- March 4, 2022
- Posted by: admin
- Category: Real Estate
Industry watchers say rent in the South-South has risen across the region- at its fastest clip in decades, following an increase in the inflation rate that impacts building materials and construction cost.
Cost of rent rose by more than 50 per cent on rehabilitated buildings, while the new buildings increased by 100 per cent in the average yearly increase seen in each of the states before the pandemic.
Many property owners and landlords are taking advantage of the situation to hike rent while some residents are forced to relocate to the city’s suburbs to avoid high-priced property in highbrow areas.
Within the last one-and-a-half year, housing rents increased by over 100 per cent in most locations consisting Akwa-Ibom, Delta, Edo and Rivers states.
The cost of raw materials, such as reinforcement, cement, finishing, paint and other components has not helped, as prices of the components rose by over 300 per cent in recent times. The economic situation has forced homeowners to increase rents on their properties.
Over 80 per cent of Nigerians now spend more than 35 per cent of their income on housing while very little is reserved for basic necessities like food, medical, education, clothing and other emergencies.
Investigation by The Guardian revealed that there has been a surge in rent with an average three-bedroom apartment in some of the highbrow locations like the Government Reserved Area (GRA), which was previously N400,000 risen to N700,000 and in some other places, N1 million yearly.
A two-bedroom, which was previously N200,000/N250,000 now go for N450,000 and above while a one-bedroom which was previously N150,000/N180,000, is currently going for N300,000 and above.
With the development, people who have relocated to the suburbs also created a scarcity of affordable homes in such locations with prices of available units hitting the rooftop.
The chairman, Nigerian Institution of Estate Surveyors and Valuers (NIESV), Edo State branch, Melody Odumah, said due to the high cost of construction, housing supply had dropped and many who were using their salaries to build houses can no longer do so.
Odumah said: “There is inflation everywhere, which has led to increasing in the prices of construction materials. Those that were using money realised from other sources of businesses can no longer do so because the high cost of materials has affected them. So, they concentrate more on things that are most important to them rather than building houses.
“Property investors, who have taken loans to build their houses, expect to recover their investments from tenants. Obviously, if you could build for N5 million previously, when things have not taken an upward trend, to build it now you may need to spend as much as N15 million. The best way to get back the money is to peg the rent at a competitive rate to match the trend in the building materials market.”
He noted that the population is growing by the day, while demography is changing with a lot of youths now leaving their parents to get their own accommodation. “With the increase in population, he said people would demand property amid the limited supply.
“People are not naturally building and there is a kind of lull in construction. When you have many people chasing a few properties in the market, automatically the price will go up. There are people in the less expensive areas that can’t even get accommodation,” he said
Speaking on the development, an estate surveyor and valuer based in Akwa-Ibom, Mr. Onukak Bassey, said in highbrow parts of Uyo, areas like Udo-Udoma environs, Shelter Afric Estate, Ewet Housing Estate, Aqua-Ima, Abak Road Housing Estate, there have been between 50 and 100 to 150 per cent increase, depending on the facilities in the property.
” Those who have surplus money still pay for the houses. For instance, a one-bedroom flat goes for N300, 000 to N400, 000, two-bedroom N500,000 to N700, 000, three-bedroom goes for N800, 000 to N1. 2million. For a three-bedroom bungalow, it is about N1. 5million and above. A two-bedroom duplex is N2. 5million and the main duplex in that unit is N3million to N4. 5 million,” he said.
He further explained that although there is an increase in rent it doesn’t cut across in Uyo as some properties are begging for buyers while some people are now going for the distressed property being offered for sale.
Bassey canvassed a strong government policy on housing for the construction of large-scale low-income housing backed by mortgages for the masses to make housing affordability and accessibility easier.
He stressed the need for a housing sector that will cut across the public and private sectors.
The chairman, Rivers State branch of NIESV, Mr. Hamilton Dieme Odome, observed that the rise in rent is a function of demand and supply with Lagos and Abuja being the chief beneficiaries of the surge.
However, he said rent had remained stable with prices in upscale locations for a five-bedroom duplex going for N5 million or N10 million, depending on facilities, while a three-bedroom flat in GRA area goes for about N2. 5 million or N3 million.
He said a two-bedroom flat in the same location goes for N1. 5million, while a move away from the GRA, would also bring down the price.
“One-bedroom in the suburb goes as high as N500, 000 and as lower as N300,000. When you have a huge demand and don’t have a commensurate supply, you will see that rent will go up. But in this case, the kind of demand that could force the change is not there.”
There are just pockets of individuals, who need houses. Before now, we used to have companies taking accommodation for their staff, but we don’t have that kind of situation again. If you get the GRA part of PortHarcourt, you will be so surprised to find a lot of vacant service apartments previously occupied by expatriates,” he said.
The chairman, NIESV, Delta State, Mr. Chris Okolo, said rent, which is a dividend of investment on commercial real estate, cannot operate in isolation from the socio-economic situation in the country, especially the hyperinflation and devaluation of naira being experienced.
Source: The Guardian (28th February 2022)