The relationship between income and affordability of housing as well as ability to meet equity contribution for accessing mortgages for various income groups are the basic elements in the interplay between the forces of demand and supply in the housing sector, a study has revealed.
The report, which is the second in its series, by the Roland Igbinoba Real Foundation for Housing and Urban Development, titled the State of Lagos Housing Market has taken a critical look at the various segments of the real estate sector with a view to providing a veritable source of information for future investors as well as policy makers.
The State of Lagos Housing Market research report dwells on analysis of key supply-side and demand trends; detailed segmentation of international and local products; historic and current data on housing statistics in Lagos; house price index-measuring across major districts; luxury consumer insight and the average consumer’s demands on housing by specific towns and districts.
With a focus on the Lagos State situation, the report draws emphasis from the high commercial value of the state, which is predicated upon its high population density and states that Lagos State remains the commercial nerve of Nigeria with a high concentration of business activities and is at the moment, the most progressive in terms of infrastructure in Nigeria.
It further revealed that Facebook sources shows that human migration to Lagos grew at the rate of 18.6 per cent between 2000 and 2012, even as the Lagos State government’s Economic Intelligence Unit put the population of Lagos at 20.19 million with a growth rate of 3.2 per cent per annum and an urbanization rate of 16 per cent. Consequently, there are 20,000 persons per square kilometer and a daily intake of 3,000 people coming in from other states placing it as the top travel destination and its accommodation needs a huge puzzle especially at the low and middle-income levels.
The report thus offers the reader an opportunity to discover the latest market trends and uncover sources of future market growth for the real estate industry in Nigeria, find hidden opportunities in the most current research data in order to understand competitive threats through detailed market analysis, and plan corporate strategy based on expert qualitative analysis and growth projections offered in the report.
According to its author in the opening statements, “If you’re in the property market in Lagos, Nigeria, this report serves as a market intelligence tool. Our research will save you time and money while empowering you to make informed, profitable decisions.”
It further reads: “Supportive framework for providing adequate shelter has been set up by the Nigerian government in an effort to alleviate the housing deficit, which currently stands at 17 million units. The introduction of the National Housing Policy in 2006 and the Nigerian Mortgage Refinance Commission have to an extent, created a more flexible environment for the private sector to participate in housing development. The Lagos State government is directly involved in constructing more homes under the Lagos Homs scheme but the continuous surge in population is not matched with speedy delivery of affordable homes.
The extent of housing shortage is enormous. In two years, government efforts have yielded not more than 10,000 affordable housing units, which is a short fall from the projection of 224,000 housing units needed annually”.
The Chairman, Roland Igbinoba Real Foundation for Housing and Urban Development, Dr. Newton Jibunoh further wrote in the report that the general paucity of research and reports across most sectors in Nigeria has been palpable and even more pronounced in less lucrative fields, with the real estate sector being mostly affected.
“Surprisingly, the real estate sector has borne the brunt of this general disposition and has become subject to an apathy that is conveniently and selectively applied. In general, the more visible aspect of real estate, which ranges from agency, property management to property development and sale, has thrived more, witnessing greater participation. Interestingly, this has not crystallized into significant profits because of the lack of data availability and adequate research information for investment decision.
“The United Nations estimates Nigeria’s population to be 1285,308, 154 ranking seventh in the list of countries by population in the world, with about 50 percent of that number residing in urban areas. In the past 20 years, we have witnessed an average population growth of 2.a6225 percent and projections show a steady rise in these figures for the next 34 years. By the year 2050, it is projected that Nigeria’s population, at 398,507,704, would be the third largest and contributing 4.22 percent in the world with urban population rising to 74.1 percent. The figures from this projection emphasize one cardinal fact: shelter would continue to be in demand and Nigeria’s housing need poses to be a continuing problem if not strategically addressed.”
Research findings of the report revealed that the high housing demand has spurred increased participation by the private sectors including banks, construction firms, real estate developers, mortgage lenders and individual investors. The direct consequence has come in the form of several new developments and construction of housing estates with good roads, security, water, recreational facilities and other supportive infrastructure. The luxury market, on the other hand is also seen as thriving with leading brands such as the Eko Atlantic developing high-rise apartments with state of the art technology. Developers, it says, have also built strong brand loyalty making them well positioned in the prime market even as the luxury segment is today benefiting from the absence of well serviced apartments, inadequate power supply, poor city planning and many more inadequacies which do not cater to the needs of a rising number of high net worth individuals currently put at 15,400 persons in Lagos. In essence, the luxury market has experienced growth due to increased earnings of individuals and groups.
The report asserted that 2015 was not a very good year for the Nigerian real estate market because the country’s financial crisis from oil price crash and naira devaluation resulted in a slow property trading and a change in homebuyers spending habits, translating to less people being prepared to buy houses than those going for rentals. This equally led to new market interests in the affordable housing and luxury market.
In its words: “We have collected data in specific towns weighing their purchasing power and consumer behavior. A concentration of high-income earners and a dense population in Ajah is mismatched with poorly managed apartments especially in the Ajah-Badore axis. An un-serviced studio apartment currently rents for N250,000 per annum compared to N350,000 for a serviced one. We foresee a rise in demand for serviced apartments in the Ajah axis of Lagos with favorable demographics. This is a class of luxury already gaining market acceptance considering the cost, time and inconvenience involved in self-servicing an apartment every year. Our insight further expands to discoveries in other locations covered in this report.
Giving background to the study, the report reads: “Recent estimates of Nigeria’s housing demand indicate a deficit of 17 million units in Nigeria, with an additional two million units required every year. Although this data may be largely justifiable, there is very limited information on the nature and dynamics of the different aspects of housing in the country. This poses a problem just as huge as the housing deficit itself, as it makes it extremely difficult for current and potential stakeholders in the sector to proffer lasting solutions or draft a sustainable roadmap for the future of housing. Other times the reports are often available, but not aggregated as one detailed compendium of useful information.”