Nigerian realtors have called on all stakeholders to ensure in-depth and thorough market research if the challenge of vacant houses littering the nation’s landscape would be effectively tackled.
Presently, vacancy rates in major Nigerian cities including Lagos, Port Harcourt, Abuja, and others have been on the rise.
According to them, many developers go into housing developments without undertaking extensive market survey and research, which would have helped them to determine the housing preference of the market.
Some, they added, still build based on their preconceived notion without subjecting such to critical review of the industry’s market. Hence, more houses are hitting the market but the would-be buyers lack the power to purchase them.
To avoid this, developers and real estate investors like other businesses should be proactive and futuristic in concept, planning, financing, development and construction, Mr. Bode Adediji, former president, Nigerian Institution of Estate Surveyors and Valuers (NIESV) has said.
According to him, if a developer goes to a bank to borrow money to build luxury estate for a class of people that are no longer available or dwindling, then such developer is courting crises from day one.
“On a specific note, the way I see the country and, particularly Lagos State, is that they have failed to embark on complementary services that would encourage private sector participation in real estate development.
“There are things the government ought to have done to provide an enabling environment for the private sector to ensure that whatever product is rolled out by the private sector, the burden of infrastructure development should be taken away from them.
“Such infrastructural provision of power supply, road network, and water adds cost on the final product and by extension, it becomes unaffordable to some categories of tenant that would have expressed interest on such product” Adediji added.
To Professor Olugbenga Nubi, of the Centre for Housing and Sustainable Development, University of Lagos, lack of pre-investment market research to determine class of properties with effective demand has been discovered to be the major factor.
According to him, it was dangerous and counter-productive to draw a conclusion on reasons for vacant properties without scientific research.
He pointed out that most property’s investors were building 4 bedroom duplexes where the need was for studio and 2 bedroom apartments.
“People who need just a room ended up renting houses that they do not really need,” he said, adding that in developed economies, the advent of Airbnb has helped resolve this problem.
Besides, the professor stated that it has been established that in most part of Lagos and Abuja, properties have been used as a means of preserving ill-gotten wealth.
He said: “Since both local and foreign banks are no longer a good option for money laundering, properties were bought with the intention of future sales.
“Our recommendation to government should be balanced with strong research support.”
He pointed out that all over the world, tenants were vulnerable and were often protected.
According to him, government must change policy that made land to be as expensive as N100 million and high cost of construction.
He said: “If we reduce cost of procurement to less than N75 million for a building of six flats -which is possible in Abuja with it’s stable and high load-bearing capacity soil, rent will drop and default will disappear.
Nubi urged institution to sponsor researches, pointing out that the future is for nations driven by knowledge (information), technology and competition.
According to him, if developers were encouraged to do pre-investment studies, they would become more relevant and respected. “We will have few failed projects,” he said.
Corroborating Nubi, another professional, Dr. Joshua Egbagbe, said government and stakeholders should start making decisions and formulating policies using well-researched information that are timely, adequate and concise.
Currently, report shows that vacancy rates in the standard residential apartments hovered around their first quarter’s 2018 figures with Ikoyi hitting 30 per cent, Ikeja GRA -26 per cent and Oniru -33 per cent among the highest.
“GRAs 1, 2 and 3 in the oil city of Port Harcourt recorded vacancy rates of 6 per cent, 11 per cent and 20 per cent respectively and continue to show potential principally for their security advantages when compared most of the city,” the report said.
However, vacancy rates have remained low for the more popular Gwarimpa – 3 per cent, Katampe -21 per cent and Wuse -10 per cent areas of Abuja.
It was noted that lease and purchase/sale values of properties in above locations have remained above the average income earner’s financial ability.