Is it wise to invest in real estate in a recession?
Nigeria Enters Recession
The National Bureau of Statistics announced on Saturday, November 21 2020 that the nation’s GDP recorded negative growth of 3.62 percent in the third quarter of 2020 after earlier recording a 6.10 percent contraction in the second quarter, which officially slipped Nigeria into her second recession in 5 years.
This decrease in economic activity has put many investors at crossroads, as they need to act cautiously while remaining vigilant in monitoring the market landscape for opportunities to pick up high-quality assets at discounted prices.
In simpler terms, a recession is two-quarters of negative growth, i.e. 6 months of the economy failing to grow. What this means is less demand caused by reduced purchasing by consumers caused by the layoff of workers.
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However, smart investors understand that recessions are a part of the normal business cycle so they prepare for it. While the recession causes a fall in consumer spending and capital investment caused by a fall in income earned by employees and business owners, it also causes a general decline in asset values and this is where prepared investors take advantage.
So, is it wise to invest in real estate now?
Yes, it is.
What type of real estate investment should I invest in then?
While the Coronavirus is producing economic stress and a slowdown in many business sectors, this is the perfect time to invest in undeveloped land.
Most Real Estate companies are going to drop their price (Danbel properties have slashed the price on Avalanche park estate by 17%) to assist investors in their quest for property ownership.
While this is a very mouth-watering deal, hesitation can make investors miss deals like this.
The future belongs to those who see it first, who get there first and who claim it first.
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