Security issues stall rebound of Port Harcourt real estate market

Going by the Financial Derivative Company (FDC) report for the month of August, slow growth in the real estate market in Port Harcourt, Rivers State may likely remain unchanged unless underlying security issues are resolved. DAYO AYEYEMI, reports

…Luxury apartments record 20% occupancy rate

If report this month’s report of the Financial Derivatives Company (FDC) is anything to go by, things are not looking up in the real estate market in Port Harcourt, River State.

Reasons being that investors and buyers are sceptical about their investments due to the unresolved House of Assembly crisis, Governor Rotimi Amechi and the Nigeria Governors’Forum (NGF) imbroglio and crime in the state. All these issues have impacted negatively on luxury apartments in the Garden city with high record of vacancy ratio.

According to FDC report, luxury apartments are the worst hit with only 20 per cent occupancy rate, while small apartments have 80 per cent occupancy rate The report said, “Real estate in PH will likely remain unchanged unless underlying security issues are resolved. Major challenges to real estate in Port Harcourt, PH, are theft and insecurity.”

These, the report said have discouraged foreign investors. In its July report, analysts at FDC pointed out that security risks would remain a major challenge in several parts of the country, saying the nation would continue to witness slow recovery in the real estate sector until security issue is resolved.

According to the report, demand for properties was influenced by property rental price, quality of the property and availability of facilities. In Port Harcourt, it stated that excess capacity compelled landlords to forgo the high price of properties.

It stated, “High quality properties with good facilities and a moderate price sold out quickly. In Port Harcourt, findings revealed that commercial properties had a higher vacancy factor than residential properties.

“For example, the rental price of a duplex that would normally be let for N7m was cut to N3.5m,” it stated. Meanwhile, the August’s FDC report noted that real estate activities in Lagos were boosted by foreign investments.

The report saw increased foreign interest in Lekki-Ajah area, adding that major attractions are the Lekki Free Trade Zone, airport and seaport.

It noted that some estate developments such as Royal Gardens and Lekki Scheme are already seeing increased patronage, adding that there is increased occupancy rate for block of 2 and 3 bedroom flats due to the demand by the foreign investors.

It said, “Ikoyi, Victoria Island and Lekki are the preferred residential locations for security reasons.”

On the outlook for the year, the report said the nation should expect increased foreign investments in Lagos, saying there would be increased demand for office space and block of flats. It said Lekki-Ikoyi Toll Bridge would have a long-term impact in favour of commercial properties along the axis.

“Lekki-Ikoyi Toll Bridge to have a long-term impact on the residentialcommercial distribution of properties in Ikoyi and Lekki. Rental values of properties in locations such as Yaba, Surulere, Maryland, Ilupeju and Anthony Village are also increasing due to influx of people who cannot afford exorbitant rental price demanded in highend neighbourhoods.

It is also noted in the first half of the year that there was higher demand for office spaces than for residential houses in the highbrow areas of Lagos.

Prices of properties in highbrow areas of Lagos show that residential flats cost between N3m and N13m per annum; duplex goes for N3m and N20m; and shopping malls cost between N30,000 and N80,000 rent per square metre.

In Abuja for example, it was noted that the need for residential properties came from high demand from civil servants who require accommodation, coupled with the limited supply of residential properties.

Speaking recently with National Mirror, Vice President, (South West), Real Estate Developers’ Association of Nigeria (REDAN), Mr. Akinloye Adeoye, had maintained that the insecurity in the country has impacted negatively on the sector.

Explaining further, Adeoye said security challenge is affecting the perception of both local and foreign investors which, according to him, would not like to invest their money in troubled locations in the country.

He explained that real estate activities in the northern states and Abuja have totally collapsed. The downturn in real estate activities in Nigeria, Adeoye said has further been heightened by high rate of unemployment in the country, adding that majority of the citizens are not empowered.

To overcome the situation, he said the government must ensure that general peace returns to all the states of the federation.

He enjoined the Federal Government to inject funds into the Federal Mortgage Bank of Nigeria (FMBN), adding that the Pension Fund should also be invested in mortgage to address the housing needs of low and medium income earners. By doing so, he expressed hope that there would be activities in the sector and the housing market would rebound.

Lagos-based estate surveyor and valuer, Mr. Akin Olawore, also attributed the slow recovery of real estate sector to insecurity in the country and dearth of funds in the economy.

Apart from insecurity, he said developers could not access funds, while people who need houses could not access mortgage owing to dearth of funds.

Except the government injects money into the sector, he maintained that the situation would remain bleak. President of the Nigerian Institute of Building (NIOB), Mr. Chucks Omeife, pointed out that the security challenge in the country had weighed down on investment in real estate industry.

He said, “When you look at the region where the issue of insecurity has escalated, the issue of development becomes the last thing anybody can think of.

“Even in some areas where there are no serious security challenges, the general feeling is that of “wait and see”, and this has affected potential inflow of investment into the sector.”

He maintained that the period between when the security challenges started and when it would come to an end would reflect a decline in the output of the sector.

Declining output in the real estate sector, he noted is not good for the country considering the volume of predicted housing deficit. He blamed lack of regulation in the sector for slow growth, saying it has made it difficult to predict the prevailing situation in the sector.

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