Experts Foresee Decline In High Urban Density As Work From Home Persists

A major part of global trends in the real estate industry today is the growing idea of “work from home”. Besides its negative impact on the commercial office space market, experts foresee a decline in high urban density as this idea persists as new the normal in workplaces.

Opeyemi Agbaje, Founder/ CEO of RTC Advisory Services Limited, argued at a real estate event hosted by the Nigerian-British Chamber of Commerce (NBCC) in Lagos recently that due to the benefits of work from home, workers can afford to live far from their workplace.

In a city like Lagos, more workers living far from their workplace means decongesting the city center which would ultimately translate into economic growth as that has the advantage of opening up new communities and allowing efficient use of available infrastructure.

“Work from home will likely affect demand for office property. Due to the benefits of working from home, workers can afford to live far from their workplace. Therefore, there might be a decline in high urban density. There will be an increase in co-working space and short rentals. It will also lead to the adoption of a digital rent collection solution,” Agbaje added.

Tunde Obileye, CEO, Great Heights Property and Facilities Management Limited, agrees, noting however that though work from home seems to be an accepted pattern in workplaces, a lot of thinking is still going into what has now become the new normal.

According to him, “there are benefits and challenges in working from home. There is still something that is missing in working from home. Workers miss their colleagues in the workplace. They can no longer share ideas with colleagues.”

“Work from home still requires installing some technology in the home. Again, the Human Resources Department does not have any policy to implement. In some countries, they are thinking of reducing workdays from five to three or four or adopting flexible hours of work,” he added.

Obileye believes that the workplace will not go back to the pre-pandemic period, noting that there will be a balancing act as businesses are increasingly thinking of their financials in relation to the size of the office space they need and alternate how staff comes to work.

Besides work from home, there are other trends to watch in the real estate space. An analysis of the various segments or categories of the sector as compiled by Hakeem Oguniran, CEO, Eximia Realty, shows that the residential segment will continue to be strong in the new year.

Oguniran in his presentation at the NBCC event noted that the current 25 percent homeownership rate in Nigeria lags behind South Africa’s 35.3 percent; Ghana, 47.2 percent; Kenya, 61.3 percent; the U.K, 65.5 percent; the U.S.A, 67.4 percent; Romania, 96.4 percent; Singapore, 90.8 percent; Slovakia, 90.3; and Cuba, 90 percent.

With urbanization at over 40 percent, showing an increase of about 4 percent in the past four years; the young population at about 75 million between ages 16-27, Oguniran sees an upsurge in Diaspora investments and huge opportunities across the sub-segments, including luxury, premium, classic, comfort, and affordable/social housing.

“The luxury segment is somewhat resilient; it is a unique category and market sentiments for it are still largely favourable. Deals will continue, but customers will be more discerning. Patronage will favour tested developers and contractors,” he noted.

The premium and classic category which, he said, are tough segments, remains competitive. He added that the category needs stronger value propositions such as affordable quality, flexible payment plans, delivery reliability, consumer-driven facilities/amenities, and digital interface.

Comfort homes, on the other hand, will see exceptionally strong demand from first time home buyers, millennials, young families, empty nesters, etc.“Good location and space optimization will be key,” he said, noting that affordable and social housing remains mired by rhetoric, inconsistent policies and hostile regulatory environment.