Rents are falling faster in short let residential property markets, creating a “draconian dilemma” for investors that sought an escape route to high vacancy rates, following a massive over-supply of apartments in the nation’s major cities.
The phenomenon, which was not new in the real estate business, is touted to be a more cost- effective and convenient solution to the high vacancy rates conundrum.
For instance, residential vacancy rate in Lagos is put at about 33 per cent, 28 per cent in Abuja and 13 per cent in Port Harcourt.
Although, it was not known in Nigeria few years ago, short let apartment was accepted that even landlords saw the concept as an easier way to recoup investment on property.
It opened up a potentially lucrative market as they can command around 30 per cent higher rates than long-term rentals. Short lets also offer greater flexibility to extend tenancy contracts weekly or monthly at the landlord’s discretion.
Short lets also give customers opportunity to stay in a private property that offer a more personal and comfortable experience than a serviced apartment or hotel.
The phenomenon also increased and assumed popularity with about 30 per cent increase in letting. However, that popularity and profitability, which short let rental business previous enjoyed is waning because of what experts attributed to continuous negative growth in the real estate sector as a result of liquidity issues.
Recently, the economic crunch has badly hit the short let apartment business; hence the prospect is now nose-diving. Consequently, operators are not recording expected turnovers, as they should, thereby reducing their profits.
For instance, investigation by The Guardian showed that a one-bedroom in Shonibare Estate, who previous goes between N35, 000 to N40, 000 per day has come down to N30, 000, while two-bedroom apartment came down from N50, 000 to N45, 000.
The same goes for three-bedroom apartment for N65, 000 from N75, 000 per day.
In Ikeja GRA, a three bedroom, which formally goes for $150 per day is between $100 to $120, while a three bedroom in Victoria Island, who goes for N2 million per month, is charged from N1.5 million and N100, 000 per day from the initial N200, 000.
Likewise, a luxuriously furnished and serviced three-bedroom penthouse with all rooms en-suite located at Maryland, Ikeja, Lagos, which formally goes for N90, 000.00 per day has been reduced to between N80, 000.00 and N85, 000.00.
Also a fully furnished super luxury two-bedroom short-let apartment now goes for about N45, 000 in Maitama, Abuja.
Similarly, in Lekki Phase I and 1004 estates, the price of a moderate three bed room flat on short – let goes between N100, 000 to N40, 000.
Speaking on this trend, the Group Managing Director and Chief Executive Officer of Luxury Villas Group, operators of “Apartment 13-13”, located at Admiral Way, Lekki Phase 1, Lagos, Mr. Tommy Odama, attributed the situation to the challenging economic situation that affected business generally in Nigeria.
According to him, it is understandable because short let patronage is a function of influx of foreigners and non-foreigners migrating from countries and other states largely outside the country and this only happens with a booming economy.
“Unfortunately, we all know the state of our economy”, he added.
An operator of a short let apartment in Maryland, identified simply as sola said he is considering closing shop because of the downturns in business.
According to him, the initial influx of expatriates into Nigeria for one form of business or the other has reduced, hence patronage has reduced apart from the Yahoo guys, who often come around.
Also, the operator of Haute Apart, Ikeja, Mr. Oluwafemi Ebenezer said the economic impact is relative as those with strategic position are still recording patronage despite the economic crunch in Nigeria.
According to him, clients, who normally come from outside the country prefer to stay where they can get all the amenities like mall, cinema and nightclubs.
He disclosed that in a short-let apartment, clients have the three-bedroom, four-bedroom all with the same facilities like internet, swimming pool, gym, exquisitely furnished kitchen and other facilities with that of the hotel but the difference is that it is a ‘home away from home’ where the client enjoys unlimited privacy and fully furnished apartment without having to go through the hassle of buying furniture or any form of household materials.
Ebenezer explained that most of clients are expatriates who have similar short-let business in their country and book online with the operators in Nigeria.
In addition, he disclosed that government officials in the country also patronise the business when they have important functions to attend in area where there are short-let operators.
He also stressed that operators whose clients come from corporate may be the worse hit as their patronage is dependent on their business but not those who want to enjoy home from home and do not want to stay in conventional hotel.
The hash economic climate is real and evident but it has not really impacted on my business, because of my relationship with my clients and the environment where I operate from”, he added.
Another operator of Short-let in Lagos Island, Seyi Ekanem said the business allows prospective clients to pay for an apartment for short-stay for a period of one-year, one- month or on a daily basis while the billing system is per day just to satisfy the needs of those who want to have a better deal away from the normal hotel, where they are usually offered a one room with a bed.
He disclosed that the business is not isolated from the liquidity problem affecting other businesses and the real estate sector in the country.
According to him, some of his clients are people come from abroad and the location of the apartment matters a lot to them because it is very important to patronage.
Ekanem explained that the future of the business is very bright as most clients that patronise them are expatriates who have similar short-let business in their country and book online with the operators in Nigeria.
In addition, he disclosed that government officials in the country also patronise the business when they have important functions to attend in area where there are short-let operators.
Also, Mausi Bababunmi of Mausi Realty, Magodo observed that the business which is fast gaining its pride of place in the real estate sector is hinged on the principle of ‘the location, determines the price’ and prices are charged per day from N35, 000, N50, 000 and above, depending on the company.
“It is another industry and opportunity under the real estate sector where interested persons explore avenue to make money. There are some people who don’t like the regular hotel at all, and so they prefer the short-let where they can cook by themselves and enjoy their own escapades and privacy”, he added.
By Bertram Nwannekanma
