Soaring demand for high-end properties raises rental prices, off-plan sales

Following gradual return of workers to offices and international travel resumption, Nigeria’s high-end homes are in high demand, which have prompted rise in rental prices and increase in off-plan sales.

The Guardian learnt that the development has sent prime lettings market into a frenzy, pushed up rental income and demand by buyers of luxury apartments across neighbourhoods such as Ikoyi, Victoria Island in Lagos and Asokoro as well as other prime locations in Abuja.

Two popular estate agencies- Knight Frank Nigeria and Sam Eboigbe and Company confirmed the report. A property development company, Cruxstone Limited embarking on a joint venture project with Lagos Government in the heart of Victoria Island announced recently that its luxury apartments have been sold out during off-plan promotion.

The project known as the Iconic Towers comprises four blocks of towers of 12 floors. Each block is built as a twin tower model consisting of one bedroom apartments, two bedroom apartments, three bedroom apartments and four bedroom penthouses. The price tag are as follows: one bedroom N70 million, two bedroom N100 million, two bedroom with boys quarter N110 million, three bedroom maisonette (type 1) with boys quarter N140 million, three bedroom maisonette (type 2) with boys quarter N165 million and four bedroom penthouse with boys quarter N350 million.

The promoters have predicted a two-year capital gain on investment on The Iconic Towers is estimated at 40 per cent, which gives an excess of N20 million to N35 million in projected profit.

According to a separate report from Property Company, MDS Properties Limited’s recent studies of a sample pool of 428 apartments in Victoria Island property market, shows that over 369 units have been sold.

Further analysis of the units sold, reveals that they comprised of 38 per cent of one-bedroom apartments, 43 per cent of two-bedroom apartments and 19 per cent of three-bedroom apartments. No fewer than 10 top real estate developers and brokers operating within the Victoria Island precincts also acknowledged a significant uptick in demand.

According to Senior Partner/Chief Executive Officer (CEO) for Knight Frank Nigeria, Frank Okosun, “the recent trend of demand is fueled by the flexibility it offers investors and the resaleability of asset type.

“Most importantly it offers impressive rental yield compared to other apartment types in these location. The trend is also buoyed by the demand for short let apartment for transient professionals in Fintech and the expatriate community.”

His views was confirmed by the MDS report, which says that the return of expatriates is also impacting the sales market, as corporate entities are looking more at accommodating their expatriates in short stay homes where they can pay weekly, monthly and quarterly as opposed to yearly rents.

“This has reduced the demand of yearly rentals by these companies by 40-45 per cent and in turn shifted the focus of investors to one and two bedroom apartments for short-let or short stay apartments.”

The Co-Founder and Executive Chairman, Sam Eboigbe and Company, Mr. Sam Eboigbe, said there is surge in demand for luxury apartments, especially in Ikoyi, Lekki and Victoria Island and can be substantiated with evidence available out there in the market space.

“We are reasonably informed there has been ongoing diversification of investment into residential property portfolio by smart investors since the COVID- 19 pandemic, which brought about changes in the lifestyles of the people. The working from home culture is typical example where residential apartments also provide work place opportunities.

“Most people spend a lot of their time at home than office places. Also, we see most commercial or office premises have voids as they don’t have need for the entire lettable spaces anymore while the demand for apartments is on the increase in highbrow areas.”

Eboigbe stated that the huge reduction in travel plans in the tourism sector is a case in point. “The holiday makers unable to travel during the lockdown made some good choices based on huge savings and may have opted to deploy such resources to acquire luxury apartments for investment purposes. You can imagine annual savings from family holiday makers abroad being channeled to the property sector,” he added.

He said: “The investors are encouraged as there is demand for luxury apartments and this is in line with economic principle of demand and supply. Again, foreign inflows occasioned by the exchange rate are another factor. The social media and online factor have simplified the consummation of transactions, including the entire process of viewing, due diligence on the title and payment. So, we have massive investments of diaspora investors. Also, the rate of returns on these classes of listings is considered worthwhile.”