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As operators count losses, experts optimistic of boom in Nigeria’s serviced apartments

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Investors in the real estate sector are expressing optimism that the fortune of serviced apartments business, which went aground due to the coronavirus pandemic and decline in the nation’s economic performance may bounce back, with the resumption of international travels.

Before now, the serviced apartments aspect of the real estate business also known as short lets had sprung up to make up for infrastructural gaps experienced in the country. The gaps include uninterrupted power supply, 24hrs security, clean and treated water among others.

The short let’s comprise blocks of one bedroom, two and three-bedroom flats, and four-bedroom maisonettes in a gated compound/ estate. Serviced apartments usually come with communal facilities like a swimming pool, 24 and treated water, security, reliable facility management, and many times super-fast internet connectivity.

They are particularly attractive to middle-class individuals/ families who want to focus on the important aspects of their lives – spirituality, career, and family.

In fact, several new entrepreneurs have emerged since the development of the services. These are business people who rent these serviced units from the property owners and furnish them using the services of interior designers with an eye for detail.

They list these flats on property sites and booking platforms for short stays, ranging from one day to six months. Payment is calculated daily so for visitors who intend to live there for months, they may negotiate a discount.

However, like several other real estate developments, the COVID-19 pandemic dealt a heavy blow on the serviced apartment business leading to its dwindling fortune.

The Managing Director and Chief Executive Officer of Luxury Villas Group, one of the operators in Lagos, Mr. Tommy Odama said, “it is a well-known fact that the pandemic affected several businesses whether short lets or hotel businesses.”

He said his apartments were all shut down; ‘the only difference was that some of them were functioning because they operate more like the regular accommodation and so you cannot tell someone not to patronize them,” he said.

Odama revealed that the patronage was down, but now things are beginning to pick up.

According to him, it was not business as usual, as investors reduced their rates to be able to accommodate people during the period because it is better to have the facility running than leave it empty.

“Currently, a typical three-bedroom, which cost N90, 000 before in prime locations such as Lekki Phase 1, Victoria Island and Ikoyi, in Eko Atlantic now goes for N100, 000 per day. But during the lockdown, the rate dropped to 30per cent, while in three bedrooms, we charge N70, 000, and a room goes for N50, 000 or N30, 000.”

Odama said his firm is repackaging its apartments, where they will be spending over N300 million to improve the facility. He also disclosed plans to change the name and bring new concepts that involve introducing a restaurant for three lounges.

Also, a past president, Nigerian Institution of Estate Surveyors and Valuers, Elder William Odudu, said the restriction of movement and subsequent closure of hotels as a result of the pandemic affected the serviced apartment, which also operates as a hotel.

Odudu who is the former Chairman of the Estate Surveyors and Valuers Registration Board of Nigeria (ESVARBON) expressed optimism that the business will pick up as movement has been restored.

According to him, serviced apartments are like hotels where you have the freedom of doing whatever you want. The pandemic affected them because those who are supposed to patronise them were not available, so it negatively affected them.

But now that Covid-19 is gradually receding, the business will pick up.

He said, there is a need to encourage tourism again because a lot of business people who want to work while on holiday or working left, prefer to operate from short lets instead of hotels, because it affords them better freedom, as they can do their own cooking.

On his part, the Group Chief Executive Officer of Global Property and Facilities International Limited, Dr. MKO Balogun said the pandemic could be an advantage for serviced apartments as the focus will now be on efficiency.

According to him, no matter the disruption in business, COVID- 19 is going to impact positively on serviced apartments as people, who live in the apartments will want to stay more at home than it used to be.

“They want a functional and effective environment now that the business conditions have changed. A couple of developments are being done and people are taking them. We have people who have travelled abroad, who have stayed in an environment that is okay before and want to operate more properly at home.

“Working from home is like replicating your office at home when you replicate it everything is serviced, you are not the one starting the generator, or buying water, you are not cleaning your house, everything is there for you it is the same thing people expect in the serviced apartments,” he added.


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