LANRE ADEWOLE engaged industry-veteran, Mr Laide Osikoya, Managing Partner of Laide Osikoya and Associates, for his views on peculiar and general challenges in the real estate sector. Despite major project partnership with Lagos State Government, he was candid enough.
Recently one of your colleagues said the estate business in Lagos has moved from seller’s market to buyer’s market. Does this hold true across board?
This is not absolute in the sense that it depends on some factors which include the type of property and the reason for the transaction. We need to discern between a property going up for sale and one for lease. Location is another factor, as well as other special features. In terms of transaction, generally, when it comes to property which is for sale, in most cases, it could be the buyer’s market, in the sense that we have a downturn in the economy now and most of these property owners need to meet their expenses and so, sometimes they are forced to sell at ridiculous prices and when a willing buyer comes up, he is opportune to dictate the price so to say.
If it is not ridiculously low, the seller may be willing to sell. In such instance, you can say that for some of the properties going up for sale, it has become a buyer’s market. But in some other instances where the properties are for let, particularly for residential accommodation where we still have very high demand which has outstripped the supply, it will not be right to say it is the prospective tenant’s market. It would be that of property owner’s market, because demand is still very high and supply is low.
Even for properties for sale, it depends on location. In sought-after locations like Magodo by prospective buyers, we still have a situation where the supply is rather low and demand so high. Even in this economic downturn, we still have a situation where property value is going higher by the day.
Is there a property doom right now, especially on the Lagos Island where properties are not patronised for years?
It is not a doom, but a small recession. Our housing needs have not yet been met and obviously every human being still desires to have a shelter. What I think will happen is that most property owners may be more reasonable on the prices being fixed on their properties. What I have discovered over the years even when we had recession in the past is that property values have never drastically dropped. It only maintained an equilibrium level and before you knew it, it picked up again. What is happening now is that there is a recession now, there is going to be an equilibrium level until the values pick up again.
So which stakeholders will this recession be a blessing to?
It should be a blessing to property investors who have good money to invest. The only thing to do is change their design pattern. For instance, if you have been developing duplexes, detached houses, you can seize this recession opportunity, buy a lot of land, develop properties with lower types of accommodation, like luxury two or three bedroom flats, mini-flats, because obviously people of this class are like to be more in demand now than those of higher class that will demand for duplexes. It is for those who could look beyond when the economy will pick up.
Lagos Island is fast becoming a failed project with the mass movement to the Mainland. What went wrong with the idea?
I think many factors. First, the purchasing power of the people in this recession. Generally, property values are higher on the Island than Mainland. That has affected the decision to relocate to Mainland. Two, with the present cost of fuel now, I think it would be most rational for someone living in Mainland to now have his office in Mainland. Even if you live on the Island and have your office in Mainland, you still safe a lot of fuel, because you are driving against traffic when coming and going. Particularly for those in Lekki and Epe axis, it could also become rational for you to come to the Mainland when you think of the maritime effect of that location, because the whole place is always flooded during the rainy session inspite of the high value. With all these factors, more people are finding it ideal, much more safe and wise economically to move to the Mainland.
Does that means property business on Island has no future?
It does. What I conceive happening is a change of use. Rather than for residential, the properties are likely to be used more for commercial purposes which would be beyond just office space. For instance, experts have estimated that the whole of Lekki axis is far better for farming than what it is being used for now. Look at the Lekki Free Trade Zone, a lot of commercial activities are going on there, not necessarily offices, though we know that some residential properties may be built around there, for easier access to the zone for the commercial activities. The challenges there right now doesn’t mean low activities on the Island, only that there might be a change of usage focus.
Is government intervention in the property sector killing or helping your business, especially when you add all the known vices in government’s end to the bad eggs in the private sector?
Unfortunately, the Lagos State Government has not effectively utilised the Land Use Act, 1978 which vested the ownership of land in state government. If it had been effectively utilised and managed, I think housing for all should be more realisable than what it is now.
Even access to land by developers, individuals, companies, would have been made easier. So, what the government needs to do is to go and look at the Land Use Act, study it well and try to adhere strictly to the provisions to ensure that accessibility to land is made easier. I know the Lagos State Government is trying with the mortgage system whereby people can access fund for housing and the Omo Onile issue you mentioned, as at today, it is still happening, unabated and there isn’t serious government measure to control this, such that people find government properties much more secure than private, whereas by the Land Use Act, the management of every land should be that of state government, because the Act gives the state government the prerogative of occupancy on every land.
There is a task force recently set up to combat the Omo Onile syndrome and Governor Ambode’s Chief Security Officer (CSO) is a member. If you claim their harassment is still happening unabated, does it mean government is just paying lip service, considering the rumour that the Omo Oniles are party loyalists who are untouchable?
I don’t want to believe so because the government is also aware of the pains of property developers go through in their hands and government wants to curb it. But the fact remains that these Omo Oniles have become a kind of enigma and it would require serious well-armed, much more in number of security forces to combat them because as at today, if you still report their case to the authority, the case will be taken up which means the government actually wants to do it, but perhaps there isn’t the wherewithal to combat them.
Why is the widespread mindset of an average estate agent being fraud?
Unfortunately, I think it is still our system, talking generally now, that has not regulated properly the practice of all professions, not just in the real estate, such that somebody can wake up tomorrow and just put a board right in front of his house, maybe he is a shoemaker and say ‘I have properties to let, I’m an agent’ and once anybody sees this, he approaches him and transaction is effected and along the line, there could be some fraudulent acts and yet you would still adduce it to an occurrence in this sector.
But in a situation whereby it becomes an offence to even use the word ‘agent’ if you are not a registered estate surveyor and valuer like we are, which has a body recognised by the Federal Government and have this enforced, we will continue to have this kind of situation.