Low activities define property market despite approaching elections

Contrary to expectations that Nigeria’s property market would be characterised by high transactions in a pre-election year, the market is currently clouded with low activities even as preparations for the next general elections in 2015 continue to gather steam.

The country’s highly rewarding real estate market which boasts of about 10 to 20 percent year-on-year capital appreciation on prime properties have continued to hold sway as one of the surest investment haven for savvy investors including politicians whenever they need lush funds.

However, with barely four months to the general elections, activities in the market have remained sluggish, defiling analysts’ earlier prediction of an expected vibrant market, where choice properties will be rushed into the market at relatively low prices, as pressure to raise funds among the political class mounts.

“Activities in the property market have remained quite slow and sleepy against earlier predictions,” Olumide Olutimayin, managing director, Axora Home Limited, a property vending firm, told our reporter in an exclusive chat.

Olutimayin recalled that with four months to go in other pre-election years, the market ought to be ‘boiling” with activities as some politicians move to dispose their assets in a bid to fund political campaigns and other election related activities.

This, he affirmed, has not been the case this year, suggesting that the political class might not be finding real estate as lucrative as they did before now.

Okechukwu Iwuagwu, a director at O-macconi, a real estate firm, disclosed that though there have been some members of the political cycle showing signs to dispose their assets, the demand has been almost non-existent.

“While we have seen some members of the political class willing to sell off their assets, the demand is really low because these properties are high-end properties and cost a fortune to acquire,” Iwuagwu said.

He was, however, optimistic that as the year winds up the thirst for liquidity will eventually compel investors or politicians to down prices so they can fund elections, finance leisure trips or re-invest in other surging sectors in the new year.

This, he presumes, should increase activity in a market he says is yet to live up to expectation in a pre-election year when compared to succeeding pre-election years.
“Though the market seems to be dragging currently, we expect some activities as the year winds up when investors would be re-evaluating their assets and seeking to diversify to other buoyant sectors of the economy,” he enthused.

BusinessDay investigations reveal that prices at the market remain quite high. For instance, a plot of land measuring 6,794sqm in a waterfront location on Banana Island is currently selling for as high as N1.9 billion, meanwhile the asking price of a 3,600sqm land on Glover Road, Ikoyi is N900 million. Likewise, a 1,315sqm of land on Alexander Avenue, Ikoyi sells for N400 million, while a 7-bedroom mansion on Lekki phase 1 is placed at N600 million.

“There has been a sudden spike in the number of new plots coming into the market for sale as the elections are fast approaching,” Rotimi Akinlose, managing director, Residential Auction Company (RAC), a real estate research firm, confirmed to BusinessDay in an e-mail response to questions on possible impacts of the election on the property market.

Akinlose maintained that though he is unaware of the personalities behind the new plots, there is a clear indication that some politicians or people within the political circle are bracing up for next year’s elections and ready to off-load their assets to raise needed funds.