The last is yet to be heard of the impact of recession in the country as financial institutions, especially commercial banks have begun to sell their idle landed property in major urban centres to cushion the liquidity shortage in the sector.
The Guardian learnt that some of the banks engaged in mergers and acquisitions with Assets Management Corporation of Nigeria (AMCON) recently, which had excess branch networks are also offloading property used as branches across 35 States and the Federal Capital Territory, Abuja, including cash centres.
Last year, some of the banks including Guaranty Trust Bank Plc, Skye Bank Plc, First City Monument Bank Limited, Zenith Bank Plc, United Bank for Africa Plc, First Bank of Nigeria Limited, Stanbic IBTC and Fidelity Bank Plc had hired estate surveyors and valuers to dispose off customers’ property used as collateral for loans.
In the past few weeks, the banks have offered thousands of square feet in Lagos, Abuja, Port Harcourt, Kaduna, Kano, Owerri, Ibadan, Enugu and other major cities through estate surveyors to prospective buyers in the real estate market.
Property industry specialists believe that the banks took to the initiativedue to the frequent use of mobile phone services and efficiency drive in the banking system as well as the automations and out-sourcing of services that were traditionally held by the banks.
Citigroup forecast that the continued growth of fintech startups would make 30 per cent of bank staff to lose their jobs over the next ten years. The bank’s 112-page report, titled Digital Disruption’, predicts that U.S. and European banks will shed 1.7 million jobs by 2025.
While banks themselves will not be replaced, their branches will as new technology enables them to do more online or via mobile. In addition, banks are under pressure to automate more back-office processes, which will also result in job cuts and reduction in office spaces.
The Senior Partner of Nelson Thorpe Alonge, a firm of estate surveyors and valuers, Mr. Kunle Alonge told The Guardian “the impact of technology is leading to the reduction requirement for branch network and smaller banking spaces. In time past, most banks invested heavily in real estate and the model is changing, prompting their disposal of their surplus property.
“The move will help in liquidity creation, it is actual wasteful for traditional banks to sit down and start managing their real estate business. The days for armchair banking are gone. People now prefer to use their phones or applications to transact businesses at homes.”
The Lagos State Chairman of the Nigerian Institution of Estate Surveyors and valuers (NIESV), Mr. Olurogba Orimalade who collaborated his views, stated that E-commerce has played a significant role in the new development.
He said that banks are reducing their assets due to the growth of technology, “lots of transactions are now being done online within the confines of their room instead of the usual practice of doing financial transactions in the banks.
According to him, the banks disposing property in areas that are not commercially viable. But his worry is that it be tough to sell some of the properties, “the design of such offices has also created a huge challenge when selling. Most of these bank premises were not built as a purpose built offices. It now becomes even harder to sell to the discerning investor, ” Orimalade.
He is suggesting that the banks temporary converts such properties to co-working space. “The owners of such properties should consider income generating options such virtual offices or the co-work share arrangements. We have youthful population, made up of entrepreneurs.
“ Most of them are seeking a table and an internet point to carry out their daily businesses. Instead of property owners always looking at just selling or leasing, options like this are in demand and owner is most times assured of daily income.
“The money being generated through this source can in worst case scenarios pay the property taxes and the maintenance of the building whilst waiting for a better time to sell such assets,” Lagos NIESV said.
Another estate surveyor, Mr. Sola Fatoki who confirmed that banks are selling their properties, said, “These properties may be those that they considered no longer useful for their operations. Once sold, it can generate more funds for their operations than being idle.
There are fears on the possibility of attracting market value this period of economic recession, Fatoki explained that “the possibility of them getting adequate commercial value for them is subjective in view of the recession. Generally, the property market is down and in lull due to the recession and this will affect the sale of the properties.
Locations and designs of these properties will be among the major factors to be considered by the potential buyers. Former NIESV president, Bode Adediji disclosed that locations and designs affect property values and demand, under the present economical climate, significantly too.
He said: “The likely buyers may include a few individuals or companies that may have surplus cash to invest, but certainly it will be difficult for people to buy properties now through borrowed fund.”
Adediji who also doubles as the principal partner, Bode Adediji Partnership stressed that it will be difficult to get commercial values for property put up for sale under the current environment.