Waterfront real estate remains bullish amid challenges
Despite the rising demand for luxury homes in Nigerian cities, buyers remain undeterred and continue to pay a premium for waterside homes. Luxury waterfront properties in Lagos command some of the highest premiums for the views and location compared to the rest of the cities in the country.
Around the world, waterfront properties have remained high in demand and command a premium compared to inflation and non-property investments. In the 12 months to June 2022, the average price increase for a waterfront property in the index was 10.9 per cent.
The pandemic and successive lockdowns have put greenery and space at the top of buyers’ requirements for homes, fuelling sales and price growth in prime regional markets. Low supply has also kept upwards pressure on prices.
Lockdowns and COVID-19 did nothing to deter potential buyers, with 42 per cent of respondents to Knight Frank’s Global Buyers Survey stating they were more likely to buy a waterfront property as a consequence of the pandemic.
The average international premium for a waterfront property compared to a non-waterfront home was 40 per cent in Q2 2022. Senior research analyst at Knight Frank, Chris Druce, said globally the pandemic has led to a fundamental reassessment of housing and lifestyle requirements.
“For many, being near the water with more space and greenery has been a primary driver, and with supply limited in all markets this has supported price growth and premiums,” he said.
Beachfront property was the most sought-after location, with waterfront property attracting an average premium of 63 per cent. This narrowly pipped a harbour location (62 per cent), with coastal, where waterfront buyers pay an average premium of 40 per cent, third.
The Guardian investigation revealed that due to high demand and proximity to beaches and resorts, the rental income placed on waterfront properties in Lagos and other city centres is higher than non-waterfront properties.
The unique features of waterfront property had attracted huge investment in Lagos, Rivers and other states, with a plot of land as high as N1.2 billion, N100 million, N90 million and N200 million respectively.
Lagos, in particular, boasts of choice locations such as Banana Island, Osborne Foreshore Estate in Ikoyi, Lagoon front estate in Epe, Avalon foreshore, Westwood Lakes in Sangotedo, Jewel Gardens in Eleko, Vopnu city ocean view Abijo, Atlantic view garden, ilashe private beach resort and others.
Presently, the waterfronts don’t command high value as they should be, but premium plots in such locations have high value. Findings revealed that one hardly sees any waterfront properties coming into the market except, when it is developed into a recreational centre, where people can come for relaxation and commune with nature.
The Guardian gathered that in locations like lbeju Lekki, a lot of waterfront properties are coming up, but those who buy lands do not value the utility created by waterfront. Also, the fear of ocean surge is scaring away new investors in some locations.
An estate surveyor and valuer, Prof. Austin Otegbulu, said waterfront homes, including land and beaches are good locations anywhere in the world but if they are kept in a way that they cannot provide the services people expect from the locations, buyers can not derive utility and so the value diminishes.
He said: “The main determinant of property value is liquidity and ability to satisfy human needs and those the property is meant for. In the real estate economy, it is called real estate productivity, which is the capacity of real estate to have economic activities.
“Every real estate is designed for a particular purpose, if it is able to satisfy that purpose satisfactorily for users, we say the real estate is productive. When the waterfront locations are turned to dunghill or dumpsite and criminal elements take over the location, use speedboats to attack people and rob people, it becomes a problem.”
In the landmark area of Oniru, Lagos and Lekki the waterfront locations are well planned and built up and there are a lot of recreational centres in the area thereby creating value. He said the planned waterfront area will not attract high value if the government allows criminals to operate in the locations and dumping of wastes in the area.
Waterfront real estate, he noted, could only command higher value and thrive in locations where conditions for it to flourish are provided. Otegbulu, who is also a lecturer in the Department of Estate Management, University of Lagos, said adequate security is key to higher performance of the waterfront real estate market.
He said: “Living in waterfront properties is quite expensive because you are overlooking nature. Naturally, waterfront land doesn’t flood depending on the distance between the land and sea level, so, the performance of the sector is relative because when waterfront locations are well planned and secured, people will pay higher for it.
“When there is flooding in the waterfront area, it is either because people have built up land areas of the waterfront and when water flows in, it does not flow out freely. Initially, in Ahmadu Bello Way when it rains, the properties in the location are flooded but after they have solved the problem it does not affect the property value negatively.”
Another estate surveyor and valuer, Mr. Gladstone Opara, said, the potential in waterfront real estate is not being tapped because of lack of planning and inertia on the part of the government.
Opara, who is also the President of International Real Estate Federation (FIBACI), lamented that in areas, where there are landmark waterfront developments, people and government tamper with it and cut off the waterfront.
Opara said: “The potential of waterfront real estate have not been understood. Look at the Queens drive in Onikan/Abayomi Drive in lkoyi about 30 years ago; it was a beauty to behold in Lagos. Over the years with new government coming to power and because people in government want to acquire property in lkoyi, they allocated the waterfront plots themselves and the beauty of Queens Drive disappeared. This constitutes intrusion because people will now have to sandfill and distort the ecology of the environment. We are crying over climate change, this is one of the causes.
“Even in the Parkview Estate that was developed, there was a waterfront on the boundary between Banana lsland and Parkview, but at a point the waterfront on the Banana lsland area was sand filled. People think of today’s gain, unconscious of tomorrow. ” He pointed out that waterfront is a facility God provided for mankind for natural anesthetic, relaxation and more defined in real estate development.
According to him, many countries, especially in Europe that harnessed the potential of waterfront are those who understand what it means in the development of their real estate and tourism industry.
He said: “Waterfront in those countries attracts higher value but in Nigeria the reverse is the case. In abroad, the locations are always guided and monitored. Some areas are marked out as commercial development and the beauty of such development is that they are major attractions for tourists.
“The waterfronts are not even secured, they appear so porous that thieves and miscreants can appear to invade people’s homes.” Opara called for regulations to correct the damages done to waterfront areas. The Waterfront Authority in Lagos, he said should not be for money making but enforcement of regulations to preserve waterfront real estate/developments.
But a former Chairman of the Nigerian Institution of Estate Surveyors and Valuers, Lagos branch, Mr. Adedotun Bamigbola, said waterfront residential properties remain one of the choicest locations in any environment, adding that they are not disappearing from the market. He said due to undersupply or scarcity of waterfront properties, they are still very costly and keep increasing everyday.
Bamigbola disclosed that in Banana Island for instance, waterfront land goes for about N1.4million per square metre, while regular plots in the estate go for around N1.1 million per square metre.
He said: “The scarcity can be created because people are not selling what they have now or because there are hardly any new developments coming up. Lekki waterfront was sold a long time ago. To get any waterfront property, it is going to be from the secondary market.”
“Land is under-supplied and then waterfront real estate.” He also stressed the need to strictly enforce law prohibiting the sale of waterfront lands by the government to avoid usurping the ecosystem.