Though the Lagos housing market at the high end remains in recession, the Lekki sub-market seems to be turning the corner as many home-buyers are flocking to that axis, drawn largely by new developments that respond to market demand and consumers’ economic realities.
Unlike Ikoyi where residential vacancy factor (RVF) hit 22 percent in February 2019, Lekki has seen a good number of new serviced apartments, including African Capital Alliance’s Blue Water Lagos being developed jointly with the Elalan Group. Another is the Oxygen Apartments developed by Periwinkle Investment.
The vacancy factor index (VFIX) on Lagos Island in the first quarter of 2019, according to a report by the Financial Derivatives Company (FDC), remains flat at 18 percent. It shows the rate of increase in the number of vacant properties based on the housing stock as at the beginning of the year.
VFIX is an indicator of the state of the real estate markets in the upper class neighbourhoods of Nigeria including Lekki, Victoria Island and Ikoyi in Lagos; Maitama, Wuse 2 and Asokoro in Abuja, and such areas as Trans Amadi, Peter Odili Road and Old GRA in Port Harcourt. These areas are close to the central business districts (CBD) or downtown areas of the metropolis.
The FDC report shows that whereas RVF in Ikoyi is 22 percent, the commercial vacancy factor (CVF) in the area is 19 percent, meaning that more residential buildings than commercial are unoccupied. This is understandable for two reasons. Ikoyi is predominantly residential. Again, it offers only highbrow and expensive apartments which have low demand from buyers and renters at the moment.
Victoria Island, according to the report, has 13 percent RVF but only 8 percent CVF. This area has less number of residential buildings and commercial activities are more here than any other part of the island. It is the second central business district (CBD) in Lagos after Lagos Island.
“Vacancy factor in old properties will remain high,” said Bismarck Rewane, CEO of FDC, in a presentation at a breakfast meeting at the Lagos Business School, noting the number of plots of land in Ikoyi was high.
A property vendor, who spoke on condition of anonymity, affirmed this, pointing out, however, that the plots were still expensive despite what seemed like a lull in the market. According to the vendor, a 2,000 square metre parcel of land in Ikoyi goes for between N600 million and N800 million.
Confirming the developments of new serviced apartments in Lekki, Obi Nwogugu, head of real estate at African Capital Alliance, explained that the reason was the thriving market for such developments in that axis. Lekki has been adjudged the fastest developing residential corridor in West Africa.
There are over 150 private housing estates in this corridor with many more upcoming ones that are being positioned to take advantage of the iconic developments coming up in that axis, including the over 600,000 bpd Dangote Refinery, Lekki Deep Seaport, airport, Dangote fertiliser plant, among others.
The high demand for serviced apartments in this corridor is reflected in both Periwinkle’s Oxygen Apartments and the Blue Water Lagos. Whereas Oxygen Apartments were sold out a few weeks into completion, Blue Water which will be completed by December this year has seen over 40 percent commitment and about 15 percent expression of interest.
“As investors and developers, our confidence in the market derives from our belief that there is demand and we can always identify products where there is demand even in a recession like this. The fact that there is a cycle does not mean that is how the market is going to be forever. There are going to be changes and forceful improvements which will improve project attractiveness,” Nwogugu said.
“We are not really concerned about where we are right now. We believe that we are investing at the right time; when people are not investing is the right time to invest because that is when you get a better deal for your development,” he said.
Blue Water is coming as a redefinition of what, conventionally, could be called ‘affordable housing’. It offers opportunity for live, work and play experience in luxury apartments and shopping/entertainment mall that will compare favourably with The Palms and Ikeja City Mall in Lagos.
CHUKA UROKO
