One of the many lessons Nigerians are taking away from the economic downturn which the country finds itself in the last 12 months is the need to reimagine and rethink almost all their existential needs.
One of such needs is accommodation which, though a basic one, has seen significant reduction or down-sizing by many families, especially the middle class folks, who love luxury living and items .
The economic downturn has also pushed corporate organizations to downsize their office accommodation, change office address from expensive to affordable areas, reduce the number of cars in their fleet, the number of staff and, in extreme cases, their take home pay.
In real estate, the situation is dire and more for luxury investors. It is a sobering moment for them as their market which used to be a rallying point for ready buyers and willing sellers is fast thinning out.
It has been a luxury market all these while, but the momentum is, increasingly, shifting to new investment frontiers or havens where the products on offer are those that speak to the market.
Though Gbenga Olaniyan, CEO, Estate Links, told BusinessDay in an interview that the luxury real estate market still see buyers and record reasonable transactions, Udo Okonjo, CEO, Fine and Country International says “this is no longer time for lavishness or super luxury.”
Okonjo’s reason is that, at any point, whether it is upturn or downturn, the super luxury segment of the market is always a tiny one because not many people are playing there as buyers or sellers.
It is a tiny specialized market that is not for everybody and Okonjo’s advice for investors in the residential segment of the market is to create products that people want which shouldn’t be over priced.
Such investors, she said, should find a creative way of delivering convenience and luxury without breaking the bank because, if they do, they won’t get returns as people are no longer able to pay.
Increasingly, players are reinventing themselves, creating opportunities with solutions and developments that speak directly to the market. This gives investors clearer view and understanding of the kind of properties people want to buy and where they want them to be.
Good location, good quality and appropriate pricing of products, according to Hakeem Oguniran, CEO, Eximia Realty Company, “remain the winning proposition for investors in the new normal we find ourselves.”
Oguniran notes that the low-to-mid income market where there are still first time buyers, including professionals, young families, returning professionals etc, forms the centre point of new investment frontiers. Some of these professionals, he explains, are not necessarily first home buyers, but people who are investing in order to get rental income as buy-to-let investors.
But Okonjo adds that the opportunity which exists in this market is for smaller residential units because the young professionals are no longer looking for 4 or 5-bedroom apartments which they can’t afford and do not even need them. “What they need is one-bed or two-bedroom for those that are planning to get married,” she notes.
For these reasons, apartment room-sizes are getting smaller because of the cost of materials such that where there used to be three-bedroom of 350 square metres, what the market offers now is between 250 and 300 square metres, all depending on design which makes such rooms efficient and functional.
New developments going on in places like Lekki now offer studio, one-bedroom and two-bedroom apartments targeted at the young professionals and families. Similar developments are also coming up in Victoria Island, Oniru axis, etc such as The Coral or Lagos Blue Waters.
These smaller units are mainly being built in the outskirt of town but there is an opportunity for them in the city centre and also in the highbrow areas, depending on the size and price of the apartments as many of the mansions, especially in Ikoyi, Lagos are largely empty.
It is estimated that about 30 percent of the high rise buildings in highbrow locations is vacant. However, some of the buildings that appear to be 100 percent empty are mainly old buildings. There are speculations, though, that some of those buildings may have challenges arising from federal government title and the Lagos State regularization scheme.
Okonjo notes that, old or new, if a property is over-priced, maybe because the owner is using it as a means of storing wealth, the house will remain vacant and continues to suffer depreciation and loss of value which are part of the costs of leaving buildings without occupants.
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