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Vacant houses, high rents persist in Lagos, Abuja

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At the centre of 17 million housing deficit, a huge number of vacant houses, coupled with high rental values persists in Lagos and Abuja. DAYO AYEYEMI reports

Nigeria’s real estate sector is still going through tough time as vacant houses persist in major cities despite the recorded growth in the economy and nation’s foreign reserves
Two major cities that have taken direct hit of this followed by high rents are Lagos, a commercial nerve centre and Abuja, the nation’s capital.

The number of vacant houses, especially at the higher end of the market in these two cities, has risen sharply in the last one and half years, in which Nigeria experienced economic crisis.
According to latest New Telegraph investigation, most streets in Lagos and Abuja’s high brows are still filled with huge number of vacant houses despite the seeming improvement in the economy, just a few days to end the year.

Some of the high brow locations include Ikoyi, Victoria Island, Lekki, Ikeja GRA in Lagos and Asokoro, Maitama, Wuse II and Jabi districts in Abuja. These locations have a high number of unoccupied houses despite the nation’s housing deficit of over 17 million units.

Survey
Market survey further revealed that despite huge number of vacant houses in the metropolis, high rental values persist as tenants and accommodation seekers find it difficult to cope due to their low-purchasing power occasioned by uncertainties in the general economy.

Survey by New Telegraph showed that rental values for three bedroom terrace building in Ikoyi ranged between N7million and N10million per annum depending on location.
Rents for three bedroom apartment in Ogba, Okota, Isheri, Ketu and Surulere cost N700,000; N600,000; N450,000; N450,000 and N1.5million per annum respectively. The same accommodation costs between N3.5 million and N8million in Victoria Island and Lekki, Lagos. Two bedroom flat in Ogba, Isheri, Ketu and Lekki costs N450,000; N300,000; N300,000 and N2.2 million.
In Abuja, house rent in Maitama costs between N7million and 25million. Rental values for three bedroom in Wuse II, Jabi and Mabuchi cost N7million, N4.8million and N2. 5 million per annum, while rents for two bedroom flats in the same locations cost N6million, N6million and N2million respectively. Rent for two bedroom flat in Apo costs N1.5million.

It was gathered that the rental values in Abuja depreciate as one moves into the outskirts such as Nyanyan, Mararaba and Suleja, justifying reason for overcrowding in these settlements.

People’s perspectives
For real estate practitioners and estate agents, the business environment has remained unfriendly as tenants have refused to pay new rent while accommodation seekers are waiting for buoyant economy.
Some of the practitioners that spoke with New Telegraph stated that the number of empty property in Lagos and Abuja high brow areas was on the increase as a result of the state of the economy.
Principal Partner, Kola Akomolede and Company, Chief Kola Akomolede, said the vacant houses refused to find buyers due to slump in the economy.

“Business is still dull. The empty houses have refused to go because recession is not yet over. There is no enough money in circulation and there is low purchasing power,” he said.
Managing Director, Jetobless Properties Limited, Mr Toluwa Jekede, a property agent in Lagos, blamed huge empty houses on absence of institutional and corporate investors/ buyers, who he said left the country due to uncertainties in the nation economy

He said the vacant houses most especially in Ikoyi, Ikeja GRA, Lekki have refused to go despite reduction in rent to attract tenants.
According to him, most of the properties in his care for more than two years have been vacant without anyone asking for them for occupation.
“I have some vacant houses in Ogba, Adeniyi Jones, Opebi and Ikeja GRA. They are just emptied for two years now. Accommodation seekers do not even have the money to rent some of these houses unlike before when it was based on who came first,” he said.

However, he expressed hope that as the country’s economy improve and attracts foreign direct investment, some of the institutional investor would return, while blue chip companies would want to buy property for their staff.

An estate agent in Ojodu-Lagos, Mr. Ikenna Mojerie, said that many young accommodation seekers were not ready for big apartment due to their low-income level, noting that demand for mini flats with affordable rents are on the increase.

Slump in real estate
It would be recalled that despite the positive trajectory in the economy, real estate and construction sectors are yet to buck the trend as they still grow at negatives. Construction sector has been in free fall since one and half years ago, around the period the Central Bank of Nigeria published a list of 41 items that were invalid for forex.

Most of these items were real estate/construction sector related and this exacerbated an already slowing sector as most of the materials required for construction in Nigeria are typically imported.

Way out
Chief Executive, 3Ivest, Mrs Ruth Obih-Obuah, noted that the recent economic downturn had caused real estate sector in Africa to fall below the projected 2.6 per cent regional growth.
In her calculation, Ruth-Obuah is of the opinion that balancing short-term indicators with long-term structural change would reinstate investor confidence. This, she said, was paramount to success and continued growth recovery process of the sector, as driven by government reforms and policies.

Lecturer at Lagos Business School, Mr. Doyin Salami, urged government to find a pathway to lowering interest rates, adding that it must open space for private sector to drive the process.

Last line
Continuous efforts must be made by the Federal Government, through reforms and sound policies, to create opportunities and restore investors’ confidence in the nation’s economy.

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Business

Architects task govt on affordable housing

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Issues of urban regeneration to architectural designs, smart city, affordable housing and climate change were again brought to the fore by architects and professionals in the property sector last weekend. Dayo Ayeyemi reports

Rising from a three-day brainstorming session, Nigerian architects have been tasked to mount pressure on the government to formulate policies and invest in affordable housing estates for low-income earners.

Besides, they were also urged to achieve sustainability by incorporating the use of local materials in their projects, as well as engage the government to make it a priority to stop deforestation, encroachment into bogs, wetlands, mashes and swamps.

Participants at the forum cut across diverse stakeholder groups from public service, private sector, academia, and allied professions to artisans and building construction material manufacturers and suppliers.

 

Themed: “Lagos 9.0 – An Architectural Regeneration 1 – The Lagos Response,” the experts in a communiqué issued at the end of the forum, called on architects to sensitise the government to ensure that every compound had minimum of one tree, and that the number of trees should be calculated based on size of compound.

“Architects should try to achieve sustainability by incorporating the use of local materials in their projects. They should design with identity in mind, a sense of belonging, which should be into our architecture,” they said.

The experts also urged the government to encourage and promote local materials industry and that it should concentrate resources in building up areas that will yield greater resources.

 

“Such projects would take time and as such, there is need for focus, regardless of change in administration,” they said.

 

Response

Represented by Deputy Director in the Ministry of Housing, Remi Adebo, the Governor of Lagos State, Mr Akinwunmi Ambode, said it was no longer news that the state government was working towards transiting from a mega city to a smart city.

He said his government was geared towards achieving a mega city status, adding that it starts with architects.

He noted that the theme of architectural regeneration was very relevant and in line with the government’s approach towards creating the mega city.

 

“Plans of regeneration has lead us to embarking on various projects in and around the state including some laudable projects such as the Ilubirin residential scheme, Oworonshoki mega transport hub, transformation of Epe and revitalisation of Oshodi,” Ambode said.

 

One of the speakers, Roman Oseghale, an architect, stated that the housing industry remained a major booster for economic growth, noting that the nation’s housing deficit stood at 17million as at 2013, and that the estimated worth of housing deficit was $302billion.

“About 720,000 housing are needed annually but we can only produce about 350,000. An estimated 70 per cent are living in poverty with about 8,000 added to extreme poverty daily. There was an urban population of 48.6 per cent (90.4m) at the end of 2016,” he said.

According to him, while justifying the need for regeneration of Lagos, he said it had an estimated population of 18million to 21million people and a projected population of 36million by 2050, adding that its housing demand grows by 20 per cent annually.

“In 12 years, Lagos population increased from 8million to 18million. It has a population density of 5,381 people/Sq.km, a GDP of $136 billion, and 30 per cent of Nigeria’s GDP. It also holds 70 per cent of Nigeria’s industrial capacity and accounts for 90 per cent of Nigeria’s foreign trade flow, “he said.

 

Stakeholders’ opinion

Chairman, Lagos Chapter of the Nigerian Institute of Architects (NIA), Mr. Fitzgerald Umah, said the 2018 LAF was a forum to walk the talk, get the details and proffer solutions to problems, noting that Lagos has been shrinking, not because the landmass has been reduced but because “the population is growing at a very fast rate.”

According to him, failure to respond and regenerate into a more resilient organism or organisation could only result in systemic stagnation and eventual decay.

Speaking on” regeneration – The East Village Story,” Adjunct professor at the University of Calgary’s Faculty of Environmental Design , Bill Chomik, pointed out that architects had stepped outside the box to play a seminal role by preparing the master plan, using innovation and creativity as design drivers.

This model, he stated, could readily be replicated in other cities where physical renewal and invigoration of a degenerated urban environment is envisioned.

Another expert, Rear Admiral Houtonu, who was passionate about regeneration, said that a lot of Nigerian towns and cities have been overtaken by what is called ‘the Inner City Syndrome.’

Citing what had been done in the East Village in Canada, she said that there was nothing wrong with concentrating resources in building up areas that would yield greater resources.

 

Last line

When participants coalesce next year, they want to see how architects have applied these solutions suggested to solve the issues raised.

 

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Business

Why real estate market is yet to recover, by facility managers

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From residential to commercial, office space and retail mall, there are signs that real estate market is still struggling to recover from the lull, New Telegraph has learnt.

 

This is evident in low demand for properties, existing vacancy rates, rent service charge defaults and low construction activities in the sector – almost six months after Nigeria came out of one and half years recession.

 

Group Managing Director, Alpha Mead, Mr. Femi Akintunde, an engineer, sais despite the fact that the market characteristics have been gradually fading away owing to improving macroeconomic indices, real estate market is still struggling to recover from the lull.

 

He noted that real estate market was one of the worst hit sectors during the 15 months’ period of economic recession, which lasted from first quarter 2016 to second quarter of 2017.

 

“The sector saw its growth dim as the market was defined by low demand, widening vacancy rates, increasing case of rent service charge defaults and slowdown in construction activities,” he said.

 

Speaking during the pre-event press briefing of 2018, Nigerian Facilities Management (FM) Roundtable, Akintunde said that for real estate markets to receive a new lease of life in post- recession Nigeria, it would be determined by the roles FM would play in enabling positive experiences for its stakeholders.

 

Commenting on current situation in the real estate sector, the Alpha Mead boss stated that report from the International Real Estate Partners (IREP), Nigeria, a strategic business units of Alpha Mead, had shown that rents in commercial properties such as Grade ‘A’ office space could lightly fall below the current average of $700 (N252,000) per square metre (psqm) as the market anticipates arrival of 37,000 square metre in Victoria Island and Ikoyi, Lagos. He pointed out that demand for Grade ‘A’ office space has not been growing at the same pace, adding that report had shown that rise in neighbourhood retail stores have been decreasing footfalls at the modern retail centres.

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NHP: Contractors seek release of budgeted N35bn

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Dearth of funds may hinder full implementation of various on-going housing projects in 33 states of the federation under the National Housing

 

Except the necessary machinery is put in place, attempts by the Federal Government to build affordable housing units in all the states of the federation under its National Housing Programme (NHP) may become another white elephant project.

 

Despite the readiness of real estate developers, who are government contractors for the project, the latest threat to the initiative is fund, which is not coming as at and when due to accelerate the completion of the housing construction process.

 

The contractors, who spoke at different times in their various locations, called on the Federal Government to hasten the processes of fund disbursement to enable them complete the works at their various sites as scheduled. New Telegraph’s findings revealed that stages of work in most of the sites were very impressive. In some locations, developers have achieved between 70 and 80 per cent completion of the project, while in almost all the sites, excuses from the contractors have been lack of funds.

 

The contractors, Mathias Orove and Jude Opute, at Calabar and Uyo project sites respectively during a media tour of the project, told this newspaper that untimely disbursement of funds was hindering the progress of the project.

They appealed to government to release more funds in order to accelerate construction work of the housing units. The team leader of the project in Enugu State, Veronica Enesi, also stated that the project in the state had lifted many of the people of the state from poverty level.

 

She explained that the site had some set back from the beginning, but having overcome the challenges, the project was gaining considerable speed and would be completed soon. Both the team leaders and the contractors called on the Federal government to hasten the process of funds disbursements, so that the projects could be completed as scheduled.

 

NHP

 

Initiated in 2016, and projected to cost about N35.4 billion, NHP was conceived to address the housing needs of workers, and provide economic empowerment for local communities where the projects are located.

 

One commendable step taken by the government in prosecuting the national housing programme is not just the fact that it has mustered the political will to partly address the housing deficit in the country, but the emphasis placed on the promotion or local contents to empower the people who live around the host communities.

 

As a matter of policy, government made it mandatory that all the building materials and every other needs of the projects must be 100 per cent indigenous.

 

That is to say that the local community hosting the project must be given priority attention. This newspaper observed that in six locations of the project visited: Enugu, Ebonyi, Calabar, Uyo, Benin, and Asaba, local content policies of the government were been complied with.

 

The contractors, building materials, the suppliers, both skilled and unskilled labourers are indigenous people who have attested to the economic empowerment capability of the project. The building designs are the same in all these locations. The project, which consists of two-bedroom semi-detached bungalows, three-bedroom semi detached bungalows, three-storey condominium blocks of 24 mixed units are at various stages of completion.

 

Govt’s reactions

 

The Minister of Power, Works and Housing, Babatunde Fashola, said that the Federal Government was considering an upward review of contractors’ mobilisation fees to 50 per cent from its current status of 15 per cent. Fashola told some members of the Association of Indigenous Construction Contractors of Nigeria (AICCON), who paid him a courtesy visit recently, that there was already an executive bill at the National Assembly to address the mobilisation issue.

 

“There is a bill from the executive before the National Assembly to review the 15 per cent mobilisation fee payable to contractors requesting the NASS for an upward review to 50 per cent,” he said.

 

The Federal Controller of Housing in Uyo, Akwa Ibom State, Mrs Ikuo Uzodinma, noted that the project was gaining more speed. She said the project, which started effectively in the state, had empowered a lot of artisans and other people in the community. The Federal Controller of Housing in the ministry, Olusola Idowu, who represented the ministry at one of the project sites in Ezzamgbo, Ebonyi State, said that NHP was one of the initiatives of government designed to accommodate and empower Nigerians.

 

According to him, NHP was initiated by government, not just to provide the populace with accommodation, but to boost economic activities of people, who live around the community. He explained that the project in Ebonyi State, which comprised 72 units of affordable houses, would soon be completed as soon as funds were made available by government. He said: “Over 95 per cent of our workforce at this site are indigenes of this community.

 

Supplying of building materials is also predominantly carried out by indigenous traders, and other beneficiaries of the site include artisans and food vendors.

 

“The project is ongoing and as you can see, most of the contractors are already completing their work while others are waiting for the release of fund to speed up the work.”

 

One of the attempts made by successive governments in Nigeria to meet the housing needs of the populace is the ongoing housing programme. It is the prototype of what Shehu Shagari’s regime introduced in the Second Republic of Nigeria’s democratic journey.

 

After Shagari’s attempt, there were many other efforts at providing the missing links in the housing industry, through more of private sector interventions. Ironically, virtually in all parts of the country, there are massive housing development by private sector investors, yet accommodation gap continues to widen, putting pressure on the health of the nation’s economy. The reason for this is simply that the affordability margin is too far for the reach of the masses.

 

Some experts in the sector noted that the desire to bridge the gap and remedy the deficit had never been lacking, saying that what has ever remained the scarce commodity was the political will to take the bull by the horn.

 

Last line

 

The relevant authorities should hasten the processes of funds disbursement to the contractors in ensuring that the housing programme is sustained.

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