The economic downturn in the country is taking its toll on the property market as buying and selling in the sector is at a low ebb, investigation revealed.
Many properties are available for sale but without willing buyers across the country. This, according to Barrister Festus Adebayo, a real estate consultant, might not be unconnected to the anti-corruption crusade of the President Muhammadu Buhari-led administration which has led to a reduction in money laundering by corrupt Nigerians.
“The economic downturn is really affecting the property sector/market in the FCT to be precise. I can tell you the purchasing power of people who want to own a home has been cut down. You know this is not the time when people can get free money. I can also tell you that most of the people who have been thinking of how to own a home before have resorted to thinking about how to renew their house rent; some people cannot even afford to pay the rent at all,’’ he said.
Aside the low sales being recorded in property in the FCT and across the nation, Adebayo said the harsh economic situation has also led to mass retrenchment in the construction sector due to the delay in the implementation of the 2016 fiscal budget.
“Most of the construction companies have been retrenching site workers due to the economic downturn. Although the budget has been approved, but they have not injected the money into circulation and because the money is not yet in circulation the construction companies cannot go back to sites and re-engage the retrenched workers,” he said.
He said half of the real estate developers that were doing very well last year could not be said to be so now due to the cash crunch they are facing which is affecting the completion of their various estates under construction.
“The reason is that some of them are relying on the Federal Mortgage Bank of Nigeria (FMBN)’s loans but which are no more forthcoming. The FMBN needs to be recapitalised for it to meet the needs of the estate developers.
“I am aware that the FMBN has stopped the estate developers’ loans due to paucity of funds. By recapitalising the FMBN, I can tell you the housing sector in the FCT and across the nation will come back to life. I can point to three estates that are waiting for the release of funds from the FMBN to continue work,’’ Adebayo said.
He also said that market forces were gradually regulating the property market as the money in circulation could not match the number of available properties for sale.
“The economics law of demand will come to play in the long run because we have so many unoccupied houses in the FCT. These unoccupied houses will be there as far money laundering is curbed,” he said.
He also said that developers, who genuinely obtained loans from the banks with working interest would not allow the buildings to remain unsold for too long, this alone, according to him, would crash the prices of the houses.
“The minister of Power, Works and Housing, Raji Fashola, said about a week ago that he was going to build affordable houses, and that the ministry is coming up with a Nigerian model wherein they will give you the size of the houses which the developer can key into, that also can affect and bring down the prices of houses,” he said.
“When the economy is not good, a man that has been earning let say N100,000 before cannot get such again. And it will be difficult for any landlord to increase rent, which is the advantage of the present moment we are. Any landlord that tries to increase rent now is doing so maybe to send the tenants out or looking for trouble,’’ he said.
Bernard Frank, another real estate agent alluded to Adebayo`s position that the market forces are already playing out in determining the prices of real estate.
According to him, three out of five property owners who entrusted him with their properties to rent out to would-be- tenants have asked him to reduce the rent rates.
“I have 1 bedrooms that cost N400,000 per year in Arab Street in Kubwa, but when we could not get people to pay for them, he asked me to peg the rent at N350,000. There are two other landlords here in Kubwa who had instructed me to slash the rent for 3 bedrooms from N650,000 to N600,000 and 2 bedrooms from N600,000 to N550,000 respectively,” he said.
In Lugbe, a settlement along airport road, the situation is the same as many houses were seen with the “To let” tag, especially in the Federal Housing (FHA) section where the rent is said to be a little on the high side.
Ibrahim Aiyekoti, an estate agent in Lugbe, told Newsmen that there is noticeably low transaction being recorded in the property market as lands and properties sales are not booming as usual.
Aiyekoti said: “Residents are complaining of none or little money. For the civil servants, it is always Treasury Single Account (TSA) introduced by the present administration while for some it is either non-payment of salaries or down-sizing of workforce being witnessed in both private and public sectors that they fly as excuses,” he said.
Another estate agent, Richard Vincent in Kuje area of the FCT, said these days it is common to hear tenants pleading with agents to collect six months rent and even three months due to the present economic challenges facing the country, adding that if the situation continues it would crash the market prices of property and by extension the rent charges.
Sabitu Ibrahim, an agent in Gwarinpa-Kado axis of Abuja also confirmed the gradual decline in prices of properties in the territory.
He said that a property worth N1.5 million in the area could be acquired at N1.2 million, a 5 bedroom flat worth N270 million going for N150m and that of N25m going for N19.8m.
Presently, in order to meet up, some landlords are asking would-be-tenants to pay upfront of 2-3 months rents at a reduced rate to complete their estates as funds are either unavailable or interest rates are high.
Reacting to this, Adebayo said if a landlord was asking for rent advance, it is a personal thing as some wise corporate organizations that have the resources could afford to pay that.
“We are not saying it is illogical or disallowed by law for some developers to ask for 2-3 months advance rent to complete their buildings from tenants. It is a business, if I am developing an estate somewhere and I have already reached an advanced stage and funding became an issue and I asked some interested tenants to pay for 2-3 months so I can provide you electricity and water, oftentimes, it is wise for the developer to do so because if he resorts to borrow from bank, interest would be charged. It is the easiest and safest way.’’
By Mustapha Suleiman