other things, that
citizens stay at home and practice the habit of social distancing to stop the spread of the
Covid-19 virus. The exercise gave birth to the idea of Working from Home (WFH), which is
gradually becoming part of the 'new normal' trend in the service industry and a primary
source for the decline in the demand for office space. Thontteh (2013) opined that factors that
affect transactions in the real estate market are diverse but have connections with the
property's demand and supply characteristics and the resultant value effects. Hence, Oyedeji
(2020) concluded that the crux for property market evaluation, analysis, and valuation is to
fill the probable gap of paucity of information observed, which is a significant cause of the
property market's imperfection destructively affects stakeholder's decision making. Olanrele
and Thontte (2020) reported the declining demand for commercial and residential properties
and the sale contract suspension, which was supposed to be sealed by clients due to the
pandemic's outbreak. They further observed that most construction sites were shut down
during the period as building and construction materials prices skyrocketed and the Federal
government's lockdown order.
The paper's emphasis is to contribute to the body of literature that examines post-
Covid-19 and real estate market transactions in emerging and transition rental markets in
Nigeria. Thus, the study examines the effect of Covid-19 on residential real estate
transactions in Osogbo, the Osun state capital. The literature reviewed confirmed the
consequential adverse effects of Covid-19 on most cities' rental market in Nigeria. The paper
is, therefore divided into the following sections. Section one is the introduction. Section two
reviews the related literature on the Covid-19 and real estate market. Section three presents
an overview of the effect of the Covid-19 pandemic on real estate transactions from the
Nigeria context. Section four present the methodology, and section five is the data analysis
and discussion, while the conclusion and recommendations were presented in section six.
The Review of Related Literature
Previous literature has shown that economic downturn is not new in Nigeria, but the
causes of each of the downturns are unique. Ozili (2020) examined the Covid-19 pandemic
and economic crisis using Nigeria experience and structural causes. The economic recession
in Nigeria was caused by the combination of the dwindling oil price, the spillover effects of
the Covid-19 pandemic and the End SARS protest across cities in Nigeria. It led to the
current free fall in demand for oil products and the stoppage of every other economic activity
due to the lockdown and social distancing policies enforcement. The study, however,
concluded that growth and development reforms are needed in Nigeria. However, the country
was plunged into its second recession in a decade in 2016 due to its high debt burden profile
and the massive balance of payment deficit resulting from the crash in oil price and the
dipping of oil revenue (Adeniran & Sidiq, 2018).
Deloitte (2020) opined that the impact of Covid-19 on real estate companies are
differently felt globally, as the intensity of the effects depends mainly on the region and the
assert class. The pandemic brought about the challenges of liquidity and value preservation,

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the safety of visitors and tenant issues and the problem of complying with government
directives on Covid-19. The study further observed that, while the executives face the
challenges mentioned above, tenants or other property users may also be facing liquidity
pressure that could bring an abrupt end to the contractual lease agreement. The leisure and
hospitality industries, retail outfits and developers or real estate investors as well experienced
serious drop in their investment performances due to the impact of Covid-19 pandemic
impact, which decreases their business transaction volume.
Oyedeji (2020) evaluates the impact of Covid-19 on real estate transaction in Lagos,
Nigeria. The study, apart from revealing the readily availability of warehouses in the study
area for occupation; hence commanding the fastest and highest rental and sale values within
the current period of the pandemic, stated that real estate transactions are relatively static
compared to the pre-Covid-19 era with banking rating the most problematic transaction area.
Ankeli et al. (2019) observed that the major challenge of cities in the emerging nations are
the effective and efficient management of the extraordinary population explosion, land use
infiltration and contestation, rental vivacity, criminal tendencies of the youths and the sudden
emergence of the new normal which is gradually changing the face of the world.
Hurun (2020) examined the possible effects and impacts of the COVID-19 pandemic
on real estate development and management processes through the evaluation and intuition
on administrative and media records. The study shows that the introduction and
implementations of policies and preventive measures (restrictions and total ban on domestic
and foreign tour) adversely impacted the tourism sector. It reduces the expected revenue, the
volume of real estate transactions and increases businesses operating cost. It concluded that
the Turkish governments' intent to save the real property market from collapse seems
inadequate. Insead, the government increased the sale of available companies and residences
and use tourism-oriented measures for radical change in the future.
Effect of Covid-19 Pandemic on Real Estate Market: The Nigeria Context
Real estate is a significant industry and one of the most flourishing sectors of the
Nigerian economy. The sector is controlled and regulated by the Nigeria land tenure systems
and various land laws like the Land Use Act and other similar laws operating in Nigeria. The
pandemic outbreak has adversely impacted the nations' economy as measures adopted to
curtail the pandemic's spread (lockdown, quarantine, social distance, work from home, travel
ban, among others) have reduced the income of the oil-rich and emerging tourism-dependent
nations.
In Nigeria, it has been observed that investment in the construction industry almost
come to a halt, with investment in the real estate sector fast declining. Trade and movement
restrictions negatively affected building materials cost and significantly reduced transactions
in the property sale and leasing market. The Nigeria economy was quite unfortunate in 2020
that besides the vacillating problem of insecurity, kidnapping and the dwindling oil price at
the international oil market, the country experienced the Covid-19 outbreak and #EndSARS#
protest, which are occurrences associated with unrest and uncertainties.
The real estate industry, hospitality and leisure subsectors were not left out as they were
the worst hit. Real property investors/owners were faced with nosediving urban rental
income. Most tenants could barely pay their rent due to job loss, salary cut and the nation's
hyperinflationary trend. Operators of leisure and hospitality, a subsector of commercial real
estate development, are counting their loss as tourism facilities, guest houses, and hotels
recorded low patronage, leading to income loss due to the cancellation of tourism activities,
air travel ban and other similar restrictions imposed by the government. Other adverse effects
the pandemic exerted on the real property market in Nigeria is in the creation of void and the
loss of rent, litigations resulting from a breach in rental agreements and the work from home

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syndrome, which is gradually becoming the new normal but having the effect of reduction in
the accommodation spaces required by service industries. It has come to the realisation of
business operators that businesses can operate within a sizeable office space, thus making
most operators relinquish part of the previous spaces acquired for their business operation.
The resilient adaptation of the current style of working from home to avoid the pandemic's
further spread is the 'new normal' the world over (Nigeria inclusive). The long-run effect of
the new normal on the property rental market will be devastating, as there will be a decline in
the demand for office and hospitality property uses and a probable increase in the demand for
residential accommodation with ample spaces and infrastructural facilities suitable for
working from home that may become competitive. Olanrele and Thontteh (2020) anticipated
the tendency of losses in income as potential property purchasers may end up in leasing with
even the likelihood of default in rent payment.
Methodology
The study's target populations are the practising Estate Surveyors and Valuers (ESV) in
Osogbo, Nigeria. Twenty-five (25) Estate Surveyors and Valuers that are vast and conversant
with the practice of Estate Surveying and Valuation in the study area were randomly selected
base on their track records. Data for the study were gathered through questionnaires
administered on this study population. Data collected and used for the analysis were based on
the respondents' responses based on their experience in property management and agency
practice in the study area between March 2020 and February 2021. The data collected were
analysed using a descriptive statistical tool as frequency tables, Likert type scale, relative
importance index and ranking. Twenty-three out of the twenty-five questionnaires
administered were correctly filled, retrieved and considered adequate for analysis.
Data Analysis, Presentation, and Discussion
Data collected from the field are analysed, presented and discussed in this section. To
adequately prioritise the most available property type for occupation, the Relative Importance
Index (RII) was considered a suitable tool and used to rate and rank the Likert-type scale
variables. The equation used for the calculation of the RII is presented below.
RII = ∑W
A*N = 5n5+4n4+ 3n3 + 2n2 + 1n1
5N
The weighting value W attached to each of the factors by the respondents range from 1
to 5, that is 𝑛1 = number of respondents assigned to option 1, 𝑛2 = number of respondents
assigned to option 2, 𝑛3 = number of respondents assigned to option 3, 𝑛4 = number of
respondents assigned to option 4, 𝑛5 = number of respondents assigned to option 5, while the
highest weight is A which in this case is 5. The total number of samples is N.
Table 1. Likert type scale for demand for real estate during the pandemic
Property
Type
Very High
Demand
High Demand
Moderate
Low Demand
Very Low
Demand
Residential
19(82.6)
2(8.7)
1(4.3)
1(4.3)
0
Office
8(34.8)
7(30.4)
3(13.0)
2(8.7)
3(13.0)
Retail
12(52.2)
7(30.4)
1(4.3)
2(8.7)
1(4.3)
Hospitality
0
0
2(8.7)
3(13.0)
18(78.3)
Source: Field data (2021)

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Table 2. Relative Importance Index (RII) of demand for real estate during the
pandemic
Property Types
5
4
3
2
1
∑w
RII
Ranking
Residential
19
2
1
1
0
108
0.92
1st
Office
8
7
3
2
3
84
0.70
3rd
Retail
12
7
1
2
1
96
0.81
2nd
Hospitality
0
0
2
3
18
30
0.26
4th
Source: Field data (2021)
Table 1 presents the Likert type scale for the demand for real estate during the Covid-
19 pandemic in the study area. The relative importance index (RII) was calculated from the
Likert scale, as presented in table 2. Demand for residential property was highest in the study
area during the period with RII of 0.92. Demand for retail properties ranked second with an
RII of 0.81, while hospitality property has the least demand rate of 0.26. The reason for the
high demand for residential, retail and office property use may not be far from the lockdown,
stay at home and work from home order of the federal government to curtail the spread of the
virus. The policy force people to stay and work from home. The order, in a way, encourages
retail businesses and discourages the demand for large office spaces. The findings of the
study are congruent with Oyedeji (2020).
Table 3. Likert type scale for assessment of rental performance during the
pandemic
Property Type
Very High
High
Moderate
Low
Very Low
Residential
20(87.0)
02(8.7)
01(4.3)
0
0
Office
03(13.0)
02(8.7)
03(13.0)
05(21.7)
10(13.0)
Retail
09(39.1)
07(30.4)
01(4.3)
01(4.3)
05(21.7)
Hospitality
0
0
01(4.3)
02(13.0)
20(87.0)
Source: Field data (2021)
Table 4. Relative Importance Index (RII) of assessment of rental performance
during the pandemic
Property Types
5
4
3
2
1
∑w
RII
Ranking
Residential
20
02
01
0
0
111
0.97
1st
Office
03
02
03
05
10
52
0.45
3rd
Retail
09
07
01
01
05
83
0.72
2nd
Hospitality
0
0
01
02
20
27
0.23
4th
Source: Field data (2021)
Tables 3 and 4 further present the Likert type scale and relative importance index of
rental performances of each of the selected property types in the study area. The tables
revealed better rental performances of residential and retail property classes compare to office
and hospitality properties during the Covid-19 pandemic as residential and retail properties
ranked first and second.
Table 5. Likert type scale of the challenges of real estate transactions
Challenges
Mostly serious
More serious
Moderately
Less
serious
Rarely
serious
Product Marketing
03(13.0)
01(4.3)
01(4.3)
09(39.1)
09(39.1)
Property Inspection
15(65.0)
07(30.4)
01(4.3)
0
0
Accessing Banks
12(52.2)
07(30.4)
04(17.4)
0
0
Financial Difficulties
18(78.3)
2(8.7)
01(4.3)
02(13.0)
0

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Rent Default
20(87.0)
03(13.0)
0
0
0
Source: Field data (2021)
Table 6. Relative Importance Index (RII) of the challenges of real estate
transactions
Variables
5
4
3
2
1
∑w
RII
Ranking
Product Marketing
03
01
01
09
09
49
0.43
5th
Property Inspection
15
07
01
0
0
106
0.92
2nd
Accessing Banks
12
07
04
0
0
100
0.87
4th
Financial Difficulties
18
02
01
02
0
105
0.91
3rd
Rent Default
20
03
0
0
0
112
0.97
1st
Source: Field data (2021)
Tables 5 and 6 revealed the fundamental challenges of real estate transactions during
the pandemic. The challenges listed and assessed by the respondents are product marketing,
physical inspection of the property, accessing banking hall difficulties, financial difficulties
and default in rent payment. From the respondents' ranking of the variables, the default in
rent by tenants ranked first with an RII of 0.97 among the other variables. Also, would-be
clients' inability to physically inspect properties is a serious challenge and ranked second with
an RII of 0.92. The Covid-19 preventive measures of social distancing, lockdown, and work
from home order have led to cut down or downsizing of workers by many establishments and
salary cut by others, the rising inflationary trend in the country rent payment difficult and life
hard for so many families.
Table 7. The pre- and post-Covid-19 real estate transactions in the study area
Transaction Rate
Frequency
Pre-Covid
%
Post-Covid
%
Letting
12
52
08
35
Sales
06
26
03
13
Supply of property to market
05
22
12
52
Total
23
100
23
100
Source: Field data (2021)
Table 7 depicts the pre- and post-Covid-19 real estate transactions in the study area.
Twelve (12) of the respondents representing 52% and six (6), representing 26% of the
respondents, believe that property letting and sales were common and in high trend in the pre-
Covid-19 compared to the post-Covid-19 era. It was observed that the supply of property
tends to increase during the post-Covid-19 period due to void resulting from the pandemic.
However, it translates to decline in real property transaction during the pandemic, which
could be tied to the effect of the Covid-19 preventive measures and the current economic
crunch in the country.
Conclusion and Recommendations
The study has evaluated the opinions of estate surveyors and valuers on post-Covid-19
and the emerging residential housing market in an emerging state capital in Nigeria. The
study's findings revealed that the pandemic profoundly impacted real property transactions in
the study area, especially the housing rental subsector. It shows a decreasing real estate
transaction in the post-pandemic era compare to the pre-pandemic period. It, however,
negates the assertions of Oyedeji (2020) that the rate of real estate transactions remains static

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during the COVID-19 pandemic. Nevertheless, the performances of residential housing rental
prices were exceptional while office rental nosedive within the period. To mitigate the
pandemic's adverse effect on real estate transactions, there is a need for the government at all
levels to extend the period of palliative measure and make it more friendly to all, be more
proactive and sagacious in policies formation and implementation. There is a need for more
investment in information and communication technology (ICT) development, aggressive
public enlightenment campaigns, revamping the nation's economy and the total overhauling
of the nation's infrastructural facilities to flatten the curve or stop it resurgence in the country.
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