- Govt is killing the sector – Experts
Indications have emerged that the real estate sector, which ordinarily used to be insulated from economic recession, especially in Nigeria, is now hard hit by the current economic downturn in the country.
The real estate sector has always witnessed increase in demand for property/land across major cities in the country, but the reverse is the case now, as the on-going economic recession has eaten deep into the fabrics of the sector, crashing the demand for property in highbrow areas across major cities in Nigeria by more than 50 per cent, according to experts.
Investigations by The Point revealed that the demand for property in estates such as Oniru, Magodo, Dolphin and Osbourne Foreshore, in Lagos; Gold, Harmony and Golden Valley, in Port- Harcourt, Rivers State; Lokogoma, the Ancestors’ Court, in Maitama and Bank of Industry in Asokoro, Abuja, the Federal Capital Territory, have dropped drastically due to either job losses or several months of salary arrears owed prospective and current occupants.
According to estate developers and managers, hundreds of their clients have packed out of their apartments, and have moved to neighbouring towns and states where the standard of living is cheaper.
A good number of buildings in the estates, The Point’s findings revealed, were vacant, as their former occupants have abandoned them, either for cheaper ones or their own property.
The Point also found out that some tenants have relocated to their own buildings, many uncompleted, in developing areas to prepare for unforeseen circumstances.
FLAMBOYANT LIFESTYLES UNSUSTAINABLE AFTER JOB LOSS – FORMER TENANTS
The assertion by estate managers and developers that demand for property had dropped drastically was confirmed by several tenants, most especially bankers and oil and gas workers, who have either been sacked or are owed backlog of salary arrears due to the economic recession.
A former staff of Ecobank Plc, who pleaded anonymity, told The Point that he had to vacate his former rented apartment in Osborne Foreshore, Ikoyi, Lagos, because he could no longer afford the N12 million annual rent for the duplex he occupied with his family.
He told The Point, “I never expected the bank to dismiss me because I thought I was doing well on the job. I have moved my family from a duplex to a two-bedroom apartment around OPIC, Isheri, Ogun State, and changed the schools of my three children too, because houses and schools are cheaper in the developing areas compared to highbrow areas in the state.
“If I had not relocated, I would have gone bankrupt, because my severance pay was not paid by the bank and I am still owed August salary with other allowances. The recession is really biting hard and life is becoming miserable.
“A lot of people have misconceptions that bankers only live for today and not tomorrow; that we all live on credit/loans taken from the bank, but many failed to understand that most of us are not duly paid because the banks too are broke.”
Some oil and gas and advertising companies, The Point gathered, had also told their employees, who they provided accommodation for across major cities in the country, not to expect such luxury again, adding that they should either pay themselves or look for cheaper apartments elsewhere.
For instance, a source in a top Lagos-based advertising agency told The Point that she had parked out of the company’s paid residence in Ikeja GRA to a cheaper three bedroom apartment around Ojodu Berger area.
According to her, the economic recession has led to the agency owing its staff about eight months’ salaries and it had become impossible to sustain the accommodation allowance of its top directors.
“I wanted to secure a duplex in Omole Phase II, but I changed my mind, because I had to pay children tuition fees and I am not certain we will receive all outstanding salaries before their resumption, much less collect outstanding allowances, like accommodation, generating plant, domestic staff and wardrobe as it is done annually. In about two years, my generating plant had not been changed, we have been collecting only 60 per cent of our salaries,” she lamented.
A staff of one of the oil companies in Port Harcourt, River States, Mr. Sam Obi, is also bothered that he had to change his apartment from Golden Valley Estate in the city to his uncompleted house in Ikorodu, Lagos, after he was transferred back to the Centre of Excellence. Though, he admitted that the oil company was not owing salaries, he disclosed that it had cancelled major allowances that came with the employees’ annual packages.
Obi recalled that the employees’ allowances are enough to get a duplex across major cities in the country, allexpense paid trips for a family of five to any European or American country of choice and new generating set among other benefits. These benefits, according to him, have been cancelled.
“Staying in Ikeja, Ikoyi or Lekki makes no sense for me now, because it is not sustainable. There are other bills that needed to be paid and this is not the time to show off or live an unsustainable life. The children always look forward to the trip every year and I don’t know how to explain to them that it won’t be possible this year. I can afford to pay for luxury apartments and summer trips but one has to be discerning on what expenses to take or drop, because of the economy and there is a need to prepare for greater challenges in the future,” he told The Point.
DEMAND HAD DROPPED BY OVER 50% -EXPERTS
Some property managers and developers, who spoke with The Point, disclosed that the economic recession bedeviling the nation had reduced the demand for property across major cities in the country by over 50 per cent.
They blamed the Federal Government for its inability to take certain proactive measures to position the sector to pull the economy out of recession.
Managing Director of Gilgal Homes & Properties, Mrs. Lola Amos-Oluwole, explained that the demand for property and land had dropped tremendously as a result of the economic downturn, coupled with the foreign exchange crisis that led to the hike in prices of building materials in the country.
“The Federal Government should look for locations that are affordable for the low income earners and build houses there, because it widely known that the location of a property determines its value. Also, it should activate mortgage finance policies that will cater for everybody that has gainful source of income and not for just the public servants alone,” he said.
A chartered estate surveyor and valuer, Mr. Abiola Oke of Abiola Oke & Co Associate, who manages properties in Lagos Mainland and Victoria Island areas of Lagos State, disclosed that the fortunes of the sector had been dwindling before the country officially went into recession.
He stated that the prices of a three bedroom duplex had dropped in Lekki since February 2016. For instance, such duplex that was valued for rent at N4.5 million per annum had dropped to N3.5 million in February, in order to get people to subscribe to the apartment.
“The apartments are just there, and it is understandable that many people cannot afford these apartments, but in situations like this, the government and some operators should put the right policies in place that will enhance growth in the sector. The government should emulate the former governor of Lagos State, Alhaji Lateef Jakande, and develop affordable property needed by the masses,” he said.
Another real estate expert with Property Link Investments, Mr. Kelvin Ese said, “In developed countries, government supports the real estate sector with low-interest loans in order to boost business activities in the sector. Also, the proper monitoring of projects by government to ensure that funds for construction are judiciously put to use is worthy of emulation.
“Government should address the issue of land grabbing if it is determined to grow the sector, because activities of land grabbers have scared several local and foreign investors from the sector. It should put in place strategies that will attract foreign investors into the sector.”