An official report coming from the economy watch, Financial Derivatives Company Limited has informed that the number of vacant luxury properties in the upper-class real estate neighbourhoods of Lekki, Victoria Island and Ikoyi, Lagos has risen by 72 percent over the last 18 months.
The Executive Officer of Sujimoto Construction Limited, a Lagos-based real estate development company, Mr Sijibomi Ogundele, who revealed this said the surge is due to over pricing.
He explained that the cost of construction is usually padded and warned prospective investors to beware.
“This has become a motto on a whole new level for prospective investors, who seek the very much-deserved value for money. To avoid drawing hasty conclusions and to guide our investment choices, investors should only listen to industry experts and verifiable perspectives as seen in the FDC research, and avoid the bandwagon of those listening to jaundiced opinions, which are quite popular.
Mr Ogundele, Sujimoto as he is fondly called, however, said that not all house owners are corrupt.
“To put this more clearly, apartments that should not cost more than 100 million naira, are costing investors 400 million naira to construct. Therefore, owners have no other choice than to let out the apartment at 40 million naira, transferring the padded cost of construction to tenants.
According to him, the case of high price tags on houses should be based on not just quantity but quality.
“A developer who compromises on quality of materials, no matter how highbrow the property’s location, has no right to place an exorbitant price on it. Thus, the argument for demand exceeding supply, as far as empty apartments in Ikoyi go, is unfounded.
“Luxury apartments are in high demand. Poorly finished buildings with exorbitant prices constitute the pile of empty apartments constantly being alluded to. Consider this: Are developments such as Tango Towers and Ultimate Towers in Ikoyi, empty? If such developments are not empty, imagine what would happen when the LorenzoBySujimoto with its high-end features, state-of-the-art facilities, exceptional returns on investment and competitive pricing, is completed?
The Lagos-based developer opinionated that luxury is not expensive, rather it is the intention to deliver luxury that is expensive.
“While the cost of a nice three-bedroom apartment in Johannesburg would go for about $350,000, the same apartment in Ikoyi would want $1 million. If the cost of construction materials is the same all over the world, the price of marble, granite, cement, tiles, kitchen, doors, paints etc, why is cost in Nigeria about 300 percent higher?
“You cannot offer a Toyota for the price of a Bentley. One might argue that both cars will eventually ply the same road but the efficiency and prestige of a Bentley speaks for itself. Luxury sells itself. For us at Sujimoto, our biggest marketers are our clients. Listen, I have sold crap before and I have sold luxury and I can tell you from experience that it is easier to sell luxury than crap.
“When you sell luxury, you sell peace of mind, you have not only sold something that would last for generations, but you win the heart of your client who now becomes your evangelist. With the oil price plummeting, and major economies across the world experiencing downturn, individuals and organisations no longer have loose money to throw around. And with the current downsizing by companies, prospective tenants demand full value for their hard-earned money.
Ogundele insisted that developers in Nigeria must adjust to the current situation and raise the standards of the country’s construction market so as to compete with foreign developers.
“If we desire to be the best and want to compete with foreign developers such as the Germans, Lebanese and Italians that have spent decades mastering their craft, we will need to raise our standards in the Nigerian construction market. Or else, one day we would wake up to find all our apartments empty,” Ogundele warned.