There has been hullaballoo in the public arena as regards augmentation of real estate projects being advertised for auction in our daily newspapers. Truth is we need to be worried about this trend we seem to have nested ourselves into.
However, in our discourse of the possible derivatives to this, we should not be frugal with the truth. Sunlight has to be the best disinfectant if we are to get to the root of this. We cannot play blind to reality. That our economy has been hopelessly struggling isn’t a revelation anymore but a reality nearly every Kenyan is living, or may I say majority of Kenyans. Every sector is feeling the pinch but somehow the public has continually expected the real estate sector to perform as before. No other excuse, amid our glaring economic tumble, can be attributed to the dwindling real estate investment return other than the ‘prophesied’ real estate bubble.
We are really calling for it. In addition, we expect the real estate industry to condone, without recourse, every mediocrity thrown at it. Isn’t it true that nearly everyone expects that every house should be sold regardless of how it was built or that every office building however carelessly conceived and executed, should be fully occupied.
Anything contrary to this expectation has been blamed on the real estate market and an apparent bubble. Really? Which is this investment sector, outside real estate, that can accommodate every idea however reckless? Unknown to many, the real estate industry is a stickler for rules that should be adhered to if returns is your dream.
Slightly over a year ago, I wrote an article warning banks and investors against the lackluster, medieval approach they continue to practise in the real estate sector amid the wild tides of the 21st century construction challenges. It is an unwritten rule that ‘if you don’t understand an investment opportunity well enough to explain it, don’t get involved.’
Yet majority consciously disregard this cardinal rule of investment and always jump into the real estate industry investment based on hearsay.
Listen, there is still attractive real estate boom returns than most sectors but its foe the vigilant not the terminally indolent. We should make this distinction going forward; for the record. The boom is for those who reverently enter this industry with sacrosanct respect for the rules not gamblers. But we should allow, without blaming the market, people with proclivity for greed and zero respect engraved real estate norm practices to continue counting their losses. And painfully so.
It is evident that in the past decade or so most housing developers have been targeting the high end market houses for development. This market tier is sure getting saturated now. But, undoubtedly, housing still has huge housing need potential that is untapped. Nigeria has 17 million housing shortfall according to World Bank report. Lagos alone has 4 million housing deficit, twice our accumulated national housing deficit of 2 million. The more reason I find it too pedestrian when pseudo real estate analysts crusade about housing bubble.
We should let nature do its checks on the industry and so far it’s commendable. Real estate companies have closed down and many more will, naturally, if they don’t obey real estate rule. It doesn’t mean the sector is grumbling. Many people still have desire and plans to own a house, let’s be ingenious to meet their needs. We cannot continue to blame the real market and economy for mediocrity, No!
- The writer is chair of Association of Construction Managers of Kenya. [email protected]