Residents Moving Out Of Victoria Island, VI Lagos As Property Owners Hike Rent Prices

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July 23, 2015 – Residents Moving Out Of Victoria Island, VI Lagos As Property Owners Hike Rent Prices

Victoria Island (VI) is a prestigious real estate destination in the Eti Osa Area of Lagos State. It enjoys proximity to the Atlantic Ocean and Lagos Lagoon. This makes it an attractive location for corporate bodies and multinationals.

The same category of people also put up residential buildings for their staff, for its proximity to their work.

This makes Victoria Island an exclusive preserve of the rich. For example, an exquisitely-furnished four-bedroom Penthouse for rent in Victoria Island is available for N24 million per year, while in lower options, a self-contained apartment at Oniru Estate, an extention of Victoria Island, goes for N450,000 yearly.

Owning a property or residing on VI used to be the exclusive preserve of the super rich. However, in recent times, the fortunes of VI seem to have nosedived. There are a lot of buildings unoccupied in the area. A walk around VI presents you with the stark reality of empty houses.

Originally designated as an upscale residential area, failing infrastructure and overcrowding in the old business district on Lagos Island and tax zoning enforcement on Victoria Island led to a mass migration of businesses over the last 25 years. Today, Victoria Island is one of Nigeria’s busiest centres of banking and commerce, with most major Nigerian and international corporations headquartered on the Island.

However, the influx of banks and other ventures have changed the formerly serene atmosphere of the Island. Long-time residents complain about the increase in traffic and influx of street traders, who cater to bank employees and businessmen.

Now, a growing trend on VI is the unoccupied flats and buildings. The properties, though are exquisitely and tastefully finished with top-of-the range facilities and services, they have not been able to attract tenants. Usually, the properties come with well-cut lawns, fitted kitchens, fitted bedrooms, gym, table tennis, 24-hour electricity, and bar, among others.

The Principal Partner, Bode Adediji and Co., Mr. Bode Adediji, blamed the rising number of unoccupied buildings or apartments on the absence of the middle class in Nigeria.

According to him, the luxury apartments were not built for lower income group, but for the upper middle income group. “Therefore, once the economy does not support the growth of that income bracket, then, we are only building speculatively,”he said. But in terms of the indices on the ground, Adediji said the volume of demand could not justify the massive influx of luxury apartments into premium locations, such as VI and Ikoyi.

Experts say the infrastructural decadence on VI and in Ikoyi was an unfortunate development that affected property value and occupation in the area. They maintain that, despite the huge taxes generated from the area, in return, investment in infrastructure is negligible.

“By the time you take away the main arterial roads – Awolowo Road, Bourdillon, Adetokunbo Ademola – there is nothing you can trace as active acknowledgement and contribution of government of upgrading this environment where the majority of her tax income spinners work and live. Eighty percent of the banks have their headquarters here, yet they benefit next to nothing as against the volume of what they contribute. Land use charge alone, the bulk of it actually emanate from this axis, yet the bulk of the roads are still what they were prior to the introduction of this land use charges,” Adediji said.

Stakeholders maintained that the conversion of VI from a residential area to commercial has nothing to do with the unoccupied buildings that now adorn the area. However, they put the blame at the government doors for refusing to plan ahead.

“As you witness changes, you have to re-examine your plans to conform. For instance, it is the inability of Nigerians to create highly-designated and controlled commercial preccints that make people to convert their residential places to commercial use. On Victoria Island, there is a CBD, but it is just about one square kilometre; they never envisaged the volume of growth in business around the area,” Richard Ibilola, an architect said.

Many stakeholders are of the view that the development in Lekki is part of VI problem. As adjacent neighbourhoods grow, the primary source of meeting their demand would be from the existing neighbourhood.

The situation has forced occupiers of VI. according to Oyedele, to relocate to Lekki, where we have, for the first time, the concept of gated communities, which is absent on VI.

“So, why would you have to pay $70, 000 for an apartment on VI when, for one-third of the amount, one can get a better apartment in Lekki with better facility and ambience?” Adediji asked.

A past National Publicity Secretary of the Nigerian Institute of Estate Surveyors & Valuers (NIESV), and newly elected Chairman of the Lagos State Branch, Mr Sam Ukpong, said the glut is an interplay of demand and supply.

He said many houses have been supplied to the market without effective demand. He explained that when the Federal Government sold its properties in Ikoyi, some years ago, most of the buildings had large expanses of land with single occupants, which its new buyers converted to storey buildings for multiple prospective tenants.

He said the demand for the properties is not as high as supply – thus, leading to a glut. Besides, he further said, the disposable income of people and even companies have shrunk to unimaginable levels.The developers of these houses, most times, lack construction knowledge or trends in housing development and build what will not easily be taken up by tenants.

Ukpong also blamed the development on the concept of building a functional house. For instance, he said that some developers build wrongly, by either not having a kitchen or sitting room big enough for tenants’ need. So, people inspect such buildings but they are not usually satisfied with them.

A former Chairman, NIESV, Lagos branch, Mr. Shola Fatoki, said the property glut is a mirror of the downturn in the economy.

This, he said, could be seen in the movement of some residents from the upscale areas to places, such as Gbagada and Ilupeju, while the former residents of those middle class abode have since relocated to Ogba, Agege and Mowe/Ibafo in Ogun State.

A developer, Mr Kayode Oyedele, confirmed the high vacancy rate in the VI area. He said it was more visible on VI and Lekki, where a great percentage of houses carry the “to–let”banners and boards. He said some properties are over-priced by their owners – making it impossible for them to be sold or let out quickly. He said it was more worrisome where houses which do not have competitive facilities or services are prized so high. He, therefore, urged developers to be realistic and also work in tandem with current economic realities to beat the property glut.

Within the Victoria Island/Ikoyi axis, there are commercial spaces whose rents go as high as $1,100 per square metre yearly and residential apartments whose yearly rents are above $130,000. Examples are the Maersk Building and the Ocean Parade apartments for commercial and residential tenants.

But with a huge housing deficit, can the nation afford to have buildings unoccupied? What can be done to arrest the situation?

A real estate lawyer, Rotimi Jaiyesimi, said as obtains in developed economies, property speculation and arbitrariness is discouraged through special levies on vacant properties. Known as “The fee structure”, it is a motivation for property owners to realistically pursue the sale of the building or find a productive use for it by possibly dropping the price at which it can be rented or sold.

“In developed societies, there are laws that force owners of buildings vacant for over 90 days to register them, and fees are imposed after the first year, at $500 a year, and increased to $5,000 a year after 10 years,” Jaiyesimi said.

This, he said, will discourage property owners from keeping their buildings in the city vacant and unproductive.

Stakeholders canvass that a timely intervention to reverse this trend is needed, especially given that vacant buildings are potential public safety and fire hazards. Besides, people who may be involved in criminal activities also occupy such properties.

[The Nation]