A growing number of real estate developers in Nigeria are, increasingly, jittery with the crippling impact of the economic recession that has hit the property market hard with low demand, over supply, falling prices and many unsold/unoccupied houses that cannot find buyers or tenants, BusinessDay findings show.
The findings also reveal that developers of residential houses are worse hit than their commercial counterparts, and analysts explain that, apart from Nigeria being a trading economy, residential properties have a higher sensitivity to economic downturn than commercial.
Across major cities – including Lagos, Abuja and Port Harcourt, the story is the same. In Lagos, demand is weak, house prices have come down by as much as 40 percent, and vacancy rate has increased by 72 percent between January 2015 and June 2016.
“Our experience in the past 12 months is worse than all we have seen in our 12 years in this business,” Omochiere Aisagbonhi, president/CEO, Omais Homes, said, wondering whether policy makers in this country ever stopped to think through the impact of the policies they make.
In Port Harcourt, the market is witnessing what is, perhaps, its greatest lows in recent history. Developers told BusinessDay that the cash crunch in the country occasioned by months of unpaid salaries, indebtedness to business owners by their partners, and rising inflation, had hugely affected their market.
The much publicised Rainbow Gardens Estate on Trans-Amadi Industrial Layout, which is an upscale estate, with multi-storey buildings, semi-detached duplexes, bungalows, among others, is still largely unoccupied, and this is so for many other newly built housing estates in the Garden City.
The same situation is quite critical for developers of Maxi Gardens Estate at Igwuruta, Ali, Omagwa and Etche, who, it was discovered, were experiencing low patronages from potential buyers.
Service providers in this market, especially estate surveyors and valuers, are also passing through hard times and, according to them, many rentable houses at different locations, including the GRAs Phases 1, 2, and 3, are empty with very few people coming up to ask for tenancy.
“Many tenants in houses we manage have been owing since their rents expired. Our business is really tough these days,” Ben Okoronkwo, managing partner, Okoronkwo Associates, said in an interview.
In Abuja, findings show remarkable drop in rents and house prices. At the Federal Housing Estate in Lugbe, where a three-bedroom flat was going for between N700,000 and N900,000 per annum, many people have moved out to neighbouring villages, such as Sauka, Angwan Dutse, Tudun Wada and Lugbe Across, which are sprawling sub-urban slums.
A tenant, who introduced himself as Luke, said his annual rent was N700,000 but his landlady had asked him to start paying N450,000 in the next rent cycle. At Games Village, a two-bedroom flat that initially rented for N1 million is now going for about N800,000.
According to Lordye Agema-Hur, an Abuja-based realtor and CEO of Sir Hur Nigeria Limited, a three-bedroom flat sold for N20 million at the Federal Housing Estate in Lugbe, but can now be bought at N17 million. At Apo, a three-bedroom detached duplex was selling for N40 to N45 million but now goes for less than N40 million; while at Apo Resettlement, the same house-type went for between N25 and N27 million, but is now sold at between N23 and N24 million.
Unfortunately, despite this drop in prices, there is low activity in the market owing to the fact that buyers are not coming up due to lack of cash. “It is not a seller’s market any longer,” Terungwa Sabe, an Abuja-based estate surveyor and valuer, said in a telephone interview.
Source: Business Day