Like every other sector of the economy, the current economic crisis is taking its toll on the real estate sector where it has been found that most tenants, both in the residential and commercial segments, are finding it difficult to meet their rent obligations.
Experts have attributed it to sudden loss of jobs and the inability of salary earners to pay their rents as most companies are either owing the workers or have suspended operations altogether.
The Vice Chairman, Nigerian Institution of Estate Surveyors and Valuers, Lagos Branch, Mr. Rogba Orimolade, told our correspondent that close to 80 per cent of all the properties under his care had defaulting tenants who were previously meeting their obligations.
He noted that some sectors, including oil and gas, that were hitherto known to offer job security had been the worst hit lately.
Orimolade said, “What is most interesting about it is that the sectors, which were termed to be secure, such as the oil and gas industry, are now the jobs that are more insecure. A lot of people are being retrenched; so, the high end or the upper middle class people working in oil companies and who live in Victoria Garden City and Lekki Phase I and other areas whose rentals are up to N4m and above are struggling.
“Some are even moving to cheaper accommodation. The ideal tenants that most landlords look forward to occupy their properties are currently defaulting because of the uncertainties in the economy. The situation is really bad.”
According to findings, the number of unoccupied houses in high-brow areas of Abuja and Lagos, in particular, has risen considerably, while many developers are wary of starting any fresh construction.
The Chairman, Lagos State Chapter, Estate, Rent and Commission Agents Association of Nigeria, Mr. Godwin Alenkhe, stated that the lull in the property market began late last year and that by the end of the first quarter of this year, the situation had gone from bad to worse.
According to him, the biggest problem being experienced by developers and real estate brokers is the Federal Government’s new policy on accountability, which is making a lot of people to hold on to their money and in turn affecting the sale of landed property.
“Most people who were interested in buying properties in the past were politicians or people in government; but now, a lot of them are holding back. It began towards the tail end of last year; it has really affected sales; even international investors are affected as many of them are waiting and watching,” he said.
He noted that the number of vacant properties, especially in Ikeja and Lagos Island areas, with very high value, had risen, adding that more people in the middle class were already searching the market for properties in less expensive areas such as Ikorodu.
Alenkhe explained, “There is no money in circulation; so, people cannot afford those high-end properties and are in fact looking at areas such as Ikorodu and others on the outskirts of Lagos where rent is a bit low.
“But we have also observed that there is no stability in rent. The Lagos State policy on one-year rent has come to stay but we have people who are trying to be smart with the business. Instead of some of them to take 10 per cent of the rental value as the legal or agency fee, they take as much as 20 per cent. This is unethical.”
Alenkhe said that apart from tenants, landlords were also affected as most of them were not getting enough value from their investment.
He added, “Everything is tied down to the economic situation; when salaries are not steady, rent cannot be maintained; this is one area that we cannot do anything about so, most of us that handle properties advise our principals to be more sympathetic towards the course of some of these clients.
“Property owners also seem to be sympathetic towards people even though it inconveniences them. The government should try to put in place policies that will make people to benefit from the dividend of democracy; most of the houses we have are from the efforts of individuals and people need to recoup their funds.”
Orimolade said that most estate brokers knew since last year when the naira fluctuation began and oil prices commenced sliding that the sector would be at the receiving end and had prepared for it.
“We anticipated that some of our tenants might have difficulty paying rents; so, what we have in place is some sort of structured arrangement because if the property becomes vacant, it may become harder to get another tenant to occupy it,” he said.
A partner at estate surveying and valuation firm, Osas and Oseji, Mr. Kehinde Akinyemi, said the challenges were in two phases – outright default and delayed payment.
“Some will not default but they will need to restructure the flow of cash, which results in a delay, but sometimes they look for other means of payment,” he said.
According to him, commercial real estate is a bit better than residential in terms of default in rent payment.
Akinyemi stated that upward rent review, which used to be common place, had become almost impossible due to the current situation in the country


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