Rewane: Lack of effective demand widens housing vacancy factor

AMIDST the estimated 22 million accommodation deficit in the country, lack of effective demand for housing units may widen vacancy factor in Nigerian cities, Managing Director, Financial Derivatives Company (FDC), Mr Bismarck Rewane, has said.

Giving the real estate’s update for quarter two (Q2)  2021 in the  May edition  of LBS Executive Breakfast, Rewane pointed out that lack of effective demand for housing units  would be driven by weak consumer disposable income in May,2021.

He also predicted likely revision in rent payment as building and maintenance costs soar.

Nigerian Tribune’s field survey has shown that the price of a bag of 50-kilogramme of cement has been jacked up to N4,000  from N3,700 last weekend  in Lagos. In locations such as Port Harcourt, Owerri, Enugu, Asaba and Aba among others, a bag of cement of any brand costs N4,500.

Logistics, general inflation and forex issues have been adduced by major manufacturers as factors responsible for hike in cement price in the country.

Decrying high cost of accommodation in high-end locations such as Ikoyi, Lekki and other choice locations, Rewane said there has been  increased preference for cheaper options like one or two bedroom apartments particularly on the  Lagos mainland.

He also noted the rise in serviced apartments and condos in the Lekki – Ikate – Ajah axis

According to a report, it’s estimated that over 5,000 properties in Lagos are unoccupied due to over-pricing and high agency fee. In Abuja, the number of completed and vacant houses are over 30, 000 notwithstanding the high number of slum settlements dotting the city.

This is also linked to high rental fees irrespective of the efforts by successive and current administration to provide affordable homes for low income earners.

On commercial real estate, Rewane foresees hotels, luxury apartments, shopping malls, clubs, event centres making a comeback as CAOVID restrictions ease

According to him, this comeback would support the recovery in accommodation and food services sector, warning that weak demand remains a threat

He also predicted increase in shared office space as companies look to minimise operating costs and maintain skeletal work from home strategy

The managing director of FDC stated that construction of high rise commercial buildings in VI and Ikoyi would continue in Q2.

However, despite the nation’s economic downturn and the COVID-19 pandemic, report of the Nigerian Institution of Estate Surveyors and Valuers (NIESV)’s Lagos Property Market Consensus Report H1 2020, stated that land, rents and house prices maintained upward trajectory.

According to the field survey carried out on cost of lands, rental and sale values of residential and commercial properties in Lagos’ Property market, Banana Island, Old Ikoyi and Victoria Island recorded the highest prices.

Banana Island, Ikoyi and Victoria Island also recorded the highest rentals for office spaces in the state, while Ikeja GRA maintained the lead on Lagos mainland property market

On the other hand, Lagos Island, though situated in the same zone with Banana Island and home to the highest offices and businesses, recorded low rental cost of N22,413 per square metre (sqm).

The report attributed poor infrastructure to low rental cost and property values in Lagos Island Central Business District.

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