Luxury property market in bearish run as supply glut persists

Despite a brewing confidence in the country’s property market in recent times from foreign and local investors, property sales in the high-end section of the residential market has remained visibly sluggish with few sales and renting recorded by luxury property owners.

The market which consists of condominiums and mansions located at highbrow areas of Lagos such as Ikoyi and Lekki-Epe corridor and Abuja are specifically built for the elite, costing between N100 million to N250 million and above depending on the finishing and facilities available.

“Recently, it has been challenging for high-end property sales in most neighbourhoods such as Ikoyi axis, while demand has soared slightly for cheaper properties within the N40 million-N60 million range,” Olumide Olutimayin, a Lagos-based property consultant, said.

The lull in the market could not be unconnected with the harsh economic condition in the country, as most property buyers are financially constrained to purchase expensive properties, despite the availability of these properties, analysts say.

“Though the demand for luxury apartments has remained relatively high, the capital to buy these houses when delivered has become a major challenge and this has, in more ways than one, stunted the sector’s growth,” Ayo Olamiju, a real estate surveyor and valuer, also confirmed to BusinessDay.

According to him, the out-going year did not really deliver the goodies as expected because of the poor state of the economy; it was very difficult closing deals even when property prices were lowered to entice buyers.

However, Okechukwu Iwuagwu of O-maconi, a real estate firm, believes that only properties not offering a commensurate value for their prices might not have attracted buyers.

“Luxury apartments are bought and rented by the affluent and this class of people desire a certain taste, but once they can’t find a property that meets their taste, they won’t pay for such properties,” he explained.

For Tunde Gbdamosi, the developer of Amen Estate, an uptown estate in Ibeju-Lekki, the opening of the Lekki Free Trade Zone (LFTZ) has helped to boost the market as investors now consider the estate a new haven for luxury living.

While the slow pace in the market persists, analysts fear that it might continue in 2014 as the election year nears because the elite, who are major players in the market space, would be seeking liquidity rather than investing.

By: ODINAKA MBONU