In the last 15
months, vacant properties have increased by 65 per cent in Lekki, Ikoyi and
Victoria Island neighborhood of Lagos.
According to the
latest Real Estate Vacancy Factor Index (VFIX) released by Bismarck Rewane-led
Financial Derivative Company (FDC), vacant properties increased in these
enclaves despite high rents and supply glut from last January.
In March 2016, the
experts said the index increased only marginally to 165 from 160.7 in January,
having climbed substantially in earlier months.
“What this tells
you is that the number of properties that were vacant in March 2016 was 65 per
cent higher than in the base month in January 2015,” he said.
Vacant properties
according to the expert were higher in Lekki-64 per cent, followed by
Victoria Island -35 per cent and Ikoyi, 24 per cent.
FDC said:
“Admiralty Way in Lekki has the highest vacancy ratio, which is not surprising
giving the challenges that businesses face in the current macroeconomic
environment; most properties on the street are offices and commercial spaces.
Nevertheless, rental prices of vacant properties in these high-end locations
have remained sticky downwards.
“For example, an
office space in Lekki Phase 1 costs N30,000 per square metre (sqm) in TBC
building. To rent a 1,250 sqm house in the same area will cost you about
N8million to 10million per annum on Admiralty Way and N5 million to N6 million
per annum in other Lekki Streets.
The VFIX is a
useful tool of analysis for developers, agents, tenants, landlords and policy
makers.
The FDC’s report
noted that vacant factor index for residential and commercial was 177 and 148,
adding that the indices increased by 77 per cent and 48 percent respectively in
March 2016 compared to January 2015.
The experts
attributed ability of real estate assets (which are long lived) to adjust to
inflation, as major factor for increased supply of housing. “Inflation
increases the value of property, which provides incentives for new initiatives
in the real estate market.”
They pointed out
that persistent macroeconomic headwinds in recent times have led to lower
demand for prime properties in Lagos, adding that stock broking firms,
investment banks, insurance companies, airlines and oil companies that usually
rent properties for office space residential use are currently experiencing a
business downturn.
On impact of
macroeconomic variables, the experts stated that the increasing trend of VFIX
was in tandem with unemployment rate, adding that forex controls have
discouraged investors, while “poor stock market returns are affecting investor
sentiment thereby reducing demand for office space and housing.”
FDC predicted that
vacancy factors index would decline as economy improves, adding that people
should expect a decline in house prices.
http://www.housingnews.org.ng/vacant-properties-rise-by-65-in-15-months-report/
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