Abuja property market defies recession

…as house rents rise by as high as 94% in 12 months

House rents in Abuja, Nigeria’s political capital have risen by an average 94 percent in the last 12 months in some areas, a survey on rental growth in the residential property market has shown.
The high pace rise is making an already expensive city even more expensive, as increasing migration to Abuja from other parts of the country and rising cost of living in the city-centre push people to the suburbs.
The rising house rents are linked to population growth which is outstripping property supply, especially in the suburbs of Abuja.
Rent for a four-bedroom apartment in Jabi, one of the city’s suburbs, jumped from N3.88 million per annum in 2015 to N7 million in 2016, representing a 94 percent increase.
But the rental survey conducted by Northcourt Real Estate Limited, also reveals that rent for a same size apartment in Wuse 2, a highbrow area in the city, rose 83 percent, to N7 million per annum in 2016, up from N3.83 million per annum in 2015.
In Maitama and Asokoro, rent increased by 53 percent and 18 percent respectively.
The only areas that saw some moderation in rents were Apo and Utako which, within the same period, recorded negative growths of -3 percent and -5 percent respectively, leading to a rent drop, from N2.50 million in 2015 to N2.433 million in 2016, and N4.75 million in 2015 to N4.5 million in 2016 respectively.
“Rents growth in Abuja at a time like this when other cities such as Lagos and Port Harcourt are experiencing the worst of market situations with falling demand and rent-default shows the peculiar nature of Abuja as a predominantly civil service city”, Ikechukwu Bejamin, an estate manager in Abuja, explained in a telephone interview.
According to Benjamin, Abuja has an active rental market where rents are rising almost everyday, particularly in the suburbs, with the rapid increase in the population of the city, which the planners did not envisage would have close to five million people that live there today.
Tayo Odunsi, Northcourt CEO, sees the rent increase in most locations in Abuja as an antithesis to the prevailing situation in the housing market in particular, and the economy in general.
“Ikoyi, Victoria Island, Lekki, Ikeja GRA, representing the expensive areas in Lagos, are the equivalents of Maitama, Asokoro, Wuse 2. But while the expensive areas in Lagos are having serious challenges with high vacancy rates, falling rents, rent default, the experience in Abuja is different”, he noted.
In Ikoyi, for instance, rent for a four-bedroom apartment dropped -21.77 percent to N9.7 million per annum in 2016, down from N12.4 million per annum in 2015. Similarly, rent for same size apartment in Ikeja GRA dropped 33.75 percent to N5.3 million in 2016, down from N8 million per annum in 2015.
The latest report on the ‘State of the Abuja Housing Market’ by Roland Igbinoba Real Foundation for Housing and Urban Development (RIRFHUD) shows that the residential sales market in Abuja, unlike other cities, also seems to have defied the economic recession with house prices rising.
According to the report, in Maitama, a four-bedroom duplex, formally selling for N206 million has increased to N209 million just as a five-bedroom duplex in Asokoro, formerly going for N136 million has increased to N141 million and a five-bedroom duplex has increased from N91 million to N95 million. In Garki, a five-bedroom duplex increased from N257 million to N270 million.
“It appears that despite the downturn in the economy, current state of economic recession and the high exchange rates for currencies, the prices of luxury real estate have gone up from what they were at the last quarter of 2016”, Roland Igbinoba, RIRFHUD’s executive vice chairman, notes in the report.
Continuing, he says, “although the price rise is not in all the locations, one would have expected that the price for luxury homes would drop as the demand for them is also expected to drop, due to the economic situations. But this is not the case”. He further explained that the price hike may be attributed to the high rate of foreign exchange, as most of the luxury residential market is priced in foreign exchange.