The recent offloading of seized assets for sale on the property market by the Assets Management Company of Nigeria (AMCON) is capable of worsening the situation in the market and piling more pressure on property owners, market analysts say.
They note, however, that the development also offers investment opportunities for willing buyers.
The property market in Nigeria is awash with empty buildings that cut across residential, retail and commercial office segments of the market. An unconfirmed report has it that 300,000 square metres and 200,000 square metres of residential and commercial office space, respectively, are unoccupied.
In a widely advertised announcement, Tuesday, AMCON disclosed that it had properties for sale in various parts of Nigeria, including Lagos, Ogun, Rivers, Delta, Edo and Kaduna States. These are mainly residential and commercial property in highbrow locations, meaning that they belong in the sub-markets where vacancy factor is very high.
In Lagos, for instance, AMCON has a property sitting on 3,709 square metres of land for sale. The property comprises 8 units of three-bedroom apartments within the 12-storey 24-unit Mulliner Apartments in Ikoyi, an upscale location in Lagos where vacancy rate is well over 30 percent.
“What this means is that vacancy rate in that sub-market will rise further in the course of the year. And don’t forget that there are also some on-going projects that will be delivered into the market this year,” Yemi Madamidola, an estate manager, told BusinessDay. “AMCON properties are usually hard sell because there is something cultural about buying seized properties.”
Madamidola pointed out, however, that these assets sale has its positive side, explaining that beyond the bureaucracy that attends such sales, it throws up buying opportunities for people, mainly investors, who are patient and have long-term view of the market. Such investors believe that in spite of the present slowdown, the market will rise again when the economy rebounds.
The situation in residential segment of the market is mixed. Whereas there is a lull in the upper end of the market, the mid-low end remains active even at the peak of recession.
An interesting development in the market, which is to the advantage of home-seekers, is that understanding the times, developers have increased their shift towards more density development, optimising their use of space, especially in prime locations.
Most of the big ticket developers, including Africa Capital Alliance, Grenadines Homes, Periwinkles Investments, who were in the market before now developing stand-alone houses and duplexes, have shifted to investing in small-sized and multi-family units developments as could be seen in the Blue Waters, Oceania and Oxygen Apartments by the aforementioned developers.
“What we are doing is in response to what the market says; this is where demand is at the moment and we are responding to that,” Obi Nwogugu, principal at Capital Alliance, explained to BusinessDay.
The public sector is also aggressively responding to demand at the low-end market with its various housing initiatives. Northcourt Real Estate’s recent report reveals that the Family Homes Fund (FHF) and the Federal Ministry of Finance are upbeat on providing 500,000 low-income homes by 2023.
So far, only 400 housing units, under that fund, have been completed in Nasarawa State while construction is ongoing in Ogun, Kano, Delta and Kaduna States.
Similarly, the Federal Housing Authority (FHA) has made a N27 billion investment to deliver 1,650 housing units targeted at low-income earners in Zuba, Kwali and Lugbe, Abuja.
Also, the Nigerian Army in collaboration with Post-Service Housing Development Limited, the Otukpo Local Government Council and Betoniq West Nigeria Limited, will be bringing 221 housing units to the Benue State market over a 24-month timeframe.
CHUKA UROKO
