Property dealers in the high end Lagos property market in the Ikoyi and Lekki axis of Lagos say rents have come down from their 2007 and 2008 highs.
“Currently residential property rents are down by as much as 60% from their 2007 and 2008 highs in the Ikoyi and Lekki axis” said a property dealer.
They also disclose that rents could have fallen even lower except that many landlords are very sensitive about pricing.
“Many of these property owners are not developers. Most of them just built these properties because they had excess money and so they are very resistant to price reductions.”
Money Issues investigations also show that rents for residential properties along the much sort after Bourdillon road in Ikoyi can now be rented for as low as N12 million($60,000) per annum. Many of the new high rise buildings in the Ikoyi axis are also sitting empty with no new tenants to take them up.
Residential vacancy rates closed December 2015 at a high of 63% from 35% in January in 2015 according the Bismark Rewane, Managing Director of Financial Derivatives Company. The Lekki Corridor is said to have experienced the highest increase in vacancy rates.
Vacancy rates for commercial properties are also not better off as it closed in December 2015 at 58% compared to 47% in January 2015. This means that about 6 of every 10 commercial properties in the market are sitting empty.
Vacancy rates in the commercial property market is actually expected to get worse as dealers in the property market tell Money Issues that more commercial properties have come into the property market in the last two years than have existed before.
Properties dealers are also pessimistic of any rebound in the property market anytime soon.
“The performance of the Nigerian property is very narrow. You are just talking about 250,000 high earning individuals whose income is closely tied to crude oil prices. Once crude oil prices drop, as it has done now, the incomes of these individuals and businesses come under pressure, which drive prices down.”
Also new developments coming into the market could also mean that prices could be depressed for a longer period.
“You are looking at the new Eko Atlantic City which is expected to add about 10 million square meters of prime property to the property market. There is the development along the Badagry axis, which involves a 10 lane High Way with a metro line, which could change how people live and work in Lagos. All these means that the shape of property demand and supply will change in the next 5 to 10 years”
Dealers say that players in the property market should take a long term view because the dynamics of the Nigerian property market is changing.
