There’s a Coup in Gabon!
Everybody is shocked by the news happening in Africa lately, first, it was Burkina Faso, then Mali, and Niger followed and now it’s Gabon, these are all French-speaking countries. One tends to wonder whether Sierra Leone, Cameroon, Rwanda and others are looking in a similar direction or not!
It’s pathetic to see this sort of occurrence in a democratic country that should focus on advancing to improve its economy rather than a Coup.
Is a Coup even necessary? Why the haste?
Lots of questions on my mind. Are the reasons for the Coup justifiable? If yes then to what end, will it improve the economy or create more tension and restiveness? One of the many sectors of Gabon’s economy that will be most hit by this coup is the real estate sector which appears to be one of the vibrant sectors of the country’s economy.
Real estate is a hedge against inflation and other repelling factors when it comes to distress, tension, coup or war. These could negatively impact on property. The impact of a coup on property varies depending on the time frame of the coup. The coup in Gabon is very likely to have the following effects on real estate;
Property Destruction: A large number of the allegedly dishonest politicians’ and government employees’ properties are being demolished or set on fire. Millions of dollars worth of properties are involved, most of which could have generated revenue for the owners as well as members of the public who were already using the facilities or could have done so in the future if the commercial buildings were destroyed throughout the process had not been demolished.
Along with the payments accrued for mortgaged property, investment is also lost when property is destroyed.
Poor Maintenance: The advent of a coup in a country will certainly affect the level of maintenance of existing structures. Property owners would rather go into hiding than think of maintaining their property. This will bring about rapid functional, economic and physical obsolescence due to wear and tear within the period under coup.
Rising Prices of Goods and Services: As a result of a coup, the prices of goods and services will skyrocket, and the country is bound to experience a huge abandonment of unsellable goods and unmarketable services. The cost of labour and building materials will increase more than the common man would be able to afford.
The rich will even find it difficult to complete their real estate projects as a result of the high cost of labour and materials.
Low Manpower: Because of the increased level of unrest and uncertainty, the building industry will experience a huge reduction in numbers which will translate to fewer masons and artisans in the built environment. The number of builders, engineers and surveyors will also reduce.
Change in Policies: Every coup comes with a change in the style of governance including changes in the existing policies to non-democratic policies.
Any changes made to the laws of the land will eventually alter the entire real estate formations and their mode of operation particularly for properties in urban areas or highly populated neighborhoods.
Capital Flight: A coup usually comes with lots of fear which leads to the movement of people into neighboring countries in large numbers for safety.
This is greater with foreigners or foreign investors who most likely might relocate to other countries with their expertise, resources and monies that were intended to engage the real estate sector in the affected country.
Inflation: A coup in Gabon will increase the number of emigrants which increases the demand for foreign currencies such as dollars etc. and result in an unexpected drop in Gabon’s currency (Central African CFA Franc) as against foreign currencies.
The effect of these would be the devaluation of Gabon’s currency, meaning that more money will be used to purchase fewer goods and services. The cost of building materials will rise exponentially and only the very rich people will be able to afford to rent or build accommodations in their preferred locations.
Apathy for Investment: The coup will cause foreign direct investments in real estate and ProTech to reduce, and real estate investments will halt leading to a loss in real estate taxation e.g. property rates, ground rent etc.
More capital flights will be experienced. Property value will decline, demand for housing will increase but people won’t be able to afford the available ones.
Increased Poverty: The poverty rate tends to rise when a coup persists. Only the military will be in control of the country’s resources, their inability to properly manage the resources will further break the economy and inflate the poverty rate coupled with more borrowings both by the government and the citizens.
Buildings will depreciate and land value will drop or remain static for a long period due to inaccessibility, poor implementation of policies, inadequate facilities and infrastructure, insecurity/political risks and adverse poverty that transcends to low demand for landed property.
Rent Control: When the demand for existing accommodation is higher than the capacity to pay due to certain economic unrest like a coup or war, the existing government would have rents fixed or give limits to the maximum sum that property or accommodation must be rented out over which noncompliance is subject to severe punishment stipulated and enforceable by the military government.
Increased Slum: One of the results of a military coup is housing deficits due to massive demolition or destructions that may occur or be implemented by the military dictators to punish dethroned leaders or their associates, demolition of buildings could be triggered out of anger or to reclaim stolen lands or properties meant for the public interest from the dethroned president, or associates.
By doing so, the occupants may end up losing their valuables, and accommodations which could land them into relocating to slummy areas to find refuge or safety. Slums are more likely to increase in some outskirts of the city.
Halt in Construction: Many ongoing developments will stop due to fear and the unknown leading to loss of jobs, site theft and abject poverty for labourers or site supervisors who may have relied on the construction (job) for a better life. The halting of construction could also cause the site owners huge losses and untold hardship in the coming days.
Property Void: Many property owners who had engaged in some kind of fraud or illicit deals would probably go into hiding during a coup to forestall being lynched by either a mob or the military if found wanting. The news of these might stir up fear among occupants of properties they own, hence tenants could quickly vacate such premises pending when the coup is calmed or the democratically elected president is released and restored to his rightful position occupied before the coup.
For as many properties that are affected, the possibility of void is extremely high, the void period lasts for as long as the coup persists unless the property owners or administrators are vindicated or let free.
Increased Absentee Landlords: The advent of military enthronement is usually followed with a cold attitude to carry out maintenance work on properties. The heat in the nation at first instance discourages onsite visits to either inspect for possible maintenance or actual maintenance. Property owners who manage their property may end up leaving town whilst they engage an independent property manager to manage on their behalf.
It is also uncertain how well the managers would care for the property considering the economic distress and safety at stake and the possible accessibility challenges likely to happen when the military announces a curfew.
Economic Squeeze: Coup causes economic squeeze which makes borrowing for real estate transactions difficult or impossible due to market pressure. When borrowings decline, the possibility of property abandonment will rise and potential revenues from real estate investment will drop within the period of coup.
Coup plotters face the risk of being penalized, for example, there’s the possibility of ECOWAS’ sanctioning Gabon which might involve restricting businesses/financial transactions with other neighbouring countries, the neighbouring countries could be forced to shut down their borders against Gabon, the effect, which automatically leads to stoppage of importation from other African countries translating to skyrocketing of cost of building construction and real estate investment apathy.
If the sanction includes freezing Gabon’s assets in ECOWAS, it will then become another hell tragedy for the nation and the property sector as a whole.
For real estate in Gabon, the recent Coup is more on the losses than the benefits. Real estate will suffer in Gabon.