Connect with us
iubh
Advertisement
Alpha
Advertisement
Hotflex
Advertisement
Advertisement
Advertisement
UBA
Advertisement
Patricia
Advertisement
app

Real Estate and Construction

Where to buy Real Estate in Lagos in 2021

The spate of housing construction in several locations in Lagos is bringing hope of an imminent recovery in the sector in 2021.

Published

on

Where to buy Real Estate in Lagos in 2021, Nigeria's Real Estate Sector recorded positive growth after three year low, Real estate: Declining credit reflects underlying weakness 

The Nigerian economy slipped into recession in Q3 2020 as the impact of Covid-19 took its toll on several sectors including the real estate, which has been in a recession since the 3rd quarter of 2019, ballooning to 21.99% in the second quarter of 2020 before retreating to 13.4% in the third quarter.

However, reports across Lagos indicate real estate developers continued to build during the pandemic months of 2020 fuelled by increased demands in residential housing units.

READ: 5 Nigerian real estate start-ups helping with easier living

Nairametrics research understands millions of dollars in diaspora inflows are being channelled into the sector. In the search for higher yields, Nigerians living abroad are taking out equity from their mortgages and then funnelling some of the proceeds into the country’s real estate market.

The spate of housing construction in several locations in Lagos is bringing hope of an imminent recovery in the sector in 2021. The development has enabled industry stakeholders to be optimistic that despite the second wave of the pandemic, the sector will yield returns to investors in 2021 for various reasons. Hence, they shared hotspot locations with Nairametrics across the nation’s commercial capital.

READ: Real Estate Developers express fear over selection process of CBN’s N200 billion Housing Fund

In separate interviews, they explained that discerning investors should buy real estates around Lekki axis, Banana Island, Ikoyi, Surulere, Ikeja GRA, Magodo, Gbagada areas of Lagos and border towns like Arepo, Magboro, Sango-Ota in Ogun State, amongst others.

Adedotun Bamigbola, Chairman, Nigerian Institution of Estate Surveyors and Valuers (NIESV), Lagos chapter, told Nairametrics that though where to buy real estate largely depends on the status and purpose of the investors, some zones will yield more returns to the investors in 2021.

Hotflex

READ: Landlords offer incentives to counter “work from home” induced vacancy rates

According to him, Lagos State is divided into 7 zones – Island 1 (Lagos Island, Old Ikoyi, S/West Ikoyi, Banana Island, Victoria Island); Island 2 (Lekki Phase 1, Ikate, Osapa, Agungi & Chevron); Island 3 (Ajah, Sangotedo, Awoyaya & Lakowe); Island 4 (Ogba, Ogudu, Magodo GRA 1 (Isheri) & Magodo GRA 2 (Shangisha); Mainland 1 (Surulere, Yaba, Ilupeju & Gbagada); Mainland 2 (Amuwo Odofin, Isolo, Festac, Apapa); and Mainland 3 (Ikeja GRA, Maryland, Ikeja & Alausa).

READ: Lagos Real Estate Regulations: The peaks and the dips

Mr Bamigbola said,

“Island 1 zone recorded the highest land prices, which is expected to be repeated in 2021, followed by Mainland 3. This is a reflection of the deepened level of commercialization in these 2 zones.

Stanbic 728 x 90

“The growing development in nascent Island 2 areas is also reflected in its high price of land averaging N112,021/sq.

“Per house types, Island 1 zone has the highest values (rental & sale) for both 3-bedroom and 4-bedroom houses. The same also goes for office space rental values.”

READ: Bank’s Credit to Nigeria’s Real Estate sector hits 5-year low

He said a great number of people are moving towards Lekki axis due to the prospects they see in the area. Some of the prospects are based on believes that “Island is the commercial capital of the state,” with attractions like the Deep-Sea port, Dangote refinery, and the proposed Airport, amongst others.

Mr Bamigbola added,

“Chevron showed the highest yield of 6.87% on investment and is expected to do more in 2021, next was Agungi (6.31%), while Osapa came in third with 6.06%.

Coronation ads

“The lowest yield was seen in Ogudu – 3.10%, next being Magodo (Shangisha) – 3.19% and third being Magodo (Isheri) – 3.20%.

“The median yield in Lagos state from this consensus analysis is 4.32% and it is obtainable in Yaba.”

READ: How to own your home in 5 years without a mortgage

Another member of NIESV, Lola Afolabi, agreed with Bamigbola, as she projected that land and house prices in Lekki Ikate, Chevron axis, Sangotedo and Lakowe are likely to keep increasing as the area welcomes more developments like Lagos Free Trade Zone, 4th Mainland Bridge and new city – Alaro City, which are all expected to come on stream in a few years. upon completion, will further trigger the rise in property values in the zones.

app

She said,

“The high rental costs of Grade A office buildings located in Banana Island, Ikoyi and Victoria Island have contributed to this.

READ: Lagos removes 200 shanties at Opebi to maintain planning standard, restore order

“The presence of supporting infrastructure has contributed to the capital value increase in Mainland, especially in Ogudu and Magodo Shangisha areas, but this has not met corresponding rental valuation resulting in lower yields.

“Ikeja GRA and its surrounding areas like Maryland, Mende, Shonibare estate remains the most expensive locations on the mainland part of Lagos state.

“This is expected to continue as more residential and commercial development come up in these neighbourhoods, particularly Ikeja GRA, in few years’ time.”

READ: Application and payment for C of O, building plans to be done online from Q1 2021

Debo Adejana, another realtor, advised that this is the time to invest in real estate with the number of growth poles in the Ibeju Lekki axis of Lagos. He said,

“There are an estimated 50,000 new jobs over the next decade. Investing in real estate now is the right investment move anybody can undertake, especially along the Ibeju Lekki axis.”

READ: Key ‘side-hustles’ Nigerian Bankers supplement their income with

What you should know

Despite the optimism expressed by the realtors, a number of them argued that the office market segment of the sector may suffer certain setbacks due to the pandemic.

According to Martin Uche, a Real Estate Analyst, the remote work policies by some corporate bodies, especially the multinational firms, will affect the Lagos A-Grade office market – not now, but during the next round of renewals.

READ: Is this Pandemic the death of coworking Spaces?

According to him, the international corporates in the financial, technology, and management consulting sectors, who account for up to 70% of prime office tenants in Lagos, are increasingly adopting remote work options, and this will impact the Lagos A-Grade office market during the next round of renewals.

He said,

“Though many offices are starting to open up, the enforcement of varying levels of lockdown as a result of the coronavirus, forced corporates to temporarily close their offices in the first half of the year or introduce new work policies to sustain business operations during the period.”

In response, most companies allowed staff to work remotely during the lockdown period. Though it was a means of keeping businesses running in the heat of the pandemic, it is clear that many international corporates will not be returning to the status quo.

Instead, they are considering a number of options centred around downsizing the space they currently occupy, as many have realized that they can operate without the entire team in the same brick and mortar space.

0

Abiola has spent about 14 years in journalism. His career has covered some top local print media like TELL Magazine, Broad Street Journal, The Point Newspaper.The Bloomberg MEI alumni has interviewed some of the most influential figures of the IMF, G-20 Summit, Pre-G20 Central Bank Governors and Finance Ministers, Critical Communication World Conference.The multiple award winner is variously trained in business and markets journalism at Lagos Business School, and Pan-Atlantic University. You may contact him via email - [email protected]

2 Comments

2 Comments

    Leave a Reply

    Your email address will not be published.

    This site uses Akismet to reduce spam. Learn how your comment data is processed.

    Real Estate and Construction

    Why rents increased by 30% in Lagos, border towns

    Factors responsible for the hike are rising cost of building materials, lack of transparency between asking and achievable prices.

    Published

    on

    Rents across Lagos (Mainland and Island) and Ogun State have increased by over 30% between December 2020 and April 2021.

    Findings by Nairametrics revealed that while rent had increased by over 30% in some Lagos border towns like Sango-Ota, Arepo and Magboro, property owners across Yaba, Magodo, Ikoyi, and Lekki axis also inflated their rents by about 33% within the same period.

    For instance, rents for one-bedroom (self-contain) and two-bedroom apartments, which are the most sought after in Magboro (one of the Lagos border towns) have increased from an average of N120,000 and N160,000 to N200,000 and N260,000 respectively. This represents a 33.33% and 30% increase respectively.

    READ: Why property prices are expensive in Lagos

    Similarly, rents in some key areas in Lagos Mainland are not cheaper. In Magodo phase 2, property owners charged between N1 million and N1.2 million for a 2-bedroom apartment, but now, a potential tenant is required to pay between N1.3 million and N1.56 million as rent (depending on how old the house is), an increase of approximately 30%.

    Though rents appear relatively cheaper in Surulere, especially around Aguda, they also increased within the period under review. While rent on two-bedroom apartments and three-bedroom in Aguda has gone up from N850,000 and N1 million to N1.2 million and N1.4 million respectively, around Ogunlana drive, two-bedroom apartments that were let out at N950,000 now cost about N1.2 million.

    Meanwhile, rents around the Lekki axis have also gone northward, as new tenants are forced to pay more before occupying houses. A 4-bedroom semi-detached house without boys quarters in Lekki Phase 1 and Ajah, which used to cost N3.8 million and N2 million, has risen to N4.5 million and N2.5 million respectively.

    In Sangotedo, rent on three-bedroom flats has also increased from N1.2 million as of December 2020 to N1.6 million.

    Hotflex

    READ: Lagos State Government offers 15% Discount on Land Use Charge Payments

    Why the rise?

    Industry experts, who spoke with Nairametrics in separate interviews, explained that there are several factors responsible for the development and agreed that some of the reasons are not fundamentally strong.

    Paul Bamigbola, Chairman, Nigerian Institute of Estate Surveyors and Valuers (NIESV), Lagos Chapter, told Nairametrics that a significant factor responsible for the hike is the rising cost of building materials.

    According to him, property owners now spend more to build houses, as the cost of cement, iron rods, sanitary wares and tiles, among others, have all risen significantly.

    For instance, the cost of steel, which was sold at N234,000 per tonne as of March 2020, had increased to N380,000 at the end of March 2021. This represents a 62% increase within the period under review.

    Stanbic 728 x 90

    Dangote Cement increased from N2,600 to N3,800 (though it is sold at N3,600 in some areas in Lagos), Lafarge Cement and BUA Cement increased from N2,400 and N2,250 to N3,600 and N3,250 respectively within the same period.

    READ: How to make money in real estate

    Bamigbola said, “The high cost of acquiring land, including the actual cost of building, also adds to the reasons property prices in Lagos are high.”

    But when our analyst pointed out to Bamigbola that the hike also affected old houses, he said, “To also increase the rents, most of the owners of the old house renovate the houses a little before letting them out. They do that to increase the rent to about N400,000 if the owners of new houses charge N500,000.”

    Another factor responsible for the hike, especially in Lagos, is the lack of formal housing. With over 3.8 million households in Lagos, up to 2.1 million households are without formal housing. This presents a supply gap of over 55%.

    Chief Executive Officer, Richfield Limited, a real estate company, Samson Odegbami in a recent interview with Nairametrics said, “As typical in every market, excess demand drives up prices. This could make landlords, who frequently get requests for their available spaces, increase the prices and let out or sell the property to the highest bidder.

    Coronation ads

    READ: Where to buy Real Estate in Lagos in 2021

    Estate Intel, in its report, stated that the lack of transparency between asking and achievable prices was also another factor.

    It added that the multiple agents and developers involved in marketing properties typically list these properties for significantly higher amounts than what they are willing to accept.

    It stated, “We expect developers or agents to aim to achieve the highest possible price, with a window for negotiation, leaving a wider than usual spread between asking and achievable prices.
    A large spread between asking and achievable rent makes average market rent seem artificially high and encourages other developers to hold fast on those artificially listed prices, keeping average rents or sale prices high.”

    app

    Bottomline

    Based on the experts’ views, the rent prices could be very misleading, especially because most of the properties on the listed platforms in Nigeria are priced well above what is achievable.

    0
    Continue Reading

    Business News

    Lagos commences enforcement against building collapse, substandard materials

    The state government has moved to actualize its vision of zero tolerance for building collapse.

    Published

    on

    The Lagos State government said that it has commenced aggressive enforcement against quackery in construction to end building collapse in the state as it called for the support of building professionals.

    This is as the state government has moved to actualize its vision of zero tolerance for building collapse.

    This disclosure was made by the General Manager of Lagos State Materials Testing Laboratory (LSMTL), Mr Olufunsho Elulade, at its inaugural stakeholders’ conference with the theme, ‘Construction, Material Quality Control and Assurance in Lagos State, on Tuesday in Lagos.

    READ: Lagos State Government orders building owners to conduct structural stability tests

    According to a report from the News Agency of Nigeria (NAN), Elulade identified the use of substandard building materials and lack of adherence to quality assurance standards as the major causes of building collapse in the state.

    He said the agency will immediately start standard enforcement in the building construction value chain to ensure the use of the right materials.

    Elulade said, “We are, hereby, using this medium to state the terms of operations with all our stakeholders across the state; we want to partner with you to move the state forward in order to have safer Lagos for the benefit of all.’

    READ: Lagos goes tough on illegal conversion of land use, enforcement begins in Ikeja GRA, Lekki, others

    He emphasized the importance of doing away with the menace of quackery, substandard materials and corruption in the construction sector.

    The LSMTL boss outlined the various services offered by its laboratory which includes soil tests, water quality assessment, calibration, destructive and non-destructive tests, among others.

    While launching the new logo of the agency, Elulade, pointed out that it was a strategy to eliminate quacks and private laboratories using the agency’s old logo to impersonate its operations and mislead the public.

    Also, the Public Relations Officer, Nigerian Institute of Builders (NIOB), Lagos Branch, Mr Olusesanayo Philip said the institute would sustain its public sensitisation campaign adding that the institute was also partnering with LSMTL to sensitise the public on the need to engage professional builders to tame the monster of building collapse in Nigeria.

    READ: FG says Lagos-Badagry Expressway not forgotten, tops Sukuk funding priority list

    Stanbic 728 x 90

    What this means

    The enforcement against quackery and the use of substandard materials in the construction value chain by the Lagos State government will come as a huge relief to residents and a boost to its fight against building collapse.

    There have been numerous building collapse incidents in various parts of the state with attendant human casualties, due to the use of substandard materials or non-compliance with the state’s building planning laws and standards.

    0
    Continue Reading

      





    Nairametrics | Company Earnings

    Access our Live Feed portal for the latest company earnings as they drop.