The Nigerian luxury real estate market is getting a significant boost from increasing number of wealthy individuals, who are seeking to own multiple homes and new portfolios.
The luxury residential market increased last year as a result of the impact of the COVID-19 pandemic, as many in the working class saw the need for better homes with access to facilities that encourage Work From Homes (WFH) policies.
Such facilities, include steady electricity supply and stable internet connections. Besides, increase in insecurity drove many to seek more secure neighbourhoods within gated communities.
The fall of the Naira relative to the dollar has also made purchase of houses more affordable for those in the diaspora, leading to an increase in demand, with its upward effect on the price of the residential units.
According to Knight Frank Nigeria, Port Harcourt, Abuja and Lagos recorded an increase in sale prices between 10 per cent to 12 per cent across the prime neighbourhoods in these cities.
“The motivations for price increase include adequate security and power supply as well as the quality of houses in these areas.
In 2022, Knight Frank anticipates a gradual increase in the demand for prime real estate, but not necessarily the super luxury class. “An expanding middle class desirous of quality housing will fuel increase in demand,” Chief Executive Officer, Knight Frank Nigeria, Mr. Frank Okosun said.
“As long as the offerings continue to match the expectations of the home purchasers, demand will remain sustainable. The growth of this demand is likely to be muted by the state of the wider national and global economy,” he said.
The Director, School of Environmental Studies, Moshood Abiola Polytechnic, Ogun State, Dr. Samson Agbato, said despite the country’s struggling economy and general unease, overall market activity in various residential sub-asset classes remained strong in the first half of the year.
Agbato, an estate surveyor and valuer, said Lagos and Abuja recorded an average of 25-30 per cent increase in price. The Lagos Island residential real estate market in H1 2021, for example, was characterised by the short let bubble, and the millennials’ rule.
“The increase in prices can be attributed to the all-time high price of land in prime locations on the Lagos Island (particularly in gated communities like Banana Island, Shoreline Estate, Cowrie Creek, and Pinnock Beach Estate).
“Fast-rising off-plan development activities, continuous rule of millennials, a short-let market bubble, an increasing number of off-market listings,” he said.
In 2022, Agbato said the residential real estate market would remain mostly unchanged from where it was in 2021 as fewer rooms will continue to be demanded in city centres as against four to five bedrooms.
“Short-term rentals will continue to receive upward reviews. Therefore, developers will make every effort to meet the highest possible standards in their projects, and some transactions will be completed for much more than the asking (and market) price, even though few ones may close for undisclosed sums,” he said.
Source : Blue Print