Private developers embracing affordable housing

Largely driven by developers’ response to the millennial market’s demands, blue-chip executives and expatriates are also opting for studio apartments. Investors who buy bigger houses for investment purposes are now being advised to purchase multiple studio apartments to sustain portfolio cash flow.

Factors influencing demand for such affordable offerings like studio apartments amongst millennials are better space management, functionality and cost of managing residential units. With high land costs, weak infrastructure and the absence of modern facilities continuing to hamper the growth of Nigeria’s industrial sector, experts said affordable housing in form of studio apartments and others are the ideal vehicle to build a sustainable and growing business because of the ability to serve more “clients” in one location, along with achieving a higher per-square-foot rent than you can achieve in a single-family residence.

The trend is receiving acceptance in places like Lagos, Abuja and Portharcourt with high cost of land, offering less competition and more economic of scale.
Before, many investors possess a limiting belief that it is difficult to buy an apartment complex and they never enter the arena.However, this faulty thinking has been changing the past few years, but many investors still hesitate to explore the possibilities of jumping into affordable housing.But with the lull in the sector occasioned by government macro economic policy, over-supply in commercial and retail sectors as well as inappropriate supply in the residential sector, more investors are embracing it.

Also, International real estate advisor, Savills put the 2017 value for global real estate at $280.6trillion with the residential component accounting for $220.6trillion. Sub-Saharan Africa’s residential real estate market is estimated at $6.6trillion, unevenly distributed across its 1.12billion inhabitants.
Promoters of Periwinkle residences Lekki are already adopting the scheme for its Oxygen Apartments , the newest development in the exclusive and serene water view of Lekki Phase 1, Lagos.

Chief Executive Officer of Periwinkle Lifestyle Estate, Chiedu Nweke said the 10 -floor high-rise is a selection of one, two and three bedroom apartments, each having a generous layout with wide terraces, unrivaled opulence and grandeur in an enchanting contemporary architectural design.Alluding to its profitability, he said although, there is so many people in the market, competing, the market selects what they want. He stressed that the apartments have been sold out because of the location, pedigree of the developers, who are building to the dictates of the clients. Nweke, said, while there are lots of unsold houses around but there was no units left for sale in their apartment because they have been sold out.

“There is so many people in the market, competing, the market selects what they want, location, pedigree of the developers”, he added. Also the Managing Director, Global Property and Facilities International Limited Nigeria (PFI), Dr. Mohammed Balogun, said for a long time, developers had placed emphasis on supply-led housing development which had continued to cripple the economy by tying down investments in the industry while the country’s housing deficit continued to rise.

According to him, stakeholders had constantly decried the glut in the property market while the number of those who really need accommodation continues to rise.He said: “ in the last two years, there has been an oversupply of properties in major cities of the country, especially luxury development without a commensurate disposable income to take them up.He stated that according to findings, more than 60 per cent of those who need housing, do not need luxury homes but require compact and functional homes such as one and two bedroom apartments.He said, “We have more houses in Lagos than is required, there are more offices than people need. We have had an oversupply of three and four bedrooms.

One thing we have not learnt as a people is that we need to create a pipeline, create one and two bedroom apartments so that these will graduate to two and three bedrooms and another set will move into the one and two.“For instance, a young person who has just got a job can move into one, when he gets married he moves into two and when his family begins to grow, he goes to three. We have 90 per cent of residential as three and four bedroom houses, whereas the demand on residential for one and two bedrooms is more than 60 per cent. If we don’t address that, we will just continue to invest in property that will lie fallow”, he added.

For, Mr. Adekunle Raphael, the Managing Director of TobyKemsworth and developer of the iconic Honeywells Garden in Maryland, Lagos, affordable housing is determined by location and practice of the particular developer.According to him, everybody know what works for him and the kind of clients also determine the project choice.He stressed that his company has chosen an affordable option to met the network of clients like teachers and the young ones, who may not have the financial muscle to go for bigger apartments.

Mr. Raphael said the project was structured to address the affordability issue.Also, the Chief Operating Officer and Director , Northcourt, a Real Estate Advisory Services, Lagos, Mr. Ayo Ibaru stressed that Studio apartments, one bedroom and two bedroom flats near the city centre have continued to enjoy demand because of some macro economic factors. Ibaru, whose firm recently released a report on the sector said there is now a shift by some developers in favour of the affordable offerings to carter for newly married and younger ones, who constitute a larger chunk of the nation’ s population