Bungalows return with opportunities for investors as short-let market booms

The few positive experiences that came with the 15-month economic recession in Nigeria are, evidently, creeping into the country’s property market. Gradually but steadily, therefore, bungalows are returning to the market and are, increasingly, getting attention and consideration from private estate developers who are producing and putting them on the market for home buyers and investors.

Before now, bungalows almost disappeared from the market as a result of the high cost of land and also because of growing sophistication and appetite for bigger and befitting accommodation which storey buildings and duplexes offer. Purchasing power was also a strong factor that stimulated demand.

In order to maximise space (land) which is scarce and costly, estate developers have chosen to go vertical, believing that, by so doing, they will not only optimize the use of space, but also recoup their investment fast and make as much profit as possible.

But prevailing economic challenges which have created affordability problems for home buyers has led to the return of bungalows in the market. Though the market is still narrow compared to that for other house-types, it is sizeable enough to cater to the class of people who need that type of housing.

In the last five years, especially in the last three years of Buharinomics, a good number of families have had to re-order their priorities and the size of accommodation they need matters most. Many of them have had to downgrade their accommodation needs, leading to a rise in the demand for not just bungalows, but also small-size apartments like studio, two-bedroom and three-bedroom.

Notable among developers involved in the development of all-bungalow estates are SSA Realties and Multi-purpose Infrastructure Development and Construction Company (MIDC). There are, however, other developers whose estates are a mix of bungalows and other house-types.

SSA Realties are the developers of First Home, a 200-unit estate located at Km 49 on the Lagos-Ibadan Expressway near Redemption Camp area. The estate comprises two-bedroom and three-bedroom semi-detached bungalows.

Oladeji Adesina, the company’s Managing Director, explained to BusinessDay that the development of the estate was their response to the housing problems faced by young workers looking for their first homes to buy.  “We are worried that some Nigerians cannot have homes of their own, and even when they take their time to upgrade landlords’ houses, all they get as reward is an increased rent. So, First Home Estate is intended to address the housing problems of Nigerians”, he said.

MIDC is the developer of Teju Royal Gardens—a 1,000-unit estate located along Lagos-Badagry Expressway, comprising one, two and three-bedroom detached and semi-detached bungalows. “The estate offers different house-types including 100 units of  one-bedroom bungalows; 200 units of two-bedroom bungalows and  450 units of detached and semi-detached three-bedroom bungalow giving a total of 750 housing units for the first phase of the project”, explained Emmanuel Obire, MIDC’s CEO.

 Each unit of one-bedroom bungalows in this estate came into the market for N2.5 million; two-bedroom for N4.5 million; three-bedroom semi-detached for N6.5 million while three-bedroom detached was offered for N7.5 million. But today, the prices have gone up by up to 30 percent.

Alongside the return of this house-type is the growth of short-let apartment market in Nigeria’s major cities of Abuja, Lagos and Port Harcourt where young company executives, people on business trips, staff of corporate organizations on short-stay, and expatriate staff of companies find accommodation.

A recent report indicates that demand for short-let apartments has maintained an upward trend in spite of the challenging economic environment. “This increased demand has spurred savvy business operators to accelerate their expansion plans seeking out strategically located residential buildings or vacant apartments in prime areas to be converted into short-let apartments to meet the flexible needs of people who require such accommodation”, Tayo Odunsi, CEO, Northcourt Real Estate, confirmed.

Besides security issues, there is also strong desire by young professionals to live in exclusive locations to have a bite of the luxury these apartments offer. Erejuwa Gbadebo, CEO, International Real Estate Partners (IREP), says demand also comes from corporates who would rather pay for short-let apartments for  their expatriate staff than pay annual apartment  rents, noting that this has also led to the growth of this market.

These short-let apartments are found in places like Ikeja GRA, Victoria Island, Ikoyi, Osborne Foreshore, Lekki, Festac Town, etc all in Lagos. In Abuja, they could be found in such expensive locations as Maitama, Asokoro, Wuse, etc while in Port Harcour they are found in Old GRA and Trans-Amadi.

“These are locations where house prices are quite high and the young professionals who cannot afford such prices yet want to have a feel of such locations go for short-let apartments”, explained Azubuike Unigwe, Managing Partner, Unigwe and Co, a firm of estate surveyors and valuers.

Another major reason is the affordability of rents charged. BusinessDay checks reveal that apartments are cheaper compared to hotel room rates.  A two-bedroom serviced apartment, for instance, at 1,004 Estate in Victoria Island, Lagos costs N35,000 per night on short-let, while a standard hotel room costs an average of N60,000 per night within the same neighbourhood. A two-bedroom apartment at the estate sells for N45 million to N50 million.

In Festac Town where UPDC offers serviced short-let apartments at its The Residences, a two-bedroom apartment sells for N65 million, but the short-let goes for N30,000 to N40,000 per night. Golden Tulip Hotel, in the same ‘compound’ with The Residences charges between N50,000 and N60,000 per night.

In Ikoyi, a two-bedroom apartment lets for average of N50,000 per night, while at Parkview estate, ikoyi it costs an average of N40,000 for same size apartment with clients expected to pay a minimum of one week duration. This is a location where the minimum rent for a three-bedroom apartment is between N20 million and N25 million per annum.

 CHUKA UROKO