The number of property developers starting construction in the Lagos mainland has tumbled by 80 per cent, following a major shift in Nigeria’s residential demand by the young professionals.
The shift was occasioned by large number of young professionals, 60 per cent of whom are within their first three years of employment coupled with the high rate of urbanization, leading to a surge in the demand for small unit apartments.
Also, new studies have shown a positive relationship between Nigeria’s growing young population and the demand for small unit apartments.
For instance, the average rate per month at which studio apartments are rented increased by 24.16 percentage points from 42 per cent in 2017 to 66.16 percent in 2019,
however, the corresponding supply to meet the huge demands for sale of unit apartments are dwindling in some cities.
In Lagos for instance, where apartments are taking the centre stage, supply is miserably low in the mainland, while the Lekki axis is recording a boom. Conversely unit apartment rentals are higher in the mainland but lower in the Island.
But experts have attributed economic reasons to the dwindling development of unit apartments in the Lagos mainland.
Chairman, Lagos State branch, Nigerian Institution of Estate Surveyors and Valuers (NIESV), Adedotun Bamigbola, said the mainland is more or less developed to its maximum, especially notable locations for upper income neighbourhood such as Surulere and Ikeja, where one expects these sales to happen.
He stressed that in such locations there are no vast land and infrastructural improvements as in Island axis.
Bamigbola also said the mainland seems to be the choice of many, who desire to be in the location due to its centrality, that is why they are targeting Surulere and Yaba.
According to him, there is ongoing development regularly in Lekki axis but that does not happen like that on the mainland, except when you are extending to the hinterlands like Abule Egba, Alimosho, Mushin and Isolo, where there are urban renewal.
“So, with all these challenges, the desire for middle and upper income earners, who are mostly the ones that can afford such accommodations are not in such common areas.
“That is the reason you will not get apartments in those neighbourhoods, unlike Lekki, where there is competition. Developers are moving towards that area because you have a lot of options, you can be at Ikate, Ajah, Ikota, Lafiaji, where there is vast land to develop.
“Therefore, accessibility of land is easier in those places because the prices are not beyond reach.”Also, the Group Chief Executive Officer, Global Property and Facilities International Limited, Dr. MKO Balogun, noted that there is scarcity of such apartments because investors’ focus is not in the mainland.
According to him, the mainland is almost fully built up, and in most cases, development will involve knocking down existing buildings for new ones. He stressed that in terms of investment interest, what will drive any development is whether land and up -takers are available.
Dr. Balogun said although there are real estate opportunities in mainland but outright sales are not demanded as it is on the island.
He said that property developers, who want to invest in real estate will ask themselves whether they are going to get better returns in the Island or the mainland.
According to him, investors just don’t follow people who are looking to buy houses today, they are looking at building an estate, where they can get returns on their investments over a period of time, not just two-three units but multiple units.
He said: “What is driving rental income is more of investment rather than usage, so if you build only on demand and the cost is reasonable, people are going to take it up.
“You will find a property on the island that is going for N70 million, the place you will get anything close to it is Ikeja GRA or Yaba, while in any other part on the mainland, you will get half or less than that value. That is part of the considerations investors make,” he added.
A property developer and Managing Director , Propertygate Development & Investment Plc., Adetokunbo Ajayi, said the desire for exclusivity and the need for sustainability may partly account for the low supply of apartments in the mainland.
He said in an environment such as ours where people are generally poor when dealing with commonwealth, apartments’ living and ownership, which require cooperation of all for maintenance of facilities, and services tend to be challenged.
This, he said, threatens sustainability in terms of assets preservation and living quality. People have seen number of apartments’ blocks that were once the envy of others becoming blighted for this reason.
Ajayi also said the economic class of owners of these apartments is also a factor. “Apartments tend to do better on the Island than mainland because the former are generally comparatively stronger from economic standpoint than the latter. The sophistication and capacity to invest in assets preservation and enhancement may be lacking among many owners/investors on the mainland.
“The experiences of Nigerians right from governance, community and other interdependent relationships, which generally are unpleasant may also be a factor. People are by this reason naturally inclined to exclusivity where they believe they will be in control of their destinies.
“Disposal also weighs in the mind of many investors. They have seen value of property assets eroded by acts of other apartments’ owners, regardless of what a diligent individual investor may do to protect his or her asset,” he added.