Owing to other factors not limited to prolonged economic hardship and low purchasing power, landlords and tenants have been caught in the web of race for smaller apartments. Dayo Ayeyemi reports
There is a shift in the demand for accommodation in the real estate market as many landlords are converting their three and four bedroom apartments to one room, room and parlour self-contain and two bedroom apartments in Lagos metropolis.
In high-brow Lekki, Victoria Island and Ikoyi, investors and real estate developers have suddenly discovered that demand for housing units lies in studio apartments- one bedroom and two bedroom flats- in order to secure high return on investment.
For tenants, desire to cut cost and save money to meet other needs is driving high demand for smaller apartments.
Investigation shows that factors such as economic downturn, low purchasing power, huge unemployment, high cost of living and high rents are responsible for demand for small/smaller residential apartments.
A landlord at the Ipaja area of Lagos, Jonathan Oludayo, said he made more income as rent from the two units of one room and parlour self-contain.
He narrated how he converted his vacant 3-bedroom apartment to two units of smaller apartments, saying that apart from being empty for almost one year, no accommodation seeker was ready to pay N300,000 as rent.
According to him, an architect friend advised him to convert the 3-bedroom flat to two units of one bedroom and parlour apartment each, which he heeded.
Today, Oludayo said he collects N200,000 on each apartment.
Another landlord, while narrating his experience, said that rental values for one room and parlour apartment in Omole Phase I and II, Magodo, Maryland, Ogba, Ikeja, OPIC and Arepo in Ogun State cost between N250,000 and N600,000.
According to a tenant in Ogba, who identified himself simply as Festus, with a family of four said there is no need for paying high rent on big accommodation when his monthly salary was low.
He said that one room and parlour where he paid N200,000 yearly as rent had eaten deeply into his savings, as he has other obligations to meet.
Another house seeker in Lekki said that small apartments had become hot cake in the area as young couples, whose workplaces are in Victoria Island and Ikoyi jostle for the few available accommodations.
He pointed out that huge demand over supply for studio apartments- one bedroom and two bedroom flats -had created scarcity of the products.
Rents for two bedroom boys’ quarters in Victoria Island and Ikoyi cost between N1.2 million and N2 million per annum.
In his report on ‘Real Estate Outlook for 2019’ which was released early in the year , Managing Director, Northcourt Real Estate Limited, Mr. Tayo Odunsi, confirmed that studio apartments, near city centres have continued to enjoy demand and there has been a shift by some developers in favour of these categories of apartments.
He pointed out that the rising demand for short let apartments would lead to more conversions, giving developers one more reason to shift focus from bigger houses to studio apartments.
“This would have the dual benefits of meeting the existing demand while maintaining cash flow for developers,” Odunsi said.
Lagos-based estate surveyor, valuer, and facility management practitioner, Mr. Stephen Jagun, said that people had been cutting down on excessive space they occupied, either as new tenants or old one, hence, the need for supply to follow the trend.
He noted that there were instances where people leased a room where they stayed during the weekdays and travelled to meet their families at weekends.
“So if smaller accommodation is available directly in the market, they’ll take it; because the fellow you are paying rent to may not pay his own rent or the owner frowning at sub-letting,” he said.
According to Jagun, starters do not need all the luxuries, hence their preference for one bedroom and two bedroom flats.
Jagun added that expatriates, who are on short stay, also preferred studio apartments for their privacy and business.
This choice of apartment, the facility management expert said, has provided another vista of opportunity for real estate developers.
An estate surveying practitioners and Director in one of the offices of the Lagos State government, Mr. Kunle Awolaja, attributed shrinking economy as the main factor coupled with citizens’ low purchasing power.
The trend for smaller apartments, Awolaja said, might not necessarily reduce rent on the types in focus, but would produce shifts in accommodation types required as tenants would move from detached houses to smaller apartments.
Despite this, he said the shift in accommodation would not reduce nor solve accommodation problems as demand would increase for the smaller apartments, “which will result to the bigger apartments being redesigned and remodeled to the lower ones.”
Another estate surveyor and valuer, Mr. Lekan Akinwunmi, explained that conversion of big apartments to smaller ones was to meet the need of people, adding that demand is the driving factor.
According to him, rental values of these accommodations could not be reduced due to limited supply and inflation on building materials.
Besides, he said: “People also want to maximise space; so space management comes in.
He is of the opinion that the trend would reduce accommodation problem.
Justifying the shift, a member of Town Planners Registration Council Of Nigeria (TOPREC), Mr. Moses Ogunleye, pointed out that smaller apartments were easier to let out.
He said: “People now believe it is wise economically to live in smaller apartments with the rise in rents.
“Again, studio apartments, self- contain or one bedroom apartments are in high demand on the island or Ikoyi and parts of mainland because of those with small families who wish to live in such places.”
Ogunleye also noted that some developers were taking advantage of those who work in Lagos Island but who also have their primary homes in far places and need second accommodation during the week.
“This is done to ease commuting to work from various parts of Lagos metropolitan area,” he said.
A former Publicity Secretary, Nigerian Institutions of Estate Surveyors and Valuers (NIESV), Mr. Richard Olodu, pointed out that on the hierarchy of investment, real estate came fifth on the ladder, while one bedroom apartment fitted firmly at the top on the hierarchy of real estate investments.
“That’s the natural demand response for the real estate industry. Small apartments are on highest demand,” Olodu said, adding that seven out of 10 renters and buyers all over the world need a place to lay their head.
He stated that larger percentage of Africa and Nigeria were youths and that Nigeria was reputed to have the youngest population on the planet at the moment, noting that the young people, singles and single seniors, including aliens would need one bedroom apartment.
“They’re in the larger percentage of the market,” he said.
However, Olodu emphasised that the tendency to have small apartments was not a barometer for rent reduction or rent increase since each investment type existed within its market segment and impacted it squarely.
“You will discover that small apartments command the highest rent per square metre in any location across the country due to the pressure of demand and the position on the hierarchy,” he noted.
Any trend that will help Nigeria solve housing deficit of 17 million units in the next 20 years should be supported by government and the private sector.
Credit: New Telegraph