How regeneration of Lagos districts impacts rent, property value
Rusted roofs, dilapidated houses and failed streets and roads were the main features of some of the old districts of Lagos State, the former federal capital of Nigeria. But they are now being regenerated, and that has increased property value and consequently attract higher rents.
The Chief Executive Officer (CEO) of RentSmallSmall, Mr Tunde Balogun, said the urban regeneration was aimed at improving the living standard of the people with improved infrastructure, good roads and other social amenities.
He said, “Real estate in Lagos has faced a myriad of issues, especially as regards quality of properties, the infrastructural state of these properties and how they impact the living conditions of people.
“The ongoing regeneration of the old districts mean a high influx of newly built and ideal buildings by modern standards. This would also impact the standard of living and infrastructure as there would be better roads, effective facility management, influx of businesses that would translate to more employment opportunities, schools, etc. More so, better planned houses that are aesthetically pleasing would surface, thereby attracting professionals and people with the financial means to afford them.
“However, the rental rates would not remain the same as change of this sort would mean higher rents due to the costs incurred in upgrading the properties and the districts. More value would be placed on the properties as developers would be keen on getting returns on their investments.
“Nonetheless, with the vision to make Lagos a smart city in the nearest future, changes, especially in real estate, are imperative, but these changes should have the people at heart in order to bring about quality and affordable living standards.”
Areas such as Ojodu, Ikeja, Surulere and Lagos Island have even more expensive rents which are beyond the reach of the average citizen.
Decades ago, these were areas considered as slums; with relatively low rents, but as urbanisation is creeping in and the population growing at an exponential rate, things have changed. Over the years, several urban regeneration projects of various communities in the state have triggered an exponential rise in the cost of rent.
Checks in areas such as Surulere, Ikeja, Victoria Island and Ikoyi, which are major highbrow areas of the state, revealed that there are very few old houses around. But more importantly, with the old houses being bought from the original owners and rebuilt, the cost of rent has reached the ceiling and only the rich can afford decent accommodation.
An estate agent, Mr Muili Taiwo, who spoke with our correspondent, said a decent accommodation within Ikeja and its environs: Ojodu, Omole, Agege, Ikeja GRA, among others, went for between N1.2m to N1.6m, noting thjat the amount could be more in an estate.
Our correspondent was told of a particular instance of an old block of three-bedroom flat apartments in Ojodu. It was revealed that the son of a late landlord issued quit notice to tenants in the apartments, claiming he wanted to renovate.
Our source said, “By the time they finished the renovation, the rent for a three-bedroom flat was increased from N900,000 to N1.6m while a two-bedroom flat goes for N1.2m.”
From Ikeja to Lagos Island, the cost of rent for a standard two-bedroom flat is between N1.5m and N2.5m as discovered by our correspondent.
For those who want to live close to the city centre, this has created a huge challenge and eaten deeply into their annual incomes. A recent report by BuyLetLive indicated that half of households in Lagos spend around 70 per cent of their income on rent.
The report reads in part: “Spending 70 per cent of income on accommodation obviously is only sustainable by magic.”
The report further quoted a 2016 report by Euromonitor International, stating that an average household spending on housing and transport in Lagos was 71 per cent higher than the rest of the country. Housing alone in Lagos accounted for over 74 per cent greater household expenditure in 2016 compared to the rest of the country.
The report further reads: “With the high rate of inflation and surging prices in rents across Lagos, these numbers today are definitely higher than what was reported by Euromonitor in 2016. Cost of construction keeps rising, making it difficult for property prices to fall.”
A resident, Mr Wasiu Adebayo, in a chat with our correspondent, said Ikeja which had long existed became a choice property area after the so-called regeneration and the improvement in infrastructural facilities in the area.
He said, “Ikeja is no doubt one of the sprawling areas in Lagos today. In fact, you pay as much rent as you pay in Lagos Island in Ikeja here. Ikeja GRA for instance is as expensive to live in as Victoria Island. Here, you find a cool, serene and calm environment which the high net worth individuals would desire.
“But for some of us who are low-income or mid-income eraners, to get something close to a decent accommodation, you must have access to other sources. That is the game. Where I live is a one-bedroom flat and it costs N600,000. It used to be N350,000 before COVID-19.”
Experts are of the view that the absence of a robust mortgage system and urban regeneration in Lagos comes at a high cost which the government cannot bear and as such the cost would be transferred to tenants.
A former President of the Nigerian Institute of Building (NIOB), Mr Kunle Awobodu, said usually regeneration did not bring down the cost of rent.
He said government had little or no role to play in bringing down the cost of rent in regenerated areas due to the current prices of building materials.
He,
however,
urged government to advocate against exploitation in rental activities with regards to buildings.
He further said developing low-cost mass housing schemes for the middle class had become a mirage for the government, adding that no government had beaten the record of the first civilian Governor of Lagos State, Alhaji Lateef Jakande, who was famous for developing mass housing across the state.
The President of the Nigerian Institution of Estate Surveyors and Valuers (NIESV), Chief Emma Wike, said only through a Public-Private Partnership (PPP) could regeneration be successful without impacting on the poor.
He explained that it could be done by subsidising the building process like providing the developer with the land to enable construction and then sell at lower costs.