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Property investors groan as economic downturn bites harder

By Bertram Nwannekanma
01 August 2016   |   2:20 am
With Nigeria’s economy facing divergent growth prospects due to inconsistent monetary policy that created volatility in financial and currency markets, property investors have started seeing the flip side.
 Chelsea Hotel, Ikoyi, Lagos

Chelsea Hotel, Ikoyi, Lagos

Shift delivery date for N7.8b project

With Nigeria’s economy facing divergent growth prospects due to inconsistent monetary policy that created volatility in financial and currency markets, property investors have started seeing the flip side.

On-going developments within the commercial real estate market are witnessing construction cost variations.

The trend has already unsettled the investors, with most of them searching for the leeway out of the quagmire. Banks, it was learnt are cautious in pushing more cash into projects being funded by them. But with project pricing increasing ahead of fundamentals, and continued tremendous competition for core assets, Jones Lang LaSalle Inc. (JLL), a real estate firm believes that  “many investors looking to place capital are challenged and have been pushed out the risk spectrum to find acceptable returns.”

The Guardian gathered that the monetary experiment by government without clear policy thrust has also affected Foreign Direct Investment (FDI), which often drives the hotel real estate market and retail sector. For instance, investors in some of the projects located within Victoria Island and Ikoyi axis,  have shifted their delivery dates between six months and one year while others abandoned their sites entirely.

They are hinging the development on the state of economy, especially on scarcity of foreign exchange, which has worsened procurement of imported and durable building materials. For instance, the delivery of the 12-storey office complex, ‘Alliance Place’ which has been under construction for a year was shifted by the management from December 2016 to February next year.

The 7,000 square metre space promoted by Edimara Properties Limited is located at Alfred Rewane Road (formerly Kingsway Road), Ikoyi, Lagos.

The promoters specifically blamed the delay in completing the edifice on foreign exchange issue.  Also, the   delivery of Presidential Hotel Enugu has been delayed because the investors said they are waiting for the new Government to sign off on the new Execution plan because of the Foreign Currency changes in Nigeria.

The shift of the official opening of the USD25million (N7.62 billion) Chelsea Hotel Ikoyi to next year, owing to what the management termed economic downturns that affected banks was also another pointer to the economic impact on most projects in Nigeria.

Although construction work on the hotel had been completed while the finishing works are on, the management said, official opening of the -5 star hotel would take place between 12-16 months time.

Situated on the intersection of Kingsway, Gerard and Osborne Road in Ikoyi, a prime location in Lagos for prospective real estate development, the hotel is being built on 15 floors with 176 rooms.

The project is dubbed a mixed development, which suggests that it will contain other functions, including retail in addition to the hospitality component.

The most noticeable thing about this project is that, it is a steel frame project, which is quite a rarity in African countries.

The Chelsea Hotel being built by Impacto Grupo for Chidol Properties (Subsidiary of Chelsea Group Limited has the biggest roof top with electric light and a large parking space.

Other professionals involved in the project include, Adof Project, Adoc Associates, KOA consultants Limited, HIRSCH Bender Associates and Deep Foundation.

Chelsea Group Chairman, Chief Patrick Citole, who signed deal with foreign partners in 2014 said the hotel was estimated to cost the conglomerate $25million before the economic down turns affected the cost.

The five-star hotel has a mixture of Nigeria and international operations will offer outstanding service to guests

Its amenities include health club, restaurant, business centre, retail facility, spa, swimming pool at the fourth floor, laundry and entertainment bars, while the multiple access points, high visibility coupled with the exclusive Ikoyi location help boost it’s suitability.

The distinctive build style that incorporates steel frames means that time of build will be considerably faster than other developments, which typically use concrete.

On completion, the building will stand proud, as one of the most elegant in Lagos, with tasteful recesses. The most impressive aspect of this mixed-use development, is however not its form, but rather the steel frame, which is quite suitable for the scope of “high rises”