Growing interest in short-let apartments swells investment appetite

Changing investment strategies resulting from relative lull in the high-end market has seen considerable rise in investors’ appetite and interest moving in the direction of short-let apartments business.

Generally seen as an escape from dull moments and an alternative source of income for upper-end property developers, short-let apartments have evolved as new trends whereby serviced apartments are given out for short stay by high-profile guests.

Seyi Okanlawon-Peters, managing partner, Shayonn Estate Agency, disclosed to BusinessDay recently that in Lagos, these short-let apartments are found in highbrow areas such as Ikeja GRA, Oniru, Lekki, Victoria Island, Ikoyi and Osborne.

Analysts see this as a welcome development, noting, however, that as an abridged version of the hospitality industry, it one way or another impacts the bottom line of hotel operators whose occupancy rate is being challenged.

According to them, a number of factors which are social and economic are driving the growth of this mini-industry, and the shortfall in luxury hotel rooms in city centres such as Lagos and Abuja for high-profile clients is a major issue.

This class of clients includes expatriates, top government officials, business executives and consultants to blue-chip companies who come to these cities frequently for business transactions and leisure.

An unconfirmed report has it that there is a growing apathy towards branded hotels in recent times, which is linked to security reasons, and this has also contributed to an increase in the patronage of short-let apartments by clients.

Another factor driving this growing appetite is the comfy nature of these serviced apartments, Azubuike Unigwe, managing partner, Unigwe and Co, a real estate firm, said.

“These serviced apartments are basically homes away from home because they offer virtually everything you can get from a home ranging from a living room, dining area, laundry space, a kitchenette, etc, unlike a hotel room,” he said.

According to him, most expatriates, top executives and consultants to blue-chip companies who wish to stay in town for a week or more prefer these serviced apartments because of their comfy nature which most hotel accommodations lack.

He also highlighted the privacy that comes with these short-let apartments which elude these clients when they patronise some hotel brands as another attraction.

Investigation by BusinessDay revealed that these apartments are also cheaper compared to hotel rooms which are quite high on these highbrow areas. It is such that a two-bedroom apartment at 1004 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 three-bedroom apartment in the same estate also costs N35,000 because of low demand by clients who always opt for two-bedroom duplex where they are expected to pay for a minimum of three nights.

In Ikoyi, a two-bedroom apartment lets for an average of N40,000 per night, while at Parkview Estate Ikoyi, it costs an average of N50,000 for the same apartment with clients expected to pay for a minimum of one week.

Other houses such as a four-bedroom fully-serviced pent houses for top executives in some parts of Ikoyi cost as much as N19,000,000 per annum.

“Another reason for the growth of short-let market is the flexibility enjoyed by guests when compared to hotel rooms,” Okanlawon-Peters said, listing some of these as the accommodation of guests’ relatives and friends which would not be allowed in a hotel room.

To him, this is also a quicker way for developers to earn income from their properties while they retain the ownership of their houses which are assets. He also sees it as an opportunity for a significant growth of the short-let market, pointing out that developers are already gearing up for the expansion of the market with projects such as the Eko Atlantic City in view.

By: ODINAKA MBONU