4
The Big Read
Sunday, August 5, 2012
Sunday Mirror www.nationalmirroronline.net
‘it’s embarrassing seeing govt property also wasting away’
Old Federal Secretariat Complex, Ikoyi, Lagos (Inset: Abandoned building on Azikiwe Street, Lagos Island)
CONTINUED FROM PAGE 3 much money we are wasting. “Start with the NECOM House; that building burnt during Shagari’s time. That property has been empty since then. The Independent House also, I can’t remember exactly since when that place has been laid waste; the Federal Secretariat has been empty now since federal ministries moved to Abuja. He added, “then go outside, drive along the Lagos-Ibadan Expressway, there was a hospital that was built there by Bola Ige between 1979 and 1983. You just imagine if there were no subsequent governments thereafter. That property is built on four floors; it is a solid construction but is rotting away. As a property man, I get embarrassed. I try to calculate what we are losing in terms of income from such properties or in terms of how much is tied down. For example the Federal Secretariat, whatever the problem on it is, for God’s sake, the Federal Government should stand up and resolve it. There is no problem that doesn’t have a solution. It is certainly an embarrassing situation to see government properties wasting away for years. Not one year, not two years, not three years but several years up to 20 years. No reasonable person will allow his personal property to waste away like that. But because it is government property, people are unconcerned and don’t care,” he stressed. But why aren’t our property management giants seeing this segment as an opportunity to move in not only to properly utilize but also make some money rather than watch government waste the public properties? Akomolede said after several years of wasting away of the Federal Secretariat at Ikoyi, Lagos, the Federal Government decided to either sell, lease it or have an agreement with a company to refurbish the place and turn it into residential apartments and sell the flats. He added that advertisements were run on it and a lot of organisations were helping to market it, not knowing there was a problem between the Lagos State and Federal Government. That, he pointed out, was the ‘last straw’ that buried the property practitioners’ dreams of putting the facilities to better and more profitable use. “It is a political issue which I think should have been solved politically. If Lagos State has a grouse, the Federal Government should call the state government and resolve it. We had similar problems with 1004 Flats, but they were resolved,” he stated. “What do you say about the Independent Building that is the pride of the nation and signifies our independence but is now wasting away? There so many of these abandoned buildings, it is embarrassing knowing the worth of those properties that are wasting away especially in a country of scarce resources. You have a scarce commodity and then you are wasting it. It doesn’t make sense to me but like I said it is left to the government, and they don’t care as long as they have their own personal properties and everything
is going on fine for them. Many of us talk; as I am talking to you now, you are going to publish it. But is anybody listening? Maybe one day God will give us a good government; a good leader that will look into this area,” he said. In his analysis, Managing Director of the Financial Derivatives Company, Mr. Rewane Bismark, noted that vacancy rates in prime areas remained on the high side with residential properties constituting a higher proportion of vacant houses. Also, he pointed out that demand for properties remained flat due to economic constraints in the country, which, he said had been a recent trend in the market since the aftermath of the economic downturn. As a result of this, he said potential buyers/tenants had to re-adjust their spending patterns by migrating from prime to more affordable areas. Shift in consumer preferences, he said led to a readjustment in rental prices as demand for properties noticeably declined. For the sector to move up, Bismark said some structural reforms would have to take place, which would include efficient pricing mechanism, removal of legal bottlenecks associated with title documentation and building plan approvals. He said: “Assets need to be appropriately priced to prevent the incidence of an asset bubble. We would recall that a property price bubble heralded the global economic meltdown. A well regulated sector run by professionals would enhance confidence in the sector and possibly attract foreign investment.” President, Africa Federation of Real Estate, Mr. Akin Olawore, said nothing much was achieved in housing sector in the last year. Rather, he said major investors concentrated on construction of shopping malls and hotels, noting that Ikeja City Mall was recently rolled out by the private investor, while other malls are still coming in. Commenting on the values of property, he said they had begun to stabilise after four year of global financial crisis, noting that people are starting to show interest in middle-income property along Lekki axis of Lagos State. The Lagos-based estate practitioner noted that all the promises by government to revamp the housing sector, especially in the area of land reform and virile mortgage system failed to yield positive results, saying that lack of access to land by developers for affordable housing development has remained problematic in many states of the federation. Besides, he explained that the downturn in the economy also contributed to low performance of the housing sector, saying that year 2011 was known for paucity of fund for real estate investment and difficult year where people found it difficult to pay their rent. National Publicity Secretary of the Nigerian Institute of Building, Mr. Kunle Awobodu, observed that the construction industry in 2011 gained from diversification of investment from the capital market to real estate business. He noted that the spread of housing estates was noticed all
over the country, but that reforms in banking sector became a constraint as funding of building projects suffered a vivid reduction. “Real estate development was faced with climate change effect as floods ravaged some housing estates in the riverine and coastal areas, resulting in demand declivity,” he said, He explained that the Tenancy Law in Lagos State, which has limited revenue derivable from rents at letting stage, make investors’ projection remain at conflict with the source of funds. The situation, he said reminded stakeholders in real estate of the essence of having longterm loans for construction projects. “The high prices of cement witnessed in 2011 is not expected to continue in 2012 due to production increase from WAPCO Lafarge’s Lakatabu Plant that President Jonathan recently commissioned. Likewise, other cement manufacturers are expected to commence operation soon to raise cement production level in the Nigerian market,” he said. Moreover, Sunday Mirror findings are that real estate investors now prefer investing in hotels than in residential buildings. The growth in the number of hotels in Nigerian cities especially Lagos and Abuja has been attributed by experts to high returns on investment, huge demand due to increasing cities population, good management and services among others. From the few popular hotels before 2000, Lagos, the commercial hub of Nigeria and Abuja, the federal capital territory, have become new hospitality havens for investors seeking quick returns on their investments following the persistence lull on luxury residential segment of real estate. In the last three years, investigation by Sunday Mirror showed that more than 300 new hotels have registered their presence in Lagos alone. Some of the new entrants in high brow areas of Lagos include the Four Point Sheraton, Palmview Manor , New World Group, Aquatic Hotel, Touch Down, Hopesea, Best Western Hotels, Golden Tulip, Stop-Over, Southern Sun, Savoy Suites, La Cour Boutique, Isno Hotels, Victoria Crown Plaza, Radisson Blu, Sofitel Morehouse, Lekki Inn, Bristol, Protea ; Oriental De Rennaisance , and Intercontinental Hotels, among others. Justifying reasons for the latest boom of hotels across Nigerian cities in a telephone chat with Sunday Mirror, First Vice-President of the Nigerian Institution of Estate Surveyors and Valuers (NIESV), Mr. Emeka Eleh, said that the daily increase in human population in Lagos and Abuja, and huge demand for short services by people on business or holiday tours were responsible. He said, “More people are coming into these cities to do one business or the other and they need accommodation for the short period they are going to stay, hence the boom in hotel business.” Besides, Eleh, who is the Managing Partner of Ubosi Eleh + Company, an estate management and valuation firm, added that guaranteed huge returns on investment owing to short-sale nature of the hospitality business with better services and management has made development of hotels the bride of many investors. Eleh said, “In locations such as Lagos, there are more demand for boutique hotels considering its huge human population and the increasing number of people coming in to do business. I have found out that hotel rates in Lagos are very high than any other cities around the world. “In the United States for example, you can get a hotel room for $20, but in Lagos, the average rate is $400 which is N64, 000 per night.” He is of the opinion that with more supply, the rates can be reduced. Another Lagos-based real estate practitioner, Mr. Samuel Ukpong, remarked that hospitability business is moving on well because of the brand. According to him, the involvement of core professionals in the management of some of these hotels has enhanced delivery and returns on investment. He said, “Most of their services are short because of people coming in there for seminars, workshops, and other ceremonies; returns on investment are high and their rates too are high including cost of operation.” He noticed that most of the hotels in Lagos and Abuja are often fully booked, saying it is a sign that real estate is moving on a high pedestal . Unlike Lagos and Abuja that CONTINUED ON PAGE 5