Rising demand for commercial properties has forced a shift in focus away from residential property development as investors react to emerging trends that have seen low returns on residential.

As the economy turns the corner, increase in business activities has created a huge demand for office and shop space, and hotel accommodation. This is in line with the fact that not many people are changing residence or buying new homes.

Analysts argue that other reasons for the shift of interest are the peace of mind and quick returns on investment which commercial property brings, explaining that a tenant in a residential building could pay one year’s rent and the landlord spend the next five years fighting to get the next rent. This, they add, is different from a commercial property for which a big company can pay five-year rent upfront. Chudi Ubosi, an estate manager, told BusinessDay that fewer people are now going into residential development, explaining that a situation “where somebody lives in your house, pays one-year rent and in the next five years, you are fighting for your rent does not encourage further investment.

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The House of Representatives is to consider a bill which will require all landlords in the country to keep records of their tenants’ personal details for the purposes of security and public information.

The bill is titled, “A Bill for An Act To Provide for Landlords and Tenants Responsibility and For Other Matters Connected Therewith,” and sponsored Emmanuel Jime (PDP, Benue State).

If passed into law, it will mandate landlords or property managers across the country, especially those in urban areas, to keep the names, places of origin, residences and places of work of all their tenants, all of which must be verifiable.

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…as Chinese firm mulls building 1m houses

Ongoing efforts by the Federal Government to provide houses for the teeming population have started yielding dividend, as the Federal Mortgage Bank of Nigeria (FMBN) is waiting for the release of $1.5 billion (N225 billion) out of the $4.2 billion (N600 billion) proposed investment from HSBC, a London based financial institution. The management teams of both companies had over the past two years worked assiduously on the investment in order to ensure safety of the facility and proper utilisation of the money aimed at boosting investment in the country’s real sector.

In addition, management of China National Machinery Industry Corporation (SINOMACH) has expressed interest in investing in the nation’s housing sector through the construction of one million houses across the country out of which 100,000 houses will be constructed in the Federal Capital Territory (FCT) under the FCDA mass housing scheme. A top official in the bank who spoke with BusinessDay said “we are expecting the release of the $1.5 billion for the provision of houses for our people across the country. I hope you know that $4 billion foreign facility is being expected from HSBC. We cannot achieve the feat with loans from commercial banks considering the high interest rate.”

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n spite of the generally acknowledged real estate volatility, especially in Lagos, which interestingly appears to have subsided of recent, rents, fair enough, are still down - with rents in the low density areas sliding by 15 percent since March.

Experts believe the slow down in estate volatility is as a result of the reduction in banks’ foreclosure which has helped improve the liquidity position of the banks.

Bismarck Rewane, chief executive of Financial Derivatives, acknowledged this, when he agreed that sales value of houses have firmed up as banks slowed down in their foreclosure. Rewane for instance, observed that, as of May, flats went for as much as $50,000 or N7.5 million per annum in Victoria Island, $65,000 or N9.75 million per annum in Ikoyi and N3 million per annum at Lekki.

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With more real estate companies springing up daily in the country with jumbo offers, especially those selling properties, some experts in the industry have said the public needs to conduct thorough investigations on any company they intend to deal with, to avoid being conned.

More Investors who are worried about the troubles in the stock market have been looking for opportunities to invest their money in the property business. But some of them are already losing large sums of money owing to lack of preparedness. Part of the problem, according to experts, is that there are several fly by night estate companies in the market now, luring people into paying for properties, especially lands along the Lagos-Ibadan Expressway and some urban centres in Lagos and Abuja, which have turned to be fraudulent. Experts say a true estate firm is duly registered with the governing professional body, wherein discipline is regularly applied to erring members.

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