Greed, PIB fingered for over 60% vacancy rate in Ikoyi housing market
Among the many factors, including competing alternatives, the construction of the Lekki-Ikoyi Link Bridge and what Hakeem Oguniran, UPDC’s MD, calls ‘concrete jungles’, which account for the high vacancy rate estimated at 60-70 percent in Ikoyi housing market, greed and the lingering petroleum industry bill (PIB) have been identified as major contributors to the situation in this upscale market.
Ikoyi, a highbrow location in Lagos, is one of the most expensive property markets in Nigeria along with Asokoro, Trans-Amadi and Victoria Island in Abuja, Port Harcourt and Lagos respectively where house prices and rents are not only out of reach, but also dollar-denominated in some cases.
Ikoyi is where investors, developers and landlords ask for about N260 million price for three-bedroom apartment, $150,000 per annum as rent for the same apartment size, and $200,000 to $350,000 for a square metre of land in places like Osborne Foreshore and Banana Island.
In its recent report on the Lagos property market, MCO Real Estate noted that Ikoyi is part of locations in Lagos where prime residential apartments’ sale prices start from 100 million, an equivalent of US$600,000, and according to Munachi Okoye, the company’s CEO, prime rents in these locations have remained as high as US$1,000 per square metre for commercial office, about US$900 per square metre for retail space while room rates for prime hotels range from $300 to $500 per night.
“Obviously, there are many vacant houses in Ikoyi and a major reason for this is that our people at a point became very greedy. Some of them started asking for $150,000 per annum for a three-bedroom apartment. So, immediately the Ikoyi-Lekki Link Bridge was done, many people realized that in Lekki, they could get a similar unit at half the price and that was it for the Ikoyi mansions”, Omochiere Aisagbonhi, President/CEO of Omais Investment, confirmed to BusinessDay in an interview.
To Aisagbonhi, the situation in Ikoyi is a welcome development, explaining that it is part of the many things that have happened in the property market in the past three to four years that are giving power back to the consumer. “If you have money, you determine what you want to pay unlike in the past when the seller dictated the price. Now, there are many products in the market and so, it is buyer’s market. In Ikoyi, it is the tenant that determines what rent he wants to pay”, he emphasised.
The continued delay in the passage of the PIB has impacted negatively on the activities of oil companies who are the main demand drivers and buyers of Ikoyi houses. These companies are no longer investing in Nigerian market and a lot of them have downsized their operations, making them look at how to reduce cost at that level.
Femi Akintunde explained to BusinessDay in an interview recently that a lot of these companies are monetizing their staff housing benefits. “Workers are given enough money to look for their own accommodation and that has further compounded the problem of demand for Ikoyi houses”, he said.
There are however, some developers and investors who are getting on well in this market because they have decided to de-emphasise profit motive in deference for customer satisfaction and value addition.
“Investor’s greed is not in our system; for us, if there is cause for us to make N30 million and we can make 10 percent profit from that, which is N3 million, I think that will be okay for us. If the cost of a property is, say N35 million, and we find a way to bring down the cost to N30 million and our profit there is N3 million, I think a wise customer would patronize us”, Richard Nyong, the CEO of Lekki Gardens Limited, told BusinessDay in an interview.
Lekki Gardens is a new revelation in the Nigerian property market, breaking grounds and providing values for all classes of home buyers through a housing model that has dismantled class and entry barriers to home ownership such that Ikoyi homes are no longer for oil workers alone.
“The focus, for us, is always on how to find a way to win for our customers. Our concern is not much on how much profit we make but what is best for the customer. This has been the kind of question we ask all through our research, purchase, negotiation, construction plan, etc. So, at the end of the day, we are looking for every creative way to save the customer’s money”, he assured.
CHUKA UROKO