Mr. Yemi Ejidiran is a quantity surveyor and Managing Director, Wemabod Limited. He spoke with CHINEDUM UWAEGBULAM on the real estate sector, especially decline in rents for high-rise office structures in Lagos Island, prospects of the retail sector and plans for Southwest region.
What that means is that inflow of revenues has been hampered, which affected people’s cash flow and spending power. With this reduction in earning power of the populace and rising cost of materials, we have decided to seek development funds from federal agencies. Real estate thrives very well in Lagos, followed by Oyo. We should not also lose sight that infrastructure development connecting these three states play a significant role in ensuring that real estate activities continue to grow in sustainable basis.
The reality of the matter is that Lagos Island needs a gradual reurbanisation, especially Broad and Marina Streets. More often, most of the grade A offices that are newly developed in Ikoyi, Victoria island, bring more rental uptake that are relatively higher than those in Marina and Broad Streets. That is causing the differential in rental values.
Most of the SMEs operators require a lot of flexibility in pricing for commercial real estate office space, as some are seeking daily, monthly, quarterly and half yearly rentals. That is gaining ground now because the option provides a lot of flexibility, those SMEs are at the backdrop of poor cash flow and it enables them to plan.
However, the growth of retail facilities has also been hampered by the spending power of the populace. It has become impossible to attract people, which has created a stunted growth for retail development in the country. There is still room for a well-developed model, once it is strategically developed and right kind of tenant mix is adopted.
Providing housing for the low-income earners has been a major challenge, as government needs to encourage developers to produce cheaper homes and with minimal stress along the vagaries associated with project life cycles. For example, government needs to make access to land easier than what we have presently.
However, if government can invest heavily in research, encourage manufacturing and local production of construction materials, chances are that construction costs will go down. It is also important for government to improve credit system to enable off-takers access mortgages, which will fast track the rate at which people can be able to buy homes. It is also important for government to ensure efficient mortgage financing.