Both investors and analysts alike see investment in real estate as viable since they hardly crash, but regularly experience capital appreciation. In most climes, even without external consultants and advisors, they experience growth. As such, most property developers/ investors tend to relegate the necessity for expert involvement while relying on self-management and sometimes other unqualified persons.
Experts who understand the technicalities of real estate are sometimes ignored since property owners erroneously count on capital appreciation over time as index of good investment and secured income. The omission therein is highlighted by real estate economics which posits that capital appreciation along with inflationary rate determine real value of money in the future. Studies show that in some segments of the real estate market, net difference display a negative index even when there is relative capital appreciation.
As a low risk investment, real estate returns in some regions is currently being challenged by extraneous factors, such as economic regression, socio-political unrest and even climatic outpouring and pandemic outbreak. Such occurrence calls for periodic holistic audit at critical intervals for ascertaining state of performance of property portfolio for strategic or proactive course, and even remedial action where necessary. With application of sensitivity and risk analysis, real-estate portfolios usually maintain steady investment course.
Major high net-worth investors in real-estate sector and their managers should, as a necessity, give consideration to periodic adjustment in their property investment portfolio mix, according to structural changes in economy. The interplay of economic forces causes oscillation in investment index in different sectors with attendant implications on real-estate and its segments.
Mr. Matthew A. Aziegbe
Presiding Partner/ Consultant