Multi-family housing units top consideration as developers review project portfolio

Top on developers’ considerations as they review their project portfolios to reflect current economic realities are multi-family housing units or flats, which, they reason, make more economic sense, a report on housing development, has revealed.

Flats make up over a third of all new housing units delivered annually into the market, giving it the largest share over other house-types and the developers say this house-type also makes more economic sense to them being more profitable, and they take up less built-up area per unit and also attract quicker sales than the more elaborate single family units.

“Developers, depending on the size of land available, often want to utilise the full value of the land to the last penny,” explains Omorotimi Akinlose, MD, Residential Auction Company (RAC), adding that they often encourage architects to come up with designs that can provide as many units optimally possible to increase the bottom line.

Some developers have a tendency to adhere to the construction of one particular house-type like Lekki Gardens, a new generation residential property developer that has taken the property market by storm with its predominantly blocks of flats estates in various parts of the country.

Some developers such as UACN Property Development Company (UPDC) plc, Nigeria’s leading real estate investment and development company, are more open to the idea of integrating various house types, that is, flats, terrace, maisonette and semi-detached on a particular site so as to cater for different segments of the market and households.

“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 such as the United Kingdom and United States of America are now a fast growing trend amongst local developers looking to attract a younger generation of clients that favours 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.

“Bungalows are the least considered house-type among developers today,” Akinlose notes further, and that is presumably because they provide low profit margins. Developers that embark on constructing these units are mainly targeting the low-end segment that seek affordable mass housing in usually out of town locations where land values are relatively low.

A typical example is the Teju Royal Garden, a 1,000 housing unit estate sitting on 102 acres of land, where one-bedroom and two-bedroom bungalows sell for N2.5 million and N4.5 million per unit, respectively.

The estate with an estimated cost of N2.7 billion, offers different house-types including 100 units of one-bedroom bungalows; 200 units of two-bedroom bungalows and  450 units of detached and semi-detached three-bedroom bungalow giving a total of 750 housing units for the first phase of the project.

In the last 12 months, Lagos has seen quite a good number of houses delivered to its market. It is estimated that 3,929 new units were delivered into the market last year 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 to have the largest proportion of new housing units.