Prices continue to skyrocket, off-plan submarkets are gaining momentum, the increase in non-marketing ads, the bubble shortlet and the millennial rule have characterized the residential real estate market on the island of Lagos in the first half of 2021.
Considered the most expensive real estate market in Nigeria and by extension, the districts of West Africa, Ikoyi, Victoria Island and the Lekki Peninsula continue to thrive as a premier real estate market. .
Despite a struggling economy and general uncertainties surrounding the country as a whole, overall market activity in various subclasses of residential assets remained strong in the first half of the year. Residential property prices in these neighborhoods are near an all-time high and developments are multiplying at an unprecedented rate.
This article takes a look at various activities and trends that shaped the real estate market in these neighborhoods in the first half of 2021.
Lagos’ premier land market continued to witness an upsurge in activity with land prices at an all time high in prime locations on the island. Gated communities like Banana Island, Shoreline Estate, Cowrie Creek, and Pinnock Beach Estate have seen price increases of over 50% year-over-year (H1 2020 to H1 2021).
The asking price of land on Banana Island currently averages 850,000 to 1 million per m² and can go as high as 1.2 million per m² for waterfront land.
Land prices continue to rise due to pent-up demand from an asset class with generally limited supply, coupled with the fact that most landowners are currently willing to hold on in anticipation of a better return. on investment in the years to come.
Another major reason is the effect of the dollar on the economy which has generally affected the price of all goods and services in the economy.
Off-plan activities have continued to gain ground in the market, flourishing mainly because they provide a win-win situation for the developer and home buyers. Developers on the island are increasingly taking advantage of off-plan transactions to finance their projects, while homebuyers can purchase at a relatively lower price, a flexible payment plan, and the ability to choose their own equipment and accessories. for the House.
Off-plan sales represent a significant volume of the total sales transactions recorded in these districts.
Millennials continue to rule
As expected, millennials have continued to play an active and more dominant role in the market. They were major participants in startup homes and low entry properties with a price range of $ 25 million to $ 80 million. The market has also seen pent-up demand for studios and 2-bedroom apartments in areas with the best location demands in Lekki Phase 1, Oniru and Ikate.
Short term bubble
The short-term rental market in these neighborhoods continues to thrive, with many activities in Ikoyi, Victoria Island and lekki Phase 1. The market was characterized by strong competition as the first half of 2021 saw a range of private institutions and companies enter the submarket.
The apartments are gradually being converted to executive rentals with an increasing demand for luxury corporate residences. These apartments offer users the option of renting on their own terms and the flexibility to change apartments and neighborhoods. They are basically designed for convenience and productivity.
The sample of monitored and well furnished apartments recorded an occupancy rate of over 85% in the first half of 2021. Apartments with 2 and 3 bedrooms were mainly sought after.
Apartment prices for a typical 3 bedroom start at N 120,000 (around $ 230) per night, while the detached house costs around N 240,000 (around $ 500) depending on the neighborhood.
The first half of 2021 also saw a significant increase in the number of non-market listings. These are advertisements that are offered for sale or for private hire. More and more privacy-seeking sellers have opted for off-market models to sell their properties.
At the end of the line
Negotiations continue to play an important role in structuring and closing transactions in the main residential markets of Lagos. The spreads between actual quoted prices and the closing price continue to widen. On average, properties sold between 15% and 20% less than their advertised prices.
The second half of 2021 looks decently promising as some real estate developments currently underway will be delivered. Most house lease renewals are done during this half of the year.
Overall and compared to previous years, the market in 2021 is on the right track.
Contribution by: Ogunkunle Olabode