These are trying times for property owners in highbrow areas as the exit of expatriates is forcing them to reduce rents. The reality of the moment has continued to dawn by the day in the nation’s real estate sector, mostly in luxury segment of the property market, with concerns that the industry has become the biggest victim of recent negative policy and decisions of governments as well as COVID-19..
The evacuations of foreign citizens by their countries, such as United Kingdom and United States in the wake of the pandemic have increased the vacancy rate in the high-end properties. It is worsened by depressed economic sentiment, and the excess supply of these properties – which is outstripping demand.
The United Kingdom and United States of America officially evacuated 886 of their citizens from Nigeria. While the UK evacuated 546 from Abuja and Lagos, the US airlifted 340 from Lagos. The number of expatriates who have left the country has so far exceeded 1,500 and this number is continuously increasing.
Expatriates from blue-chip companies and oil firms inhabit most of the posh homes in Ikoyi, Ikeja Government Reserved Area, Victoria Island and Lekki in Lagos. Foreigners also enjoy staying in highbrow areas in Abuja, Kaduna and Port Harcourt.
Essentially, the pandemic has affected the income of many tenants, which led to failure in the payment processes. There has also been a glut of new luxury residential buildings. All of these are factors that directly reflect on the returns and revenues of property owners.
With the increasing departure of expatriates, the expectations of real estate experts indicate deterioration of the condition of the real estate sector. Among the most prominent of these expectations is a forthcoming decline in real estate investment in terms of prices and performance.
The Chairman, Faculty of Estate Agency and Marketing, Nigerian Institution of Estate Surveyors and Valuers (NIESV), Sam Eboigbe disclosed that repatriated foreign citizens have affected the real estate market, essentially the high-class residential properties.
He said that if the pandemic lingers, most of the properties vacated by the evacuated expatriates will ultimately have their running tenancies and leases attain expiration and the sector will be negatively imparted with colossal loss of income.
According to the Chairman, Royal Institution of Chartered Surveyors (RICS) Nigeria Group, Mr. Gbenga Ismail, “the absence of expatriates has caused a glut in the higher end rental market. Effectively, the rents have dropped at least by 50 per cent in Ikoyi particularly.
“ In Victoria Island you have almost 70 per cent drop. Lekki however gained some of the losses of Ikoyi and Victoria Island. Rents in Lekki held on without much significant drop in rental values.”
Ismail said that some leases are not being renewed whilst the wait period to lease predictably might now be longer. This inevitably may force rental levels down, adding, “we are not experiencing abandonment.”
The past president, International Real Estate Federation, (FIABCI) Nigeria, Chief Kola Akomolede, also confirmed the development saying, “the demand for properties in those categories mostly in Ikoyi and Victoria Island has gone down leading to downward review of rents.
“Some of them vacated their residences and gave up their leases since they were not sure when they will come back. In fact, some landlords are in a dilemma now.
“Their expatriate tenants left abruptly and while they are still away, their leases expired. The tenants are not around to renew and pay and their things are in the premises.”
Eboigbe continued: “Most of these transactions were furnished residential accommodation that we begin to wonder if they had foreknowledge of unfortunate events typical of this pandemic at the point of negotiation of the terms and conditions.
However, in cases where properties of expatriate tenants have not been removed upon expiration of tenure, the country offices are contacted and arrangements concluded on removal of such properties since term of renewal is doubtful at this stage.” (The Guardian)
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