The Nation Newspaper

Tag: real estate

  • ‘Recession is opportunity to invest in real estate’

    ‘Recession is opportunity to invest in real estate’

    A real estate professional, Adetunji Adediran, has advised investors to see the current economic recession to invest in real estate.

    Adediran, who is the Principal Partner at Diran Adetunji and Associates, spoke at the inauguration of RHF Apartments in Abuja.

    He said “The Nigerian economy might be doing badly at the moment, but one thing I know with certainty is that there is hardly an economy that enters recession that will not bounce back. One of the things that cushion the effects of a recession is investment in real estate.

    “Real estate investment is still the surest bet to wealth accumulation. Its value is ever-increasing and appreciating. When compared to other forms of investments, the real estate depreciation rate is very low. This is ideal for prospective investors to generate profit through rents or leases of varying lengths. It is all the more important that developers find new and quality local and international products and solutions. Government find avenues for supporting mortgage growth and improving lands regulations. Real estate agencies deliver holistic consulting services and quality customer service. Buyers are more exposed and educated about their options in the market as well as find creative bargaining solutions.

    “These will pose advantages to real estate investment, even while the economy seems to be at a downturn.

    “As real estate professionals, we ought to understand that in any economic downturn, there are opportunities. We only need to be creative to identify and leverage on the available opportunities.”

  • Glut in real estate presents investment opportunities – Report

    Glut in real estate presents investment opportunities – Report

    CLUTTONS, a firm of international real estate consultants, has noted that there is an overall slowdown of activities in Lagos’ commercial real estate market, with rents either stagnating or declining across most segments of the sector. Cluttons’ Spring 2016 Lagos Commercial Property Market Outlook report attributed the weakness to the adverse global and domestic economic environment, which is fuelling and challenging trading conditions.

    According to Faisal Durrani, Head of Research and Partner at Cluttons, “the decline in crude oil revenue has taken its toll on all business segments, mirroring what we have seen in other parts of the world. Perhaps, most significant, however, has been the devaluation of the Naira, which is supporting the high levels of inflation. In addition, the restrictions around foreign currency exchange in Nigeria have put international businesses under tremendous pressure as they struggle to cope with the inability to make payments.

    “Furthermore, the deteriorating global economic conditions have also impacted Lagos’ commercial real estate market, with transaction levels dipping and vacancy rates rising across the board, putting rents under downward pressure and driving landlords towards offering a range of lease incentives to entice demand.”

    The Chief Executive Officer of Cluttons Nigeria, Erejuwa Gbadebo, said the most expensive office sub-market at the end of first quarter was Ikoyi at the rate of $850 per square metre, followed by Victoria Island at the rate of $750 per square metre.

    He added that while there has been limited movement in office rents over the past six to nine months, Victoria Island is among the three worst performing markets in the 12 months to the end of March 2016, with rents falling by 13 per cent to $750 per square metre, while Q1 2016 recorded no change in rents in all seven of the firm’s sub-markets.

    According to him, “Cluttons expects more significant falls this year, reflecting the shrinking level of overall occupier activity. In fact, on an annualised basis, rents in Ikoyi have already declined by seven per cent in the last 12 months to $850 per square metre, while Lagos Island has registered a substantial 25 per cent reduction in asking rates over the same period ($113 psm).

    “This is largely due to the strong pipeline of office supply. In fact, Cluttons expects that some 35,000 square metres of space will be added in Ikoyi and the VI, led by the completion of The Wings and Madina Tower,” Gbadebo noted.

    He said there are challenges ahead for the market, but there are clear opportunities for landlords to position themselves favourably.

    Based on the firm’s experience in other similar international markets, a well maintained and well managed properties will always be in high demand and it is the landlords that demonstrate an understanding of market conditions by offering flexible payment terms and other lease incentives that will be best placed when demand does pick up again.

    “Cluttons’ report explains that rents in the retail sector appear to have held steady, despite the economic conditions and tough operating environment. Many retailers have committed to existing leases with built in escalations, hence no real change in rents will be immediately evident in the city’s key shopping malls.

    “Having said that, we are aware of instances where landlords have reduced rates to help retailers stay profitable in the tough trading environment. For lease renewals in existing malls and the new malls coming up, however, it is likely to be quite a different story. We expect to see some falls in rents this year, reflecting the tough operating conditions for retailers.”

    Cluttons also identified a growing trend in the retail sector with an increase in provision of smaller formal retail centres with gross leasable areas of 5,000 square metres or less.

  • Understanding the dynamics of real estate sector

    Is it possible to ask for the price of a Bentley in exchange of the quality of a Toyota? Impossible! Any sane person knows that. While many will consider this outrageous, it is indeed a stark reminder of the realities experienced in Nigeria’s real estate industry.

     As an avid property enthusiast, developer or an observer, you must have noticed the surge in the number of empty apartments in Ikoyi over the last few years. This disturbing phenomenon must have prompted the well-informed and educative research publication of economy watch, Financial Derivatives Company Limited, last week, which pointed out that “the number of vacant properties in the upper class real estate neighbourhoods of Lekki, Victoria Island and Ikoyi has risen by 72 percent over the last 18 months”.

    The padded cost of construction. Buyer Beware! This has become a motto on a whole new level for perceptive investors, who seek the much-deserved value for money. I can’t stress enough, the fact that the era of monkey dey work, baboon dey chop is long gone. To avoid drawing hasty conclusions and to guide our investment choices, investors should only listen to industry experts and verifiable perspectives as seen in the FDC research, and avoid the bandwagon of those listening to jaundiced opinions, which are quite popular.  For example, the fact that former UK Prime Minister David Cameron said Nigeria was ‘fantastically corrupt’, did not in fact mean each and every Nigerian was. Also, the fact that a few celebrities find themselves enmeshed in marital problems does not always mean that the marital life of every Nigerian is in danger. To put this more clearly, apartments that should not cost more than N100 million are costing investors N400 million to construct.  Therefore owners have no other choice than to let out the apartment at N40 million, transferring the padded cost of construction to tenants.

    ‘What’s the difference between the locally fried plantain bits sold in remote areas and its counterpart, the plantain chips sold in urban areas? Have you ever wondered why a good meal prepared in Ijebu Ode would cost less than one sold in Lagos? An estimated rental for an apartment in Ikoyi is about $80,000. The same apartment in Lekki would cost $30,000. What do you think makes the difference? VALUE – price, quality and location put together in the same place! If location is a fundamental principle in real estate, how much more luxury real estate?

    A developer who compromises on the quality of materials, no matter how highbrow the property’s location, has no right to place an exorbitant price on it. Thus, the argument for demand exceeding supply, as far as empty apartments in Ikoyi go, is unfounded.

    Luxury apartments are in high demand. Poorly finished buildings with exorbitant prices constitute the pile of empty apartments constantly being alluded to.

    During my interview on CNBC Africa, I once pointed out that luxury is not expensive. It is the intention to deliver luxury that is expensive. While the cost of a nice three-bedroom apartment in Johannesburg would go for about $350,000 the same apartment in Ikoyi would want $1M. If the cost of construction materials is the same all over the world, the price of marble, granite, cement, tiles, kitchen, doors paints etc, why is cost in Nigeria about 300% higher?

    A delicious meal requires a lot of money. You cannot offer a Toyota for the price of a Bentley. One might argue that both cars will eventually ply the same road but the efficiency and prestige of a Bentley speaks for itself. Luxury sells itself.   When you sell luxury, you sell peace of mind, you have not only sold something that would last for generations, but you win the heart of your client who now becomes your evangelist.

    With the oil price plummet and downtrend of major economies across the world, individuals and organizations no longer have loose money to throw around. And with the current downsizing by companies, prospective tenants demand full value for their hard-earned money.

    Nigerian developers must realise that times have changed. The ‘quick fix – quick gain’ syndrome has ended. Real estate developers who fail to understand that the current investors and real estate enthusiasts are upbeat about quality and finishing after having seen same from their travels around the world will soon fade away.

    If we desire to be the best and want to compete with foreign developers such as the Germans, Lebanese and Italians that have spent decades mastering their craft, we will need to raise our standards in the Nigerian construction market.  Or else, one day we would wake up to find all our apartments empty.

     

    • Ogundele, a real estate practitioner writes from Lagos.
  • Nigeria, South African firm seal N224.17b agric, real estate deal

    Nigeria, South African firm seal N224.17b agric, real estate deal

    The Nigeria Sovereign Investment Authority (NSIA), manager of Nigeria’s sovereign wealth fund, has signed a $700 million (about N224.17 billion) real estate and agriculture deal with South Africa’s Old Mutual Investment Group (OMIG).

    Under the deal, signed in Abuja at the weekend, NSIA will partner with South Africa’s OMIG UFF Agri-Fund to establish a $500 million real estate co-investment vehicle and a $200 million agriculture co-investment vehicle.

    NSIA’s Managing Director, Uche Orji said the deal would cover retail assets, especially office buildings.

    He said: “The objective is to invest $500 million in commercial and retail assets, especially office buildings and hospitality facilities. The vehicle is expected to have initial commitments of up to $100 million each from NSIA and Old Mutual and is targeting a total commitment size of $500 million with deal origination and execution to be undertaken jointly by both parties.

    “(For that of agriculture), both parties will make commitments for an initial vehicle size of $50 million ahead of the targeted size of up to $200 million, with deal origination and execution to be undertaken jointly by NSIA and UFF Agri-Fund. The aim of the agreement is to improve Nigeria’s food security and promote rural economic development to capitalise on the growing opportunities that the Nigerian agricultural industry provides.”

    NSIA and OMIG’s interest in the real estate and agriculture sectors Orji explained “is underpinned by a shared vision of the significant opportunities presented by both sectors, given a number of advantageous socio-economic trends prevalent in Nigeria”.

    On the significance of the agreement, Orji said: “The real estate and agriculture sectors offer considerable potential for economic growth in Nigeria. Our commitment in these sectors is underpinned by the economic imperatives of urbanisation, population growth and enhancement of liquidity for the sectors. The real estate vehicle once created alongside the agriculture vehicle will be configured to address some of these issues. The NSIA will continue to serve as a catalyst for private sector involvement in key sectors of the economy by exploring partnerships with credible entities such as Old Mutual Investment Group and UFF Agri-Fund.”

    Minister of Finance, Mrs Kemi Adeosun said the  agreement signing “marks a critical milestone towards delivering on NSIA’s broader mandate to invest in key sectors of the economy. It is consistent with the Administration’s concerted efforts to diversify the Nigerian economy away from oil and attract investments into other core sectors which can stimulate sustainable growth.”

    OMIG CEO, Diane Radley, said the partnership with NSIA is a critical step in the development of OMIG’s commercial real estate and agriculture strategies in Africa.

    “As the largest manager of real assets in Africa, we have a deep belief in the opportunities in agricultural and real estate investment across the African continent. Our dealings with agriculture as an asset class have shown that it has already gained huge momentum globally but is still in its infancy in Africa. This presents a significant investment opportunity for both local and international investors,” she said.

    This experience, combined with NSIA’s significant local knowledge and capacity in the real estate and agriculture sectors of the Nigerian economy, Radley said allows for a formidable partnership that can add significant value to both partners’ clients as well as the development of the Nigerian economy.

    For the NSIA – Old Mutual $500million Real Estate Co-Investment vehicle, the vehicle will be established as a private investment holding company, with joint ownership between NSIA and Old Mutual Property (OMP). Each party will commit an initial $50 million-with the opportunity to increase capital commitment to $100 million each, as and when further funding is required.The Vehicle intends to seek third party investors.

    The vehicle will offer investors an opportunity to access high yield retail and commercial real estate investment opportunities in Nigeria, leveraging NSIA’s market presence, with an experienced co-sponsor real estate team.

    Old Mutual Property is considered to be a leading developer of real estate in Africa with over 40 years’ experience in developing landmark shopping centres, industrial parks and major office blocks on the continent.

    With estimated assets under management (AUM) of $1.3 billion as at April last year, Old Mutual Property is one of the specialist boutiques within Old Mutual Investment Group, Africa’s largest private sector investment manager with over $44.6 billion in AUM.

    NSIA’s investment will be made through a wholly owned subsidiary, NSIA Property Investment Company Ltd (NPIC) while OMP’s investment will be made through its wholly owned subsidiaries. Assets will be substantially de-risked, either through leases or robust downside protection.

    The vehicle is expected to have substantial development impact in a number of ways including: to cater for the rapid population growth and urbanisation of the major cities in the country that require such projects; direct and indirect employment benefits due to liquidity created for developers to pursue subsequent construction projects; open up the real estate market and the economy for inflow of greater investments and; absorb the current demand in the market for commercial office spaces allowing for increased business productivity in the economy.

    On the NSIA-Old Mutual $200 million agriculture co-investment vehicle, the NSIA and Old Mutual Investment Group are establishing a $200million co-investment vehicle targeting the agriculture sector in Nigeria.

    NSIA’s commitment to the vehicle is $25 million, with matching capital from Old Mutual bringing the first close to $50 million. Additional capital of $150 million is then expected to be raised from third party investors, bringing the Vehicle to a final close of $200 million.

    The investment focuses on primary production, processing, and logistics. It will have an important social investment component, investing in rural development, food security, import substitution, and other areas in the sector that are beneficial to Nigerians with the NSIA and UFF African Agri-Investment managing the Vehicle.

    UFF African Agri Investments (UFF) is the agriculture management company of Old Mutual Investment Group, Africa’s largest private sector investment manager with over $44.6 billion in assets under management.

  • Nigeria, others for real estate expo in Germany

    Nigeria and 74 other countries have indicated interest to participate in this year’s 19th International fair on Real Estate and investment Expo holding in Munich, Germany, in October.

    The fair, expected to host to over 18,000 visitors from across the global, is regarded as the largest property and investment expo in Europe since 1998.

    The focus this year will be on commercial property: office, retail, hotel, logistics, health, infrastructure and residential property for institutional investors.

    The organisers of the fair, Messe München International and Trade and Fairs Consulting, Germany, are in talks with a Lagos-based public relations company, Niche PR and Events, to recruit participants from the country.

  • ‘Real estate is playing key role in economy’

    The Chief Executive Officer/Managing Director, Nedcomoaks, Mr. Kennedy Okonkwo, has described the real estate business as “a major player in the Nigerian socio-economic needs as it provides shelter, a need second only to food.”

    Okonkwo, who Forbes Africa recently featured as one of the leading property entrepreneurs in Nigeria, is playing big in Lagos and other parts of the country.

    Amongst his major projects in this sector are Kiryan Court, Dream Court IV, Crystal Dreams Apartment, Crystal Court, Sandton Court but the most recent job he just delivered is Victoria Crest I, while work has fully commenced on the Victoria Crest II, which he said is presently on sale.

    In a brief chat, Okonkwo explains his passion for real estate, why and how he chose the profession and some details about the ideas that informed the kind of estates he has set up in the choice areas of Lagos. Victoria Crest II, he said, “is an estate of 76 units of 3 and 4 bedroom homes and its located by the 2nd Lekki toll gate on Buena Vista Road and situated adjacent to the Buena Vista Estate and estates in its proximity includes, Lake View II, Essential Homes, Ocean Bay Estate, Bricks and Brains Estate, Golden Leaf Estate,and the Shell Cooplag Estate.

    “Our properties,” Okonkwo said, are “luxuriously finished with guaranteed annual rental returns, put at N3million. This makes them a must have for the smartest of investors and for those looking for a great environment to reside in.” He added that investing in Dream Court II is one of the premium developments around Lekki. Some of the prestigious neighbourhoods around the development includes: Northern Foreshore Estate,Friends colony, and the new Lekki Circle mall.”

    The Nation investigation however shows that the high brow real estate industry despite all the current achievements of key players like Okonkwo still has a long way to go to satisfy the growing demand of Lagos residents. The Nedcomoaks boss admitted this much when he said, “The country is lacking about 17 million houses with about 60-70% living in slums and informal settlements. He pointed out that the Centre for Affordable Housing and Finance in Africa, estimates that 700,000 more homes are needed each year to keep pace with the population explosion.

  • Vine Realtors lures property investors with enticing offers

    Vine Realtors lures property investors with enticing offers

    Investment opportunities in real estates abound in Nigeria and smart investors are now jostling to outsmart each other in the burgeoning industry.

    Real estate business in Nigeria has taken a positive trend and is now a major money spinner in a country known for its huge dependence on fossil fuel (oil and gas) as source of revenue.

    Nigeria has one of the most conducive business environments in Africa.

    The desire of upwardly mobile people is relocate to from a rural setting to the urban environment where life will be more comfortable.

    There are many business opportunities in Nigeria but real estate investment outwits them all.

    Advantages of real estate include quick return on investment and quality control over investment.

    Every investor wants his cash back as quick as possible and for that matter, real estate investment in Nigeria gives the quickest money guarantee.

    After investing your money, the first income you may get from making an investment in a property is the rental income.  Some investors are lucky and get good locality like city centers and areas close to universities which can he rented as hostels. Here the rental income will be quite substantial and the profits will come quicker.

    With real estate, you are assured of good control over your cash flow. Investment in properties fetches you rental incomes month after month.

    Investment analysts have argued that rental incomes gives greater dividend than investment in stocks. With stocks, if you are extremely lucky, a sudden surge in the value of your stocks may get you good returns if you sell the stocks at the most opportune time.

    In its quest to encourage individuals to try their luck in the burgeoning industry, Vine Realtors, a real estate website, has launched promos for some properties in its stable.

    Those that bought properties in Lekki Phase 1 for N1m or N500, 000 saw what others didn’t see and they are reaping the fruits today.

    The promo ends this month.

    Stop dilly-dallying and make a move NOW.

    The estates for which promos are ongoing include:

    • Star Gardens, opposite Fara Park

    The property is just six minutes off the Lekki- Epe Expressway

    It goes for N4.5m.

    • Cherry Wood Courts, Osoroko Town

    Cherry Wood Courts is just few minutes drive from Lekki Free Trade Zone.

    Its current price is N1.5m.

    • Rockville Courts, Osoroko Town

    Rockville like Cherry Wood Courts is just few minutes drive from Lekki FTZ and goes for N2.5m.

    * Brooksville Courts, Ibeju Agbe Town, Ibeju Lekki.  The promo price is N1.5m.

    * VIP Gardens Festac, Abule Ado, Ado Soba.  It goes for N3m.

    * Lagoon Courts, Ibeju Agbe Town, Ibeju Lekki. Price is N1.2m.

    Take advantage of these promos and be part of the new Lagos.

    For detailed information on this contact:

    Phone: 08052864662, 08166250519

    Or,

    Email: info@vinerealtors.com.ng

    Website: vinerealtors.com.ng

  • Invest in real estate, Nigerians in diaspora urged

    The Managing Director of Livelihood Homes Limited, a Lagos-based real estate firm, Mr .

    Kelly Nwogu, has advised Nigerians living abroad to invest in landed property.

    He said Nigerians in the diaspora should channel part of their resources to owning or building a personal house in their country for a better future when they return home.

    He identified lack of trust and challenges of processing necessary documents as the major problem that scares Nigerians in foreign countries from purchasing landed property in Nigeria.

    “So many people have been duped by their friends, relatives and quacks in the process of trying to help them purchase properties. A number of others have also been frustrated by cumbersome processing of necessary title documents on landed property while on short visit to the country, hence, not a few of them want to buy properties anymore in Nigeria,” Nwogu said, advising Nigerians in diaspora to patronise registered real estate firms when buying landed property in the country.

    He explained that there are plans by his company to engage Nigerians living in South Africa on how best to own property in Nigeria without stress, especially through its various housing projects.

  • Why Lekki/Ajah is property investors’ preferred destination

    Why Lekki/Ajah is property investors’ preferred destination

    Lekki and its corridors are goldmine for smart real estate and property investors willing to double their investment within a short time.

    Lekki, regarded as the new Dubai in Africa, is the most structure part of Lagos and holds huge potential for both cheap and expensive properties.

    Its closeness to the Atlantic Ocean has increased its commercial value significantly as this attracts smart international investors from different parts of the world.

    Why Lekki is now the investment destination of choice:

    It is situated by the sea coast of and has the most ventilated environment in Lagos.

    It boasts of resort centers like the Eko Tourist Resort and La Campagne Tropicana beach resort.

    Lekki has a Federal Highway that links Lagos to other parts of the country.

    Lekki is home to several top class estates and properties.

    It has proposed international airport and International FREE Trade Zone.

    Several international projects such as Dangote Refinery, oil tank farms and seaport are ongoing in the area.

    This is the time to take advantage of Lekki’s unique location and its alluring features.

    For more information contact:

    VINE REALTORS LIMITED – http://vinerealtors.com.

    Our services include – real estate sales, real estate brokerage and products sales and services.

    For real estate sales, we assist our clients in selling properties across residential and commercial categories. Our focus is on fast developing emerging locations within the Lagos metropolis; with a plan to diversify into other cities, states and countries.

    We have several properties available and these include – VIP Gardens, Blevic Gardens, Kingston Gardens, City Point Gardens and Crystal Garden, among others.

    We assure you of a great deal.

    Contact us:

    Email: info@vinerealtors.com

    Phone: 08052864662, 08166250519

  • Real estate gets digital platform

    Real estate gets digital platform

    A premier online market place, Lands.ng, has been launched to lead  a digital revolution on the real estate industry.

    With over 1.4 million plots uploaded, more than 250 registered and certified agents, multiple enquiries from over 12 states, the platform is set to revolutionise the sector.

    Its founder/Chief Executive Officer (CEO), Mr. Godwin Ani, said the e-commerce platform would create a secure and conducive online destination and ecosystem for buyers, sellers, land owners and realtors to connect, make informed decisions and connect with ease.

    He said the decision to create the premier platform was aimed at “removing the barriers to land ownership and starts with providing Nigerians the right information and a secured platform for interactions among land owners, agents and buyers.

    ”At Lands.ng, we are using technology to revolutionise the way Nigerians think about real estate – land value chain in particular, and thus providing a long term solution to the home ownership challenges and the living standard of our society,” he said.

    With increased penetration of digital technology, and new owners and investors coming into the land market, he said there is – more than ever – a need for a more robust offering for connecting investors, buyers and sellers, which is what Lands.ng has been addressed with its introduction of advanced technology and security features, a product of its strategic involvement with Ade Digital Media, a leading Digital Marketing Agency in Lagos, Nigeria.

    Also, the Co-Founder/CEO, Ade Digitial Media, Mr. Michael Ebia, said the new platform’s success would rely on technology.