Stand-alone residential houses outperform apartments in H1’16

A cursory look at the growth in capital values in Lagos housing market in the first half of this year (H1’16)  generally shows that price of stand-alone houses appreciated faster than that of flats, pointing to a cultural preference. While prices of three-bed apartments dropped in Lekki Phase 1, Magodo, 1004 Estate and Ikeja GRA, the prices of four-bed houses grew in these locations.

These growths were occasioned by the rising cost of land in those locations and since four-bed houses sit on dedicated land, it follows that the price of the houses may rise quite commensurately as against the case of apartments which have housing units stacked on a smaller land area.

 “The economic hitches currently experienced in Nigeria became apparent in 2014, but land values have continued to rise fairly steadily in Ikoyi, Lekki Phase 1, and Ikeja GRA between 2014 to 2016”,  explains Tayo Odunsi, Director, Real Estate Advisory at Northcourt Estate.

Values appreciated considerably in some locations in Lagos during the period under review. Odunsi informs that values went up 9 percent in Ikoyi, selling for N328,000 or $1,160 per square metre, up from N300,000 or $1,500 per square metre,  and Lekki Phase 1 also appreciated 20 percent to N150,000  or $530 per square metre, up from N125,000 or $620 per square metre, but VI declined 30 percent to N300,000 or $1,060, down from N430,000 or $2.18 per square metre.

His company’s  half year report on the Nigerian real estate market notes that on the surface, residential real estate seems to be clouded by news of forced sales, declining prices and rental defaults.

“This is true in a lot of locations and scenarios, however, the housing survey conducted shows a healthy vacancy level in most low and mid-market locations, especially in Lagos and Port Harcourt. It becomes apparent that the high-end locations in any part of the nation are the ones on the receiving end of the economic decline”, the report says.

Odunsi notes that the price appreciations seen in his survey report does not however infer buoyancy of the market, stressing that market players all chorus the dryness of the sector, reduced sale and lease transactions as well as a reduced development pipeline as fewer developers are still actively constructing new homes.

“Considering there are fewer buyers looking to buy homes, developers who offer superior quality, payment plans, unique house features and other inducements are more likely to sell faster than those offering plain vanilla. Off-plan sales have almost totally dried up; only the consistent and big developers are able to attract prepayments in a bearish period”, he says.