Property prices in exclusive locations still high despite economic, political uncertainties

Despite the uncertainties beclouding Nigeria’s economy and the political system, property prices in some exclusive locations in Lagos have remained considerably high, BusinessDay investigation has revealed.

These locations which include Banana Island, Nicon Town, Eko Atlantic City, Victoria Garden City (VGC), Admiralty Way in Lekki and the water front section of Victoria Island, have their property prices unchanged,  in spite liquidity squeeze in the economy and an increasing residential vacancy rate.

Local currency devaluation, falling oil prices in the international market and the rescheduled general elections in Nigeria, are posing serious economic challenges to the country and the elections, particularly, create a scenario that has left investors cautious in their investment decisions.

Analysts say the high prices associated with these prime locations which are home to Nigeria’s super rich and expatriates may not drop unless the global economy suffers a major shock like it did in 2008.

“Property prices in prime locations are driven by demand pressure, and this pressure translates into sky-rocketing prices, especially in markets that are not elastic, Adetokunbo Ajayi, MD/CEO of Propertygate, a real estate investment firm, explained to BusinessDay.

Ajayi explained that the limited space in Banana Island, for instance, has raised prices to an unprecedented level as the elite class craving to own assets in the island are left scrambling for limited spaces.

BusinessDay checks revealed that contrary to efforts by some property owners to think of innovative approach to offer realistic and competitive prices to intending buyers, some others have remained stock to their prices, not ready to let go.

For instance, a parcel of land measuring approximately 2,000 square metres in the commercial section of Banana Island currently sells for N500 million and N600 million on the residential section.

Similarly, a parcel of land measuring 6,000 square metres in the waterfront section in the same Island currently sells for N1.8 billion.

At Eko Atlantic City, a square metre of land currently sells for $2,500 at the waterfront section with a standard plot measuring about 3,000 square metres and above.

At Nicon town along the Lekki-Epe Expressway, property owners have stayed put on the N150 million being demanded for 1,000 square metres, while at VGC, prices are still within N100,000 per square metre of land.

According to Lamudi Nigeria, an online real estate market place, 1,000 square metres of water front land on Admiralty Way, Lekki, currently sells for N300 million, while 10,900sqm of land within the same neighbourhood goes for N900 million.

These prices, analysts say, are clearly not realistic, but have become the norm in Nigeria’s exclusive neighbourhoods where property prices have remained immune to market forces.

“Most of the clients buying these properties are affluent individuals; so, they can conveniently pay for these properties without feeling the financial burden,” Ajayi said, adding that the sellers were also wealthy individuals not under pressure to sell.

“Most of the assets in the high end market are owned by wealthy individuals who are always ready to sit out on those properties and wait for the highest offer before they can sell,” Ajayi noted, adding that these individuals are only willing to drop prices when they have bank loans to service.

ODINAKA MBONU