Proshare - Facebook Proshare - Twitter Proshare - Google+ Proshare - Linked In Proshare - RSS Feed

Real Estate Market is a Function of Economic Prosperity in a Country

Proshare

Monday, January 09, 2017/ 3:22 PM /FDC

Q: I have a block of flats on Glover road and it has been vacant for over 9 months. When can I expect it to be occupied with an asking rent of $60,000 per annum?

A: The real estate market is a function of the level of economic prosperity in a country. As a lagging economic indicator, it rises and falls after the business cycle. That is why it is not surprising that we have seen a huge leap in the vacancy factor in the upper end of the market. Since 2015, the vacancy factor index has increased by 74% with marginal increases quarter on quarter.

The excess supply of residential properties has created a glut and a supply gap. It is now a buyer’s market whereby the bargaining power of buyers has increased significantly at the expense of sellers. Buyers and tenants are now searching for better quality in order to get more bang for the buck. Quality to a buyer means better location, property ambience and facilities.

Glover road, where your property is located, has one of the highest vacancy factors in Ikoyi with an increasing supply of apartment and office blocks. Recently, the road has undergone a facelift with road repairs and positioning of streetlights. $60,000 asking price considering the devaluation is extremely unrealistic at a time when annual rate of inflation is 18% and the devaluation effect is about 45%. This makes it very difficult for tenants that are likely to occupy such luxury flats to pay.

However, if you can invest some more in making the property look more attractive, chances are that your property will be the first to become occupied. A property will only be occupied if:

 

         The location is attractive, close to the central business district, water front with an unobstructed view of 180 degrees

         Has outdoor amenities like swimming pool, gym, golf course, tennis lawns

         The is security coverage

         The finishing of the property is improved after the exit of previous tenants

         There is adequate car parks as cars cannot be parked on Glover road


The depreciation of a property is worse when the property is unoccupied therefore it is extremely important to reduce rents in order to increase occupancy.

Related News
1.      
My Investment Portfolio Dropped Less Than 50% In Dollar Terms, What Should I Do?
2.     
Is The Official Exchange Rate of N305 Realistic & When Can We Expect Uninterrupted Supply of FOREX?
3.     
Global Economy Watch - Predictions for 2017: Globalisation Takes A Backseat
4.     
2017 Budget - Navigating Through A Cloudy Atmosphere
5.     
Made in Nigeria and Make in Nigeria - Strategic Steps to Grow The Economy
6.     
Naira firms up at N305 against Dollar at interbank FX Market
7.     
Ambitious Spending Plans in 2017 Will Not Be Realised
8.    
Oil-Driven Recovery Will Be Muted in 2017, Investment Lustre Will Be Slow To Return
9.     
Market Movements in 2016 - Forex Reserves Drops by 12.87%
10. 
Not a Vintage Year
11.  
The Slow Boat to FX Reform
12. 
From The Archives: Rejoinder on What Causes A Currency Crisis
13. 
Untapped Potential of Remittances

 

Related News