- Property Owners Give Discount To Woo Tenant
- Not Likely To Get Better Soon- FDC
| It is crunch time for the real estate sector in upscale Lagos areas like Ikoyi, Victoria Island, Ajah, Magodo GRA, Omole Phase 1 and 2, Asokoro, Asokoro extension and other high-brow areas as macro-economic indicators like Gross Domestic Products, GDP), High Inflation Rate, Unemployment has created an increasing glut of vacant apartments, investigations by The New Diplomat has shown. |
Rather than tenants, weather-beaten inscriptions like “To-let” “Vacant” “For Lease” adorn the walls of several new and renovated buildings in these high-brow areas. A trip to TY Danjuma street, Jose Martin and Nelson Mandela Street all in Abuja show empty properties begging for occupants. This, according to stakeholders in the sector is a result of the economic recession in the country.
Lending credence to the notion, a report by Financial Derivatives Company Limited recently revealed that “The number of vacant properties in the upper class real estate neighborhoods of Lekki, Victoria Island and Ikoyi has risen by 72 percent over the last 18 months.
The FDC’s vacancy factor index (VFIX) which is a measure of real estate rental strength shows that vacancy factor has increased sharply from 172 in June 2016 to about 200 now. It also showed that Lekki has the highest vacancy rate at 65%. According to the Chief Executive Officer of Sujimoto Construction Limited, a Lagos-based real estate development company, Mr. Sijibomi Ogundele, the surge in the number of empty apartments in Ikoyi, and other high-brow areas is due to over-pricing and the inability of most Nigerians to afford the properties.
Femi Ajayi recently left his 2-Bedroom flat apartment at Victoria Island for Mowe; he revealed that he had to take that decision to conform to the realities on ground.
“I am working with one of the big banks in Victoria Island. To be close to my place of work I was living at Victoria Island but because of the recent situation of the country, I have to quickly develop my property at Mowe and move in,” he revealed
Explaining further, he told The New Diplomat that rather than an increase in salary to cushion the high inflation rate, he has had to contend with salary cut and the fear of being sacked. “How can I continue to pay a rent of N2million when there is no increase in my salary,” he asked.
Checks by The New Diplomat reveals that a 2 –Bedroom Flat in high-brow Lekki Garden, Osborne and Parkview Estate costs about N5m per annum; in Magodo, Omole Phase 1 and 2 it goes for about N1.3m per annum excluding the service charges while the same range of apartment goes for N2m and above in Lekki, Victoria Island and Ikoyi. These are in stark contrast to the N150,000 and N200,000 that the same apartment goes for in areas like Alagbado, and suburbs like Mowe, Ibafo.
Speaking on the development, an Estate Surveyor and Valuer, Wole Leye of Wole Leye and Co. linked the emerging trend to the economic reality in the country.
In his words: “Quite a number of people who were initially living in those choice areas cannot continue to do so anymore apparently due to the fact that income inflow is not what it used to be. The suburbs are presently experiencing a boom as it is hard to empty properties unlike in choice areas like Ikoyi, Victoria Island, Lekki where there are a lot of void properties. Even those properties that are occupied right now, a lot of tenants are owing huge rents,” he said
Further investigations by The New Diplomat reveals that property owners and estate agents alike now offer incentives like 20% cut off the rent to attract customers.
Speaking on the development, Wole Leye posited that rather than have an empty and un-occupied apartment, the property owners will likely accept a cut or give discounts to have the property occupied. This, he posited, is still not yielding the desired result.
It is not likely to get better anytime soon, according to the picture painted by FDC. Overall, FDC forecasts a “no-quick recovery of the VFIX”, meaning a further low demand for housing due to lower expendable income, until perhaps the first quarter of the year, when economic activities are expected to pick up, as there is a time interval for the market to return to equilibrium. The company however forecasts further relocation from top districts to cheaper areas, while also hoping of new developments under construction, to add to the supply of properties in the short-term which will likely increase the glut.
According to figures by the National Bureau of Statistics (NBS) inflation rate is at 18.55 percent, unemployment rate at 15% while the GDP has contracted to about -2% which are some of the indices which has grossly affected the economy of the country.
