Job losses, shrinking personal/household income and cost-push inflation, which are reflections of the bad state of the Nigerian economy, have made it difficult and impossible, in some cases, for people to buy or rent houses and even pay house rents for those who already have accommodation.
In effect, there have been a lot of movements, notably in the last three years when the economy took a drastic turn for the worse, leaving landlords and those who have invested in build-to-rent houses in dire straits.
In a recent report on the State of the Lagos Housing Market by Pison Housing Company, Roland Igbinoba, the company’s President/CEO, estimated that 30 percent of Lagos residents change location every year for reasons of rent or moving into their own homes.
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But movements as seen in the last couple of years, especially in the big cities of Lagos and Abuja, have far exceeded that number, meaning that, really, more and more Nigerians are slipping into poverty as economic condition worsens, crimping disposable income and eroding consumer purchasing power.
At the receiving end of these developments are landlords, particularly those in gated estates and other highbrow locations. In these locations, many of the residents have moved, leaving behind empty houses. Many of those who have stayed back are defaulting in their rents and service charge payments which put the landlords under intense pressure living without rental income.
“We have, in the past 12-24 months, seen a lot of movements and these cut across various segments of the property market. Some families are relocating while others are downgrading accommodation. And this applies to both residential and commercial properties, especially in the expensive locations,” Gbenga Olaniyan, CEO, Estate Links, confirmed to BusinessDay in an interview.
He noted that because of the poor state of the economy, the property market is struggling with over supply, falling demand, rent default and rising vacancy rate which is about 30 percent higher than what it was 12 months ago.
Tayo Odunsi, CEO, Northcourt Real Estate, added however, that the high vacancy rate in the market was also caused by skewed supply, reduced purchasing power and people he described as “legacy landlords” who would rather keep their properties than give them out at prevailing rents or prices.
Temidre Oguntade is a landlord in one of the gated estates in Lagos. He told BusinessDay that only one apartment in his twin-duplex is occupied and the rest had been empty in the past two years. “This is a huge challenge for me as a civil servant. That had been my major source of income. Today, I find it very difficult to pay my bills, especially my children’s school fees,” he lamented.
In Abuja, there has been significant urban-rural movement occasioned by tenants’ inability to pay rents in the city centre. An estate surveyor and valuer, Alomaja Olajide , confirmed to BusinessDay that people are relocating from places like Garki, Wuse and other highbrow locations where they can no longer afford N1.3 million to N1.5 million rent to satellite towns like Kubwa where rent is more affordable at N700, 000 per annum for a three-bedroom apartment.
Uche Ugochukwu is a public servant who lost his job and had to relocate from Suncity Estate where he was paying N1.4 million per annum to the Satelite town where he is presently paying N700, 000.
“Before now, those estate managers would come up with different levies for you to pay; service charges, estate security, drainage etc. In this place (Abacha Road), I am not paying any of such bills,” he said.
Similarly in Lagos, the mid to low end market has witnessed tenants’ movement. Areas like Maryland, Omole Phase 1, Magodo Estate, Ikeja GRA, Surulere, Ilupeju, Ajao Estate, among others, have seen relative vacancy rate that is unusual in such locations which are sought after by young executives that work in banks and other blue chip companies.
But many of these young executives have been laid off and can no longer afford their rents. Some of those who are still at work are not sure of their salaries, leading to high rent default rate. Some of them have moved from these mid-income locations where rents range from N2 million to N3 million per annum for a duplex, and N800,000 to N1.5 million per annum for a three-bedroom apartment to areas like Ketu, Aguda, Ejigbo, Okota, Egbeda, Iyana-Ipaja, Oke Afa, etc where rents are relatively lower at N1million to N1.5 million per annum for a duplex and N500,000 to N750,000 per annum for a three-bedroom apartment.
On Lagos island, people who occupied the N3 million to N3.5 million property in Lekki Phase 1 have moved down to the Chevron axis to pay N2 million rent. Some people have moved from Ikoyi or Victoria Island where rent is as high as $70,000 per annum to Lekki Phase 1 where a flat goes for N6 million per annum.
All these, however, come at great costs to both the tenants who are leaving and the landlords whose houses are left vacant. While the landlord loses rental income and spends more money maintaining an empty house to guard against depreciation, the tenants have some challenges to face in their new ‘affordable’ locations.
These challenges come in form of new schools for children, paying more and spending longer time commuting to work or shoping, and incurring hospital bills as a result of strain and stress that come with driving or commuting long distances through bad roads on daily basis.
CHUKA UROKO & STELLA ENENCHE, Abuja
