High vacancy rate triggers boom in short- letting business
Sequel to high vacancy rates in Nigeria’s real estate sector, some property owners are now embracing short-letting as a means to recoup their investments.
Although short letting is not a new phenomenon in property business, it has assumed a new dimension in Nigeria’s real estate sector as it offers a more cost- effective and convenient solution to high vacancy rates in choice areas.
For instance, residential vacancy rate in Lagos is put at about 33 per cent, 28 per cent in Abuja and 13 per cent in Port-Harcourt, while vacancy rate in retail developments stood between 33-50 per cent among large shopping malls.
Specifically, short letting was not popular few years ago in Nigeria, but it is now accepted that even among landlords, who saw the concept as an easier way to recoup investment on a property.
Currently, the phenomenon is now increasing and assuming popularity with about 30 per cent increase in letting, according to an estate surveyor and valuer, Mr. Joe Etiniru.
Etoniru, who is a fellow of the Nigerian Institution of Estate Surveyors and Valuers said, “People tend to prefer short letting to hotels especially those outside the country because of its unique features.
In fact, it cost less in short let apartments than in popular hotels. The Guardian gathered that a one-bedroom in Shonibare estate for instance, goes for N30, 000, two-bedroom for N45, 000, three-bedroom for N70, 000 per day inclusive of the services clients enjoy.
While in Ikeja GRA, a three bedroom goes for $150 per day, in Victoria Island a three bedroom goes for N2 million per month, and a duplex goes for N200, 000 per day.
Likewise, a luxuriously furnished and serviced three-bedroom penthouse with all rooms en-suite located at Shonibare Estate,
Maryland, Ikeja, Lagos goes for N90, 000.00 per day.
Also a fully furnished super luxury two-bedroom short-let apartment goes for N50, 000 Maitama, Abuja.
Similarly, in Lekki Phase I and 1004 estates, the price of a moderate three bed room flat on short – let goes between N45, 000 to N35, 000. In Ikeja GRA, two bedroom flat / apartment short let goes for N45, 000 per day.
Another estate surveyor and valuer, Mr. Sola Enitan attributed upsurge of short letting on the rise in visitors and investors because of the high exchange rate, who visits home to invest prefer to stay in short let.
Although, the concept, he said it has come to stay, it is more prominent in Lagos and just beginning to its root in Abuja.
The business, he said also thrive in estates where there are between 20-24 power supply and well-secured environment.
An operator of Short-let in Lagos, Seyi Ekanem said the business allows prospective clients to pay for an apartment for short-stay for a period of one-year, one- month or on a daily basis while the billing system is per day just to satisfy the needs of those who want to have a better deal away from the normal hotel, where they are usually offered a one room with a bed.
He disclosed that in a short-let apartment, clients have the three-bedroom, four-bedroom all with the same facilities like internet, swimming pool, gym, exquisitely furnished kitchen and other facilities with that of the hotel but the difference is that it is a ‘home away from home’ where the client enjoys unlimited privacy and fully furnished apartment without having to go through the hassle of buying furniture or any form of household materials.
Ekanem explained that the future of the business is very bright as most clients that patronise them are expatriates who have similar short-let business in their country and book online with the operators in Nigeria. In addition, he disclosed that government officials in the country also patronise the business when they have important functions to attend in area where there are short-let operators.
Also speaking, Mausi Bababunmi of Mausi Realty, Magodo observed that the business which is fast gaining its pride of place in the real estate sector is hinged on the principle of ‘the location, determines the price’ and prices are charged per day from N35, 000, N50, 000 and above, depending on the company.
“It is another industry and opportunity under the real estate sector where interested persons explore avenue to make money. There are some people who don’t like the regular hotel at all, and so they prefer the short-let where they can cook by themselves and enjoy their own escapades and privacy”.
On profitability outlook for the business, he said,” Sometimes ago I had a short-let apartment at Ikeja and I had some people that have a wedding function and they wanted somewhere close to their venue at Sheraton. They contacted me and I charged them N40, 000 per day and they booked for 10-days, that is; N400, 000 which could be almost equivalent to One-year rent”.
Mausi who operates short-lets in Magodo and Victoria Island, admitted that the business is becoming popular at the rate of 40 per cent patronage and as one of the operators in the sector, he charges for its professional fee, apart from the normal rent that goes to the landlords.
“Short-let just gives you the normal incomes that help you carry on your normal livelihood, the profit cannot be compared to the normal rental service”, he stated.