2013: Defining moment for the property market

Globally, the outgoing year was, indeed, a defining moment for the property market with many regions of the world, notably Africa, Asia, Europe, United Arab Emirate (UAE), etc, recording significant recovery and growth across various segments of the market.

In Africa, particularly in sub-Saharan Africa including Nigeria, Ghana, Sierra Leone, Cote d’Ivoire, among others, 2013 saw continued growth driven by demographics, rising spending power and the softening in the economy of the developed world.

In South Africa, the story was, however, different with price index for medium-sized apartments falling by 2.01 percent year-on-year to third quarter (Q3) 2013 and, according to Global Property Guide’s Q3 2013 housing prices survey, prices declined by 15.5 percent in the country during the global financial crisis.

Dubai, Nigeria, UK and the US markets which were badly affected by the global economic crisis had struggled through that period to the last quarter of 2012 when, in a dramatic way, prices started climbing with investor-appetite growing to appreciable level.

Global Property Guide, a research house and website dedicated to residential property, reports that of the 24 European housing markets included in their survey, 19 performed better in Q3 2013 than the previous year, disclosing that prices rose 1.8 percent in the UK.

Dubai, the survey adds, remains the best performer, explaining that house prices soared by 21.37 percent during the year to Q3 2013, such that luxury residential towers in Dubai now sell like pancakes. It cited Skai Properties, a new luxury apartment complex located on the Palm Jumeirah that sold 98 percent of its 702 units in September 2013.

The survey says United States saw prices rise by 6.1 percent, adding that overall house prices rose in 32 of the 51 advanced and emerging market economies in the IMF’s Global House Price Index.

In Nigeria, it was not just a story of visible recovery, but also of growth, especially in the commercial segment of the market where analysts estimate that investor-confidence and interest soared, seen in the quantum of investment in the development of retail centres and office buildings.

“Across the country and also West Africa, there has been continued growth in retail. It is happening most in countries like Nigeria, Ghana, Cote d’Ivoire, etc. New retail facilities are being built and new retailers are coming in. That is one major thing that has happened in 2013,” said Obi Nwogugu, head, real estate unit, Africa Capital Alliance, an institutional equity investment firm.

Nwogugu, who spoke in an interview with BusinessDay, added that the office space market has also seen continued growth, estimating that “in Lagos, between Ikoyi and Victoria Island where you have business hub, there are close to 250,000 square metres of office space coming into the market”.

Across various segments, there was some level of movement, even though Erejuwa Gbadebo, former CEO, Broll Property Services Nigeria, sees “a bandwagon thing” in the movement in some of the segments. She, however, agrees there was a difference from what obtained in the market in 2012.

In the residential segment of the market, UAC Property Development Company (UPDC) plc and Lekki Gardens were quite bullish, addressing the narrow upper-end market with their mega million naira products.

Estate Links Limited, a local and international real estate services provider, also made a little impact with its 18-unit ‘The Lofts’ which targeted the middle-income earners, selling at N25 million per unit.

Growth in low-income housing was quite remarkable as a few developers found meaning and sense in addressing this largely un-served market with blocks of flats, apartments and bungalows. Analysts observe that this new interest was driven by rising vacancy rate in the high-end market.

A good number of low-cost housing came into the market from Common Sense Company with its 100-unit Signature Estate comprising one-bedroom bungalows available in detached, semi-detached and terraces at N3 million as minimum entry level.

Avenue to Wealth (A2W), a cooperative partnership scheme, also offered studio apartments selling for N3.4 million on outright payment, while Multi-Purpose Infrastructure Development Construction (MIDC) also came into the market with 1,000 low-cost housing units at its Teju Royal Garden in Lagos.

In what Chudi Michael Ejekam described as a revolution, the commercial properties were a toast of investors in the outgone year with retail malls and office buildings delivered and new ones initiated.

Heritage and Cocoa Malls in Ibadan, Oyo State, opened for business; Omais Homes’ Trinity Mall in Lagos also opened for business, while UPDC started construction on its N5 billion Festival Mall in Festac Town, Lagos. Actis, an international private equity investment firm, is building the Ado Bayero Mall in Kano and the Jabi Lake Mall in Abuja with Duval Properties.

While The Mansard Place and The Brook were completed within the year by Mansard Insurance and BusinessDay Media Limited, respectively, Actis started work on its 14-floor Heritage Place in Ikoyi, and RMB Westport also took off with its 15-floor The Wings.

Another significant development in this market was the mortgage sector reform which saw the primary mortgage banks (PMBs) migrate from the statutory N100 million to N2.5 billion and N5 billion for state and national operations, respectively.

Of more significance was the setting up of the Nigerian Mortgage Refinance Company (NMRC), a private sector-led secondary mortgage refinance company being promoted by the Federal Government with $300 million seed capital provided by the World Bank. It is expected that when the company becomes operational from the first quarter of this year, it would change the face of mortgage banking and housing finance in the country, giving hope of improved homeownership level in the days ahead.

By: Chuka Uroko & Odinaka Mbonu