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Property and Environment

As vacancy rates rise nationwide, investors place high-rise commercial property, others for sale

These are not the best of times for property owners and investors as many of them, who want to meet other contractual obligations are opting for outright sale of their high-rise commercial buildings in a bid to recoup their investments.

After long wait for a restart in the real estate sector as the economy emerged from recession and moved towards path of recovery, investors may have exhausted their patience.

The scenario is more pronounce in Lagos, with about 203 available commercial property for sale in Victoria Island, Lagos, Nigeria.

With high vacancy rate of properties in the area and existing oversupply in the market, many landlords had in the past adopted strategic leasing options to attract tenants to their buildings.

These leasing options included attractive financial incentives such as extended rent-free periods as high as 12 months, longer beneficial occupation periods of six months and tenant fit out allowances as high as $400 per square metre.

But the low liquidity in the economy meant that many people are finding it increasingly difficult to pay rents , while others are moving to low rental areas to be able to cope with their accommodation needs.

For instance, many new high-rise commercial buildings have been listed for sale while older ones are still not taken.

The list of the properties include, the iconic N20 billion Kanti Towers in Victoria Island.

The Guardian learnt that the 15 storey Lagos office complex with two basement floors, five floors of parking and 10 floors of office space has been listed for the past four years.

The landmark building, developed under a joint venture between Lagos State Development and Property Corporation (LSDPC) and Senkay Nigeria Limited is being marketed by K2com Luxury Limited. It boasts of 6,500 square metres of premium office area with five floors of multi-level parking bays for over 100 cars.

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Similarly, some floors in the recently completed “Architects Place”, which has been in the storm for a long time is up for sale.

The tenth and the 1th floors have been listed for sale even though, some architects have been protesting that it was a desperate exit plan to cash out on the asset of the Nigerian Institute of Architects that have reversion rights.

Sources hinted that any such intending sale is tantamount to robbing architects in Nigeria of their commonwealth.

But The Guardian learnt that the prestigious development was given to developers on 40 years lease, after it was thought that the bungalow housing the national secretariat was undervaluing the land.

However, after the building was completed, a lot of problem came in, and the condition of the whole transaction was changed, leading to the listing.

The second Vice President of the institute, Enyi Ben Eboh confirmed the development. He said only two wings with boys’ quarters which is configured into two-rooms with toilet/bathroom and kitchen, was listed for sale.

The price of the property is put at N250million per wing or two wings for N500million .

There is also 15 – storey office complex building with car park, elevator and up to date installation, along Ademola Adetokunbo street, Victoria Island Lagos, besides tantalizer.

The property situated approximately on 3500Square metres has a price tag of N15 billion.

An estate surveyor and valuer, Mr. Chudi Ubosi, said one of the main things triggering the sale of these buildings is the high cost of debt service.

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Ubosi, a principal partner, Ubosi Eleh and Company, stressed that many of the owners of these buildings are still owing development loans and are not able to even find the right tenants to occupy them.

According to him, there is an added fact that many of the existing tenants may not be able to meet their rental obligations as a result of the poor economic situation. He said listing the properties for sale is one of the options open to the owners of such structures in the hope that there maybe some other operators in the economy who may have the financial muscle to acquire same.

Former Chairman, Estate Surveyors and Valuers Registration Board of Nigeria ( ESVARBON), Elder William Odudu, blamed the situation on the economy and the policy of government.

According to him, people are not really benefiting from the policy of government.

“ I am too sure that those banks or financial institution that finance them, they are anxious to recover their investment, they are desperate so they have no option than to attempt to sell to recover money. . Even some listed they are no buyers, because anybody wanting to buy for investment and found out that they could not even get tenants to occupy them.

Also the past chairman, Lagos State branch of the Nigerian Institution of Estate Surveyors and Valuers (NIESV), Mr. Sola Fatoki collaborated his views.

He said: “The economy needs to be revamped and money pumped into it.

“Our economy is bad and the effect its mostly felt in the property market”, he said.

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For the Director, Real Estate Advisory, Northcourt, Mr. Ayo Ibaru, the sale of office buildings is an indication of the gradual improvement in the economy’s long-term prospects.

According to him, the gradual improvement in the economy’s long-term prospects have resulted in a number of relocations from office buildings outside the Grade A bracket to prime office spaces.

A case in point, he said, was the planned relocation of United States (US) Embassy to the Eko-Atlantic City.

The unwillingness of a few landlords to offer rent incentives have also led to their property listings for sale.

He also redevelopment, has stood to be a key consideration for the sale of office buildings with the renovated IMB Plaza now called Number One as a good example.

“There is more confidence in the nation’s economic growth and organisations are looking to take positions, hence the enquiries for purchase”, he added.

Source: By Bertram Nwanekanma
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