Multi-family homes: Big growing trend for real estate investors
Globally, the big and growing trend for real estate investors today is the development of multi-family units that bring together a large concentration of families who share recreational, shopping facilities and other infrastructure in common.
There could be other reasons, but in Nigeria, the main reason for this trend is economic. The economic recession which the country went through between 2015 and 2017 left bitter lessons for families whose basic needs, including housing, has been redefined with a lot of them favouring smaller units.
Demand for housing, therefore, has shifted from mansions and stand-alone duplexes to flats and apartments. As a result, investors looking at residential property are, increasingly, looking at multi-family housing, retirement housing and students accommodation.
Though still at low level stage in Nigeria, global student housing investment volumes, especially in the Western World, have risen by 87 percent in the last five years, according to a research conducted by the international real estate firm, Savills. The research points out that global need for multi-family, co-living and retirement housing offers opportunities across all jurisdictions, and are, particularly, under-invested asset classes in the UK.
In Nigeria, investors are keenly taking interest in this trend which, according to Obi Nwogugu, Principal at African Capital Alliance (ACA), one of Nigeria’s leading and well capitalised private equity firm, is a response to market demand and also to the state of the economy.
Together with Elalan, an old generation and reputable construction firm, ACA is doing one of the most ambitious residential developments in Nigeria today that hopes to deliver to the market over 500 apartment units in five high-rise blocks comprising 1,2 and 3-beroom apartments with retail facilities in Lekki Phase 1, Lagos.
Alone, Elalan is doing a multi-unit development, the 4-Bourdillon, which is a 25-floor building that will deliver ultra-luxury apartments in an exclusive, upscale location in Ikoyi, Lagos.
Omorotimi Akinlose, MD, Residential Auction Company (RAC), has other reasons for this trend which are, largely, tangential. “Developers, depending on the size of land available, often want to utilize the full value of the land to the last penny”, he explains, adding that they often encourage architects to come up with designs that can provide many units optimally possible to increase the bottom line.
“This trend is now very common in the market for developers to adopt”, Akinolse notes, explaining that the emergence of terrace, town-house and maisonette house-types commonly seen in the western markets are now a fast-growing trend amongst local developers looking to attract a younger generation of clients that favour such house-types rather than the conventional detached and semi-detached house-types. Like flats, these house-types also take up less built-up area, making them cost-effective for plot sizes.
In the last 24-36 months, Lagos has seen quite a good number of houses delivered to its market. It is estimated that over 3,929 new units were delivered to the market a couple of years ago and of this number, 3,203 units, representing 82 percent, were located in Lagos Island and of this too, 2,579 units, about 66 percent, were located along the Lekki-Epe axis, making this location have the largest proportion of new housing units.
The good news for investors here is that the demand for small unit apartments, especially 2-beroom, is not only huge but positively effective. This is driven mostly by short-let accommodation business which catches the fancy of young professionals and expatriate staff of corporate organization on business trips.
For off-shore investors, Propertywire, an online residential property portal, says this trend offers compelling business opportunities, adding that, in its city-by-city data analysis of the trend, Student-Marketing, an independent provider of student housing and micro living research and data, has identified that provision is lowest in Rome, with a student population of 220,500, but only 6,500 student beds, a provision rate of just 3 percent, followed by Porto at 3.5 percent, Florence at 3.8 percent, Barcelona at 4.9 percent and Madrid at 5.7 percent.
“These cities, therefore, offer the best immediate opportunities for investors, says Savills, as many have strong international student populations, indicating a solid supply base, and high average purpose-built student accommodation (PBSA) rents”, the portal says.
CHUKA UROKO