Here are reasons there’s uptick in demand for small-size apartments
For some reasons, not limited to prevailing economic conditions, small-size apartments, notably 1 and 2-bedrooms, have seen an uptick in demand and investment across cities and market nodes, according to close property market watchers
An analysis of the market by MDS Properties Limited, a real estate firm, shows that of the 428 apartments surveyed in Victoria Island, over 369 units have been sold amid an apparent lull in the market.
The company says that further analysis of the units sold, reveals that they comprised 38 percent of 1-bedroom apartments, 43 percent of 2-bedroom apartments and 19 percent of 3-bedroom apartments.
Real estate developers and brokers who operate in the Victoria Island, Ikoyi and Lekki axis, offered explanations for the increase in demand for these small-size units, noting that investment interest and considerations are also rising in favour of these units.
Some of these reasons include decisions by corporate bodies looking more at accommodating their expatriates in short-stay homes where they can pay weekly, monthly or quarterly as opposed to yearly rents which they did before.
“This has reduced the demand for yearly rentals by these companies by between 40 and 45 percent and, in turn, shifted the focus of investors to 1 & 2-bedroom apartments for short-let and short-stay apartments,” the MDS market survey explains.
Other reasons are owner-occupiers looking for a small flat, house or room kept for occasional use in the central business district (CBD); older couples downsizing to more efficient spaces; parents giving their children these apartments as gifts; young families starting out and the steady rise in the number of first-time homebuyers who prefer relatively more and affordable apartments.
According to MKO Balogun, Group CEO of Global PFI, six in every 10 persons looking for homes to buy are looking for 2-bedroom apartments, thus authenticating MDS Properties’ findings that 2-bedroom apartments are the toast of home seekers.
Balogun noted that developers with big-size apartments are either converting them to one-bedroom and 2-bedroom apartments or allowing co-habitation in which case two or more people pool resources and buy a 3-bedroom or 4-bedroom apartment and share, using the sitting room as a common area.
Many developers and investors are already tapping into the opportunities offered by this segment of the market. African Capital Alliance (ACA) is among the early investors in this market. “We are responding to what the market says; that’s where demand resides at the moment,” Obi Nwogugu, former Head of Real Estate Unit at ACA explained, talking about the Blue Waters Lagos.
Blue Waters is the company’s 17-floor mixed-use development that comprises mainly 2-bedroom apartments and, according to Nwogugu, all the units had been sold out before the project was completed.
The management of Cruxstone Development and Investment, developers of the 13-floor Iconic Towers in Victoria Island, tells the same story of rising demand for 1 & 2-bedroom apartments which is why the entire building is designed to deliver mainly 2-bedroom apartments except for the short-stay component.
MDS Properties’ Coral Apartments in Victoria Island is also a premium collection of 1 & 2-bedroom apartments, offering great value to both owner-occupiers and investors. The company assures investors of a high rental yield, leading to a good return on their investment.
Though Chudi Kalu, the CEO of Middlechase Properties, does not see prospects in short-stay facilities in the long run, Segun John-Adejumo, an ex-finance banker and managing director of Precioso Homes, thinks differently.
“For 2-bedroom apartments, the turnover is high, the demand is extremely high in terms of rentals whether for short let or normal rental. So, if you have a 2-bedroom apartment and you put it in the market, if it’s nice with good location, within one month you have rented it out unlike people that stay in 3-bedroom,” he explained.