There is increasing concern over the rising number of vacant houses in the highbrow Ikoyi area of Lagos with a report estimating over 70 per cent of properties therein. What could be responsible for this? Why are the properties being abandoned?
A real estate developer and Chief Executive Officer of Sujimoto Construction, Mr. Sijibomi Ogundele, said the rise in the number of empty apartments in Ikoyi over the last few years was worrisome.
He noted that the development was a reminder to the economic recession being experienced in the country’s Real Estate Industry.
He said: “As an avid property enthusiast, developer or an observer, you must have noticed the surge in the number of empty apartments in Ikoyi over the last few years.
“This disturbing phenomenon must have prompted the well-informed and educative research publication of the Economy Watch by the Financial Derivatives Company Limited, recently, that says that the number of vacant properties in the upper class real estate neighbourhoods of Lekki, Victoria Island and Ikoyi has risen by 72 percent over the last 18 months.”
He said a developer, who compromised on the quality of materials, no matter how highbrow the property’s location, has no right to place an exorbitant price on it.
He was also of the view that the argument for demand exceeding supply regarding empty apartments in Ikoyi was unfounded.
Luxury apartments, he said, were in high demand, but that poorly finished buildings with exorbitant prices constituted the pile of empty apartments constantly being alluded to.
“During my interview on CNBC Africa, I once pointed out that luxury is not expensive. It is the intention to deliver luxury that is expensive. While the cost of a nice three bedroom apartment in Johannesburg would go for about $350,000, the same apartment in Ikoyi would want $1 million. If the cost of construction materials is the same all over the world, the price of marble, granite, cement, tiles, kitchen, doors paints etc, why is cost in Nigeria about 300% higher?
“‘Luxury sells itself. When you sell luxury, you sell peace of mind, you have not only sold something that would last for generations, but you win the heart of your client who now becomes your evangelist,”he said.
Ogundele stated further that with the oil price plummet and downtrend of major economies across the world, individuals and organizations no longer have free money to throw around.
“And with the current downsizing by companies, prospective tenants demand full value for their hard-earned money. Developers must realise that times have changed and that the ‘quick fix – quick gain’ syndrome has ended.”
Ogundele added, “If we desire to be the best and want to compete with foreign developers such as the Germans, Lebanese and Italians that have spent decades mastering their craft, we will need to raise our standards in the Nigerian construction market, or else, one day, we would wake up to find all our apartments empty.”
On his part, Bldr Kunle Awobodu, 2nd deputy vice president of the Nigeria Institute of Building (NIOB), said the situation could be attributed to the power of demand and supply.
Awobodu who was the former NIOB Lagos chapter chairman, noted that every human aspires to live in decent environment but the fact that some landlords within Ikoyi neighbourhood demand hard currency which could be easy for foreigners but difficult for Nigerians, can be alluded to the declining number of occupants of houses in Ikoyi .
“Some foreigners prefer to stay in Ikoyi because they can afford to pay for the houses. But some of these houses still remain unoccupied due to high cost usually attributed to the construction cost involved,” he said.
Speaking in a similar vein, a development analyst, Victor Olapojoye, argued that there was no shortage of luxury housing in Victoria Island and Ikoyi but they remained unoccupied because their rent-out- prices are out of the reach of all but the wealthy.
He said: “It is not everybody that will own a home, but that should not preclude them from having access to decent and affordable rental housing.”
Jason Njokualso, a real estate enthusiast, expressed similar view, saying prices of properties in Ikoyi are simply absurd compared to other modern cities in Africa.
“Lagos property prices are simply absurd. There is obviously something else driving the prices up. In South Africa there are the largest banks in Africa. I believe the Standard Bank market cap is larger than the entire Nigerian banking system. With the most structured banking system, there is huge liquidity in the system too, so getting credit in SA is not a problem. Mortgages are common and in abundance.
In Nigeria, it is the complete opposite. There is no real credit system here. The banks simply refuse to extend it,” he said.