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.
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