Why upscale locations are viable investment destinations

The decision to invest in real estate often comes off as a difficult task and becomes all the more difficult when the decision is about where to invest and why.

As a capital intensive asset class with long gestation period, real estate scares a good number of potential investors  and their case is not helped by their ignorance of locations that are investment destinations and also at what time investment should happen.

Real estate industry experts advise that prospective investors should not do it on their own but seek advice and guidance from professionals and industry operators who have knowledge, experience and expertise to guide them through.

At the June edition of the Real Estate Investors’ Series hosted by Fine and Country West Africa International in Lagos at the weekend, John Strang, the company’s Managing Director, advised that prospective investors should work with credible and qualified real estate professionals to help with the process.

He also listed a developer with track record of successfully executed projects, finance managers and mortgage providers, accountants, lawyers and insurance brokers as other good guides for investors.

John who spoke on ‘Where to Find the Best Value in Lagos Real Estate’, highlighted the strengths and opportunities in investing in upscale locations in a city like Lagos, pointing out however, that such locations also have their weaknesses and threats to investment.

Ikoyi, for instance, is an investment destination and its strength lies in its excellent location, ease of obtaining approvals for development based on precedent, high rents and return on investments (ROI) based on high demand, its internationally recognized and accepted location increases value perception, and the area has the highest office rents in Nigeria.

Strang pointed out high cost of land and approvals, restriction of building to high rise apartment to maximize land use, the need for an attractive design and layout of the project based on competing developments within the axis, and lack of storage rooms and individual green areas as some of the weaknesses of the area.

Though there are opportunities which include ease of rental from a large pool of prospective homebuyers (both locally and Nigerians in Diaspora) who would rather buy outright a finished product that meets their immediate needs in Ikoyi, there are also threats of construction challenges leading to delay of delivery.

An investor wishing to invest in Victoria Island, another highbrow location in Lagos, will enjoy the benefits of excellent location, ease of obtaining approvals for development based on precedent, high rents and return on investments (ROI) based on demand, and a wide mix of support service companies.

Opportunities in this location include lack of good quality residential and commercial space which commands high demand, and there are many corporate entities and individuals that want to own properties close to their offices. The weaknesses of this location are poor parking, traffic congestion, lack of supporting infrastructure, high cost of land and approvals, buildings are restricted to high rise apartment, and availability of land for residential development is extremely low here.

Investment in this location is threatened by the development of the Eko Atlantic City in the next seven to 12 years. This is considered a major threat to the continued prosperity of this location.

In her brief remarks at the event, Udo Okonjo, Fine and Country’s Chairman/CEO, informed that the investors’ series was part of their functions as a real estate marketing and advisory firm, adding that a lot of people, for lack of information, fail to ‘grab’ opportunities within their neighbourhood.

She added that the series, which provides answers to who, where, when, what and why (5Ws) on investment, is a forum through which her firm provides information on investment, stressing that investment is for everybody irrespective of age or gender and that the time to invest is now.

CHUKA UROKO

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