Real estate deals you can go for during lockdown

After President Museveni extended the national lockdown by three more weeks, speculation and uncertainty have grown. Most people are worried there might be another extension with more Covid-19 cases being confirmed.

Just like others, the real estate sector has been badly affected by the pandemic and is struggling to keep afloat.

According to Shirely Kongai, the president of Association of Real Estate Agents in Uganda, the Covid-19 pandemic has had considerable impact on the sector and stakeholders are trying to come up with schemes and innovative ideas to remain afloat.

“With the current situation in the country, no serious transactions can really can go on in the real estate sector, given that land offices were also suspended for one month. The rental market was also suspended for the same period.

The only way forward now is to brainstorm and think of the way forward and how to look into other investment opportunities that can generate passive income,” Kongai says.

Farmland
Kongai advises a change in investors’ perception and choice of investments. “If there is one thing people should learn from this situation, it should be the importance of diversifying their investments. A number of investors are now stuck with tenants who are unable to pay their rent. The most lucrative area to consider right now is farm land because this decade from 2020-2030 will heavily rely on agriculture,” Kongai shares.

She notes that while the pandemic is a terrible worldwide catastrophe for lives and livelihood, Kongai says this should be used as an opportunity for people and businesses to reinvent themselves and learn how to prepare for the unexpected.

Invest where you are
“What is happening now is more less a form of forced retirement. It is time to start asking yourself the tough financial questions and finding satisfactory solutions. One of the mentalities, which I hope will cease is people preferring to invest only in places they consider home to them. Anyone can invest wherever they are and prosper.

So, if you cannot move to your home to buy land, broaden your thinking; look closer to you for what is available,” she recommends.

Take advantage of cheap sales
Rogers Matovu, a lecturer of real estate and financial management at Makerere University Business School, says the biggest impediment to the real estate market is the restriction in movement due to the lockdown.

“The reason is because, purchase of property requires any sensible investor to first inspect it, like it and then buy it if they are willing and able, but, we all cannot move.

However, if someone is able to bypass this big transport restriction, the biggest opportunity now is to take advantage of the cheap sales happening now because people are becoming broke by the day, they need money and as a result, they seem to be disposing off what they have at giveaway prices,” he says.

Basing on the economic principle where low demand affects prices negatively, Matovu urges investors to take advantage of the situation and buy as much properties as they can right now. Due to low demand, discounted rates on good inventories are available.

But once the economic condition starts settling, the bargains will reduce and demand will also start floating upwards. The rates will not be as low as they are now during lock down.

“Buy now so you can have enough cheap stock of real estate assets to dispose off at good prices when business gets back to normal,” advises the don.
Similarly, it is important to understand that if you properly market your properties right now with people glued to their phones at home in the lockdown, you are more likely to reach more potential clients.

Go digital
Robert Okwir, a property manager, says there has been a significant drop in business but there is a whole new potential of business transactions online.

“We are really trying to live in a completely digital environment where real estate agents do not go to the home in any way, shape, or form. We have been forced to adjust and be creative and try not to give up. There are people that need to buy and sell homes right now. They do not need to wait. These are the people every property agent should be serving,” Okwir advises.

Liquidation
While there are people who need money right now and are liquidating some of their properties, there are others looking at this situation as an opportunity and want to buy up investment property. So even though it all seems like gloom and doom, there are still opportunities available.
“Expecting to continue doing business like before is naiveté. We have to think outside the box to survive. For instance, I have enabled customers can log in to our website and inspect our properties and chat with us if they are interested. This has helped us pitch our products effectively to potential clients that have access to a smart device,” Okwir reveals.

Okwir reveals that while there are some good deals available on the market right now, investors should avoid impulse purchases that might become difficult to manage in the long run.

“Do not rush into finalising deals even if the deal is attractive before having done due diligence. For instance, will this property deliver on investment? How easy will it be for you to sell or rent it out? You might have the down payment but are you in a position to service the financial obligations that come with buying property such as maintenance and property taxes without dipping into your savings? But most importantly, will your business survive after the lockdown?” He cautions.