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Property Developers to tread carefully on the real estate frontier in Nigeria

SEEMINGLY buoyed by the growing apathy by commercial banks to fund jobs and impact of on going reforms by the authorities, a brand new report has called that developers prepare for a changing landscape, and will be more cautious in property development as the economy remains sluggish.

The Lagos Housing Development Marketplace — 2016 Outlook Report by Residential Auctions Company (RAC) revealed that «the next coming months and beyond will be analyzing times for developers as demand is likely to be curtailed with clients cutting back on spending until a clearer image of the market emerges to restore consumer confidence in the marketplace.

»It's anticipated that plenty of developers will tread carefully when embarking on new jobs to launch and location of choice will be a predominant factor. Also to hedge risks, developers will cut back on the size of projects they embark upon and certainly will seek to develop modest size jobs that can provide not more than three — ten units, which will immediately bring sales even in the off-plan period hence eliminating the occurrence of baseless units waiting to be sold several months after end that may raise the price of keeping stock."

Given the current economic atmosphere, the report projects that just a third of the 14,415 units currently under construction will be delivered this year resulting in 4,325 units, «but unless developers can seek alternate funding asides from the commercial banks then this amount mightn't be delivered.

»Some of those developments date back to over five years and there are lots of plausible reasons for the delay in delivery, one of such reasons could be a dearth of funds that may hinder the ability of the developer to finance the progress of the development or it could be a litigation case between parties involved. Typically it's usually the former that occurs and unless a source of financing emerges the development will stay in limbo until a solution has been found.

This might possibly present a chance for developers to pursue «Crowd financing» which is an alternate form of raising finance from a group of investors through a web-based platform and is a relatively new concept."

The research says that 62 per cent of new housing units in the development will be delivered in the Lagos Island market as shown above. This shouldn't come as a surprise since the Lekki- Epe axis still has a massive region of green field sites (undeveloped property) in Lagos.

«The future of this market looks pretty much intact as supply will continue to grow with demand and infrastructure is improved to attract more businesses. We can't categorically say that Lagos Island has more green field sites than Lagos Mainland or vice-versa as there is no data to demonstrate or demonstrate this theory, accordinng to RAC Managing Director, Mr. Omorotimi Akinlose.

He clarified, „Notwithstanding the very fact that Lagos Island has the majority of new units under going development, we cannot neglect or overlook that a few places on Lagos Mainland for example; Ayobo Ipaja, Badagry and Okokomaiko additionally have vast variety of components in the development, an important impact of a few mass housing schemes launched under Joint Venture (JV) organizations and are still awaiting completion.

RAC report said: “With the on-going rehabilitation and expansion of the Lagos-Badagry Expressway as well as the construction of the Blue Line Lagos Rail Transport (LRT) mass transit transport system from the Lagos State Government (LASG), the Okokomaiko — Badagry axis part of Lagos Mainland really has the capacity to emerge as the next „Lekki“ of Lagos Mainland in the future with reference to the delivery of new housing units in Lagos supplied infrastructures continues to enhance along this axis.

»This could have a directive positive impact on commercial activities in the location and certainly will become a driver to tempt more residents from other locations on Lagos Mainland to migrate. The Blue Line is a 27km urban railroad line that will run from Okokomaiko to Marina. There will even be a Red Line which will run to Ikeja International Airport from Marina.

The report shown that underneath the Eko Atlantic City project, a Public-Private-Partnership (PPP) initiative involving the Lagos State Government along with a private company South Energyx Nigeria Limited (a subsidiary of the Chargoury Group of Companies) under the auspices of the Federal Government of Nigeria, over 1,000 units of apartments of various room sizes ranging from one bedroom to four bedroom penthouses are already under construction.

Leading the pack of those developments are Eko Pearl Towers by ESLA International. Eko Pearl Towers are high rise residential buildings to be located in the centre of Eko Atlantic City.

It's going to comprise of five stunning residential towers on the seaport of Eko Atlantic. The towers are; Black Pearl Tower, White Pearl Tower, Indigo Pearl Tower, Champagne Pearl Tower and Aqua Pearl Tower. The towers will supply just somewhat over 560 flat units with one tower fully sold out and the initial set of units is going to be delivered as early as 2016.

Another high rise development currently under construction in Eko Atlantic City is Eko Energy Tower Estate being produced by gas and oil logistics firm Orlean Invest West Africa a Nigerian group with over 25 years of supplying corporate and real estate services. Eko Energy Estate is a premium residential area that'll cover about 450,000 square meters of land and will be located in the Northwestern corner of Eko Atlantic City.

The initial phase of Eko Energy Estate will consist of three high rise 20 floors residential towers that will provide about 260 flat units of numerous amount of bedrooms as exemplified above and is anticipated to be delivered by 2018.
It's projected that by the full completion of Eko Energy Estate there will be 5,000 flats in 50 — 60 residential towers.

Other prominent residential developments now in the works in Eko Atlantic City are LeReve Tower Lagos Sky Tower and Azuri Penisula.