Tuesday, June 24, 2014


A couple of years ago Lagos State brought out a law to protect tenants, The Lagos State Tenancy Law.  The question on many people’s lips today is, is the law working? It is difficult to answer this question as I know that if you speak to ten people, you will get ten different perspectives. I guess that in itself is an answer that the Tenancy Law is not as cohesive as it should be. In my opinion as a property professional, the Law is not being followed to the letter, I guess this is because it is difficult to implement some of the requirements ie collecting only one year’s rent in certain areas and not in others. This creates confusion for landlords and tenants who cannot understand why Lekki should command one year’s rent and Victoria Island, two years. Some landlords, who are paying off mortgages, really cannot afford to take one year’s rent as they need to service their mortgages. Landlords will tell you that if the tenant cannot pay the two years or more rent that he wants, they are welcome to go and look for a property elsewhere that accepts one year payment. The landlord is well within his rights to decline a tenancy as long as monies and an agreement have not been exchanged, which can be tendered as evidence in a court of Law

A Tenancy Agreement must be given to each and every tenant before allocation of a unit of accommodation is made. All laws, rights and obligations must be stated in the Agreement. The Agreement must be read and signed by both the landlord and tenant, and the tenant should receive a copy of the Agreement. Landlords should provide the tenant with sufficient time to read the agreement and raise any questions they have before signing and agreeing to the terms. The landlord is also required to provide the tenant with their full name and address. All tenancy agreements should state the parties involved, the rental price, any deposit retained by the landlord, the property address, the start and end date of the tenancy, and the obligations of the tenant and the landlord.  All tenancy agreements must comply with statutory law. This is law that is enforceable by the judicial system and is therefore legally binding regardless of what is stated in the tenancy agreement. With all tenancy agreements there are rights by law for both landlord and tenant; even though these may not have been discussed between both parties in advance, they apply to all tenancy agreements.

The rate at which court decisions are made for the eviction of illegal occupiers is so slow, as they end up staying rent free for up to a year or more before a judgment is made. There is therefore a lack of confidence in the court system. The Property law is of course open to corruption and unregulated practices when one or all parties involved, try to cut corners. Agents who are mentioned in the Tenancy Law also give the business a bad name by going behind the backs of their main client and collecting fees from both parties. Some landlords will go with whoever closes on the property and not who they appointed and blatantly tell you that they owe no one any allegiance, therefore the property market regulations are really subject to the honesty of those involved in its practices.

A lot of tenants are still not aware of their rights and therefore get bullied by landlords who increase rents without notice or because they have received an offer of higher rent payments or they tell the current tenants to leave the property before their lease expires. If the tenant does not move out or increase the rent to match the offer being given by the landlord, they are asked to leave. Most tenants resort to begging the landlord instead of taking the matter to court. Sometimes Agents capitalise on this by demanding exorbitant fees and higher rent from the tenant in order to assure them of getting a sought after property. The responsibility of carrying out repairs is another area where tenants and landlords are not clear about responsibilities. Some landlords feel that a tenant should take their property in the state of disrepair as it is advertised and fix the repairs themselves. This is wrong! Some tenants carry out all sorts of alterations and works to their rented property without consulting the landlord. Both actions are wrong and can be taken to a court of law for resolution.

What is needed in the property market is closer monitoring of practices and instant enforcement of penalties from the monitoring agencies for those found breaking the law.


Return on Investment (ROI) is very important when calculating profits on your property investments. Real estate return on investment, is a simple way to determine whether any given property purchase will yield a significant profit. Before you start the process of investing, be sure to gather all relevant information, such as what the rent payments, service charge payments, any property costs such as taxes and insurance fees and the original amount of your investment will amount to

A lot of investors set out to buy properties only thinking of the rental income, conveniently forgetting the amount they spent on building or buying the property, forgetting the amounts they spend on purchasing the land, all levy’s and all other charges if on an estate, forgetting the amount spent on putting in fittings in the property and other improvements. Many so called property developers and investors do not realise that they end up spending far more on their properties than what they can gain back in profits for many years to come. The first thing any wise investor should do is determine what their investment gain will be. Unlike profit, an investment gain tells you how much you receive before subtracting expenses. Determine how much you will receive from your investment on an annual basis. I will use a very conservative simple example although it is almost impossible to find good properties for this price in any city in Nigeria. Let us say you make N1.2m rent per year on a property you bought for N10million. The rent is your gains.  Add up all investment-related expenses. For example, if you are required to pay any taxes or insurance, be sure to include these figures. Repair costs are another important factor to consider. Let's say you spend N100k per year in taxes, N50k in insurance and N50k in other expenses. Add these figures together to get your real cost of investment. In this example the total cost of investment totals N200k. Subtract the cost of investment from the investment gain. N1.2m – N200k = N1m. Divide this number by the total cost of your investment. For example, since you bought your investment property for N10m. The calculation would look like this: N1m ÷ N10m =0.10. Convert the decimal into a percentage. In this example, this would be 10 percent. This means that you will receive a 10 percent return on investment each year from your real estate, which is an extremely healthy profit anywhere in the world. Anything over 7% should be aimed for, although many do not achieve the correct figures due to their micalculations.

Some estates along the Lekki Expressway axis sold their units for N24m –N30m about four years ago, these same units are going for N40-N55m today and climbing. As you can see, minus all charges these units have almost doubled in prices giving the owners over 30% ROI without them even lifting a finger. This can be likened to them winning the lottery! If they had bought two or more units, they will be laughing all the way to the bank. Wise investors will reinvest their profits in order to maximise their earnings. I get told all the time that these rapid increases will soon stop as the properties cannot be worth that much, but as a property speculator, I will not say that an investor should not buy or build just because they feel that the price increases will stop. There is a saying that “bricks and mortar” are the best way to save and grow your money anywhere in the world. Even if there is a property slump for a period, it will always appreciate again after a few years if one remains patient. Nigeria’s property boom is relatively new and will continue to grow for many years to come. The UK and the USA have been through many property rises and falls and have always come out of it better than the last. Of course there are some people who are just speculators and want to turn over their investment fast and see property buying and selling as a business. The location you buy in is the most important factor in buying for investment, as you will want the property rented out immediately and permanently, therefore the property will need to be accessible and near  amenities and infrastructure, it helps if it is serviced as well. This is unless you are building your dream country home in a remote part of your home town, where you can indulge your hears desires and have no worries about the property being empty for long periods and not earning an income from it..

Be a wise investor!


This is one area that sadly needs a lot of improvement. With the property market flooded by Agents who have little or no training in Real Estate or even Customer Service, it is inevitable that service given to prospective clients is usually below acceptable standards. I guess the question that springs to mind next is “what acceptable standards?” The Lagos State Government has done a lot to bring some regulation into the property market, but without proper enforcement and provision of information, neither the Agent nor client is equipped to deal with poor service.
Ask any CEO of a company, Managing Director of a bank, manager of an office, telecoms company or even a tailor, and they will tell you how important the customer is to their operations and success. How you define service shapes every interaction you have with your customers/clients. Limited definitions of service based on an exchange of monies for goods or service misses the overall point of customer service. “Service” should provide the customer/client with more than a product or action taken on his/her behalf. It should provide satisfaction. In essence, the customer/client should walk away pleased at the result of the transaction – not just content but actually happy. A happy customer will continue to be a buying customer and a returning customer. Agents seem to think that once just one sale or lease transaction is completed, they are successful. They don’t realise that if the client is happy, he will refer other people to them and maybe even use the same Agent again.
Customers, buyers and clients who want to put their hard earned money into property investment will want to pay a fair price for quality service and outcome, and feel satisfied they have paid for a service/product and received what they have paid for in return. They also want someone to take care of them by guiding them in the right direction. They need someone to understand their needs and help answer them. They need someone to hold their hands and walk them through a process. Customer service starts with the ability to listen to the customer and find out through polite questioning what he/she needs or wants. From my experience some clients are unsure of what type of property they want and may give the Agent one specification, which the Agent runs around trying to meet, only to hear that the client as closed a deal on another property that did not match the original specification at all. The Agent therefore needs to have a wide choice of properties around the client’s specification and guide them or suggest other properties that may meet their needs. This requires a skill and thinking “outside the box” which is sadly lacking.
Customer service and contact with a client mean that the client must be heard and his/her problems will not go unanswered or ignored. It also means getting to know your client, his/her likes-dislikes, ideas, background, etc.

The other most important aspect to do is to listen to what the customer is saying. If people do not understand what is motivating the customer, they will not be successful in handling them or finding the right property. Do research on customers, their habits, and what they want and expect.
One common denominator among all companies or organizations that provide good service is the development of a system and attitude promoting customer friendly service. By “customer friendly” this means viewing the customer as the most important part of your job. The cliché, “The customer is always right” is derived from this customer friendly environment.
The two main tasks of successful customer relations are for the Agent to communicate and develop relationships with the client. This does not take a huge effort, but does not happen instantaneously either. Positive dialogue/communication with your customers and developing ongoing relationships with customers/clients are perhaps the two most important qualities to strive for in customer service, even if it is just ringing up from time to time to see how they are or letting them know what’s new on the market.  Agents should remember that good customer service results in consumer satisfaction and return customers and growth in business. Poor customer service, except for monopolistic businesses like PHCN, generally results in consumer dissatisfaction, poor reference, lack of returning customers and diminishing business. What is needed for property professionals is to invest in training for Agents and their staff if they are to maximise their business potential and earn a respected name in the market


I want to share a bit of history with you, seeing as the 70% of population of Lagos is under 35 years old. In 1914, Lagos was chosen as the capital of Nigeria by the British colonial masters and from then onward, the demographic and physical expansion of the city has been so dramatic that by 1960, it had grown into a metropolis with well over 1 million inhabitants, by 1990 it had 7 million inhabitants and the estimate today is between 15-20 million inhabitants. The inhospitable physical environment and the choice of location by the British colonial authorities to develop Lagos as Nigeria's capital are largely accountable for the rapid rate and nature of its land use development. The predominance of swamps and lagoons makes it necessary for large scale land reclamations as a precondition for land use development, while the administrative, industrial, commercial and transport functions in Lagos still make it function as the capital. The past Lagos Executive Development Board (LEDB) dominated land use development for many years and in spite of numerous constraints, the Board succeeded in carrying out extensive swamp reclamations providing residential and industrial estate development. The decision to transfer the capital to Abuja was expected to mitigate the rapid land use development in Lagos, but this has not proved to be the case at all. Above all this is clear evidence that urban planning alone has failed to tackle the growing population and housing needs in Lagos. The geometry of land use in Metropolitan Lagos is gradually changing under the influence of urban renewal and highway development radiating from the inner-city to the neighbouring towns and cities which have attracted new industrial and residential estates are springing up in border areas.

The Lekki Expressway corridor is home to the fastest growing number of construction sites in the whole of Africa and one of the fastest in the world? The rate of construction in this area has been so rapid between 1999 to present, that the whole landscape between Victoria Island and The Lekki Free Trade Zone has been transformed beyond recognition. A lot of reclaimed land has added to the land mass and size. Unfortunately much of this development has been unregulated, giving rise to buildings that have many design faults and will need to be demolished in the near future for safety purposes. The rainy season is here again which exposes a lot of problems with construction development and every year without fail this causes a lot of setbacks to construction works. As I have mentioned repeatedly, this is a good time to rent and buy as it exposes a lot of problems with the property and the surrounding areas. Property and road construction works are usually delayed during the rainy season as sites and access roads get flooded and always need trailer loads of sand and rubble for filling again after the rains have subsided. In many areas gutters overflow into roads, and drains and plumbing in homes get blocked. It must seem like a lost cause to developers who find that their workers also seem to spend more time in the rainy season sleeping and taking time off with illnesses, thereby delaying even further the project completion dates.

Visiting building sites during construction is quite interesting, as you find works are being undertaken at varying speeds depending on the flow of funds available for that project. For some, works have either halted or slowed down considerably. The ones that are continuing are often reviewing their spending on materials and fittings, which in many cases may mean compromising the quality of the finished property. At the best of times it is rare to find a really good finished property, but with frequent cut backs and compromise on materials it is even rarer to find a fairly well finished property. Developers are desperate to complete their projects on time and will often take on artisans through recommendation from a friend, brother or church member without proper checks, resulting in the finishing in a lot of properties being of poor quality; something as simple as fitting light switches is a challenge for some of these artisans they don’t have the right training or tools. Plumbing works is a major concern if done badly, of which I have had terrible personal experience. Shoddy and badly finished works can cause damage the property and cause a life of misery to the inhabitants for many years and possibly forever, so with the proliferation of building construction going on, it is important to ensure building works starts and finishes correctly


There seems to be a rapid increase in the building of shopping and entertainment Malls springing up in Lagos and major cities in Nigeria. They range from large properly constructed malls to small unregulated malls. In Lagos alone we have seen at least twelve large major malls spring up in just a few years and hundreds of smaller ones. On the Lagos Island we previously for many years just had two major malls, Silverbird Galleria and The Palms which came with cinemas and food courts, many smaller shopping outlets like Mega Plaza and Lafayette mall were also trailblazers. Now all of a sudden, everyone is building shopping malls on every little space they can find. Just take a drive along major roads like Adeniran Ogunsanya in Surulere which also houses a large Shoprite, go to Opebi and Allen Avenue in Ikeja, drive along the Lekki expressway and Admiralty Road in Lekki 1, you will be shocked to see how rapidly residential homes are being converted into every kind of mall imaginable. Some of these malls have been so haphazardly converted, that you are unsure what is behind every door unless you enter. The stairways are poorly lit and there is usually insufficient sanitary provision even where there are restaurants. In the major shopping malls I can already see the signs of a breakdown in facility maintenance, like cleanliness of the public spaces and toilets, broken toilets, Air conditioners always not working, poor security, broken floor tiles, blown light bulbs etc. The list is endless. Last year I went to a major mall to watch a film and the air conditioners in the cinema hall was not working, it was like an oven, the toilets were locked because they was no water in the mall. You can never find that happening abroad. Take a trip to the Adeniran Ogunsanya Shoprite mall and you will be shocked to note that this is a recently built mall. It is dark with endless corridors not sign posted and empty. It feels like you are in desolate dark world that you see in Sci-Fi movies. It is really a strange place. Unfortunately a lot of so called “malls” do not have planning permission and have not been constructed/converted according to any architectural plan. The main reason for these malls is purely financial and not longevity, therefore many of them shut down in a couple of years.

Shopping Malls are really modern, indoor version of traditional outdoor marketplaces where we now have lots of different shops clustered together to form a network of shops under one roof.  Malls provide all sorts of convenience like time saving, safety, car parking and a calm environment that smaller shops may not be able to provide. There are a few advantages and disadvantages that need to be taken into consideration. The most noticeable advantage that Shopping Malls provide to the community is the ease of shopping for the consumers. There are usually car parking spaces available, security cameras in almost every shop to ensure that criminals are caught, moreover, there are security guards at every entrance and exits to the Mall in order to maintain a safe environment. In addition the creation of competition in one place can also helps to provide a better range of products and choices for the customers. Shopping malls are usually air-conditioned which is always beneficial from the heat and stress that you get in outdoor market places. The disadvantages are the high rents that some of the larger malls command without the attending customer traffic to buy their goods, leading to a short life span for businesses and loss in profits. Prices also tend to be inflated to take into account the rent, service charge and staff outlay. Malls also encourage people hanging around for needlessly prolonged periods. The security in large malls needs to be really good owing to the large traffic under one roof at any point in time. There can be serious implications if a mall is targeted for criminal activities.

There are lessons to be learned however from America where Mall business started and is such a part of the society there. Unfortunately due to the proliferation of malls in the US some malls in some states there, are being closed down due to lack of customers and are being turned into homes for the community after consultations with community leaders. There were too many malls in close proximity providing more or less the same goods. You can already see that this is happening in some areas here, as you may find that out of twelve shops in a small mall, six are selling clothes albeit different prices and quality, but how many shops will attract customers unless it is already known or a branded name. New areas are daily sprouting new malls and I do not foresee this unchecked growth slowing down anytime soon


I am sure most are familiar with the parable of the house built on sand and the one built on rock. It says a house built on sand can never stand as the sand will be washed away from under the house because there is no solid rocky foundation.  If you apply this literally to the amount of property development going on in sand filled areas, it does not look good. A large amount of property construction along the Lekki Expressway axis as well as the coastline of Lagos State is on reclaimed sand filled land. A look at the Eko Atlantic City will reveal how much land has been reclaimed from the sea at a cost of billions of dollars. The Bar beach waters which was on the doorstep of the streets of Victoria Island has been pushed so far back into the sea that you cannot see the ocean anymore, This water that has been pushed back will of course have to find other outlets, so will be redirected to areas that did not have so much water previously. Lagos State coastline has been suffering ocean surges and flooding in the last few years, could this be the reason why? I am not an expert on this issue and am just wondering where all the redirected water will go and if the sand filled land will ever be washed away.  Are we facing a future environmental problem?

The rate of property development along the Lekki Expressway corridor is so rapid that the traffic on the only access road to this axis is gridlocked every morning and evening during rush hour traffic. One of the days last week I decided that instead of sitting in the long traffic jam, I would explore some of the side roads that I very rarely go into. One of these areas was an eye opener, there were beautiful houses and apartments under construction and there was a particular red brick development that would not have looked out of place in London or America. It was beautifully finished both inside and outside, the garden was landscaped to perfection. To be honest it was better than a lot of properties in Ikoyi or Banana Island. The only issue was that the road leading to it as not tarred and gets flooded each time it rains. Most of this area was under water seven years ago. It got me thinking that a one can actually create their own little paradise in an unknown area and this usually encourages other developers to start construction the area. Many people are still focused on living in Lekki1, Victoria island and Ikoyi, not realizing that they could live in a better built property for a quarter of the price, just ten minutes down the road. and still have all the comforts

On some of the newly built estates in Lagos you have nature and human beings co-existing side by side in some sort of imposed harmony. It is not uncommon to find crabs and snakes in people’s gardens, on the roads and even inside the uncompleted houses. I had to take a client to a property on one of these new beautiful developments which has risen out of water, and while waiting outside the estate gates, I had a look around and could have been in a remote village in Oyo or Bayelsa state. There were goats and chickens running around, naked children blissfully happy in their God given skins, untarred dirt roads and bush as far as the eye could see, women cooking on firewood stoves. Yet when you drive through the estate gates, you are transported into another world with evenly laid out plots and houses with landscaped gardens. It is sometimes disconcerting to go from one environment to the other in one second. But the beauty of this type of living is that both communities feed off one another. Local shops are set up in the local communities which cater to the needs of estate community.

Last year a friend abroad had purchased some plots of land on the basis that it had been highly recommended. The plots of land were purchased with the intention of selling them on at a much higher price in a few years when prices should have gone up.  Unfortunately it is proving difficult to get the paperwork and therefore will be difficult to sell on. This is fairly common with land purchased from land owners who are happily cashing in on the demand for land even if on water logged or inaccessible land. The cost of land is going up alarmingly even though one can still get fairly affordable plots of land nearer the Free Trade Zone and the further outside Lagos you go go. Be sure however that you get all the paperwork for the land before exchanging any money.

It will be interesting to watch this trend of land reclamation and see what happens to these homes in ten years time