Winning formulae for successful property development

Monday

It appears I may have the answers to the question I posed last week, about why some properties seem to get snapped up immediately and others don’t? Some property professionals explained to me, that the location, good access roads, quality and affordability of the property x affordable services and good security are the winning formulae for a successful property outcome. Added is good maintenance, on site customer service, 24 hour power generation, clean tap running water, effective sewage disposal, and uniformed security

Properties that are being snapped up before they are even completed are on estates that have cracked this formulae, thereby creating a waiting list of clients for future developments by the same developer.

Tuesday

The rapid deterioration of some side roads along the Lekki axis is a cause for worry. In order for cars to use the roads, builders from building sites, use the pot holes to dump all their rubble, so not only are you navigating pot holes, but you are also at risk of sharp metal pipes, nails, barbed wire, jagged concrete slabs and pieces of wood damaging you car. On some of these roads are built the most luxurious homes, with cctv cameras, electric gates, armed security etc with at least 4 expensive cars parked in the driveway. Yet no one sees it fit to do anything about the road outside their gates.

Wednesday

Apartments are springing up all over the place, In Ikeja, Yaba, Ikoyi, Victoria Island down to the Lekki Free Trade zone. A lot of these built on land on which stood single dwelling units. The space for car parking that such dwellings generate, are more often than not, nonexistent, and if available is so narrow that you may not even fit a tiny car in the space provided.

Flats/Apartments are being built without much thought for the demand such multi dwelling units place on the environment. The drainage , rubbish disposal, number of cars using the compound or surrounding roads, power provision, where to site generators and diesel tanks, boreholes, water tanks etc. Serious monitoring of these dwellings needs to take place by the appropriate agencies, before they turn into slums.

Thursday

 About a year ago, I approached a property developer with the hope that he would allow my company to advertise and mange his units. He explained that a friend of his had a property company and had already requested the job and out of obligation he would let him do it. I said I understood and we parted ways. To my surprise, I received a call from this same developer today, asking if I was still interested in managing his property and that he also still had a few vacant units! I was lost for words, but told him I would go and see him to discuss things a bit more. I really want to know what happened to his friend and the service contract he had executed so far. No point in RSG taking on work that has been so badly done, that it will need starting from the beginning again. Let us wait to see what the outcome is

Friday

Once in a while, I have to fly out/into the country and am always dismayed by the state of our airport MMA1. It is a shame that it has the prefix “international” added to it, as it is nowhere near any international standard that I am aware of though it appears some sort of works have started, but it all appears uncoordinated.

I landed there a few days ago and the stench of diesel in the arrival terminal was so strong, I had to cover my nose. The escalators were broken down, some areas were not lighted, the luggage did not start coming out for over half an hour, and when they did, it was at snail pace; the air conditioners were not working. I could go on and on, but I am sure you get the drift

Until next week

THE PROPERTY LOTTERY

Monday
Renting and buying property is like playing the lottery, sometimes you win and sometimes you lose. There is an estate along the Lekki expressway that sold its units for N30m a year ago, they are now being exchanged for N47m! The same units were being let for N1.6m a year ago, and are now asking N3m and above! This particular developer has earned such a good reputation, that his developments are snapped up long before they are even completed. Whereas some other developers have completed units sitting empty for two years or more, having to lower rents, just to attract clients.

Tuesday
It appears that some landlords and developers are stepping up their game a notch and are now improving on the quality and standards of their properties. I have in the last few weeks seen some very good quality developments on serviced estates, and not in the expected “highbrow” areas, but in Lekki and further along the Lekki Expressway! This really does go to show you that people should start expanding their horizons and going further afield to get good quality properties

I know everyone is terrified of the daily traffic gridlock, but, if you want to live in a good safe estate, in a well built and finished home which you can retire to at the end of a hectic day, then it may really be worth spending 15 minutes extra in traffic and going to sleep with a smile on your face.

Wednesday
I decided to follow up on the progress of a development on the island which I had my eye on a few months ago. I drove down there today, only to find it had been boarded up and works brought to a standstill. I called the developer to find out what had happened, and was told all works had ceased until further notice. This is an unfortunate common experience nowadays, with a number of previously buoyant developments, looking like ghost towns, because the developer does not have the finances to finish the works.

Thursday
A client walked into our office today as he had seen our advertisement of a property he was interested in. He was ready to pay for the property there and then, but I insisted he viewed the property first, just to be certain. He went round to the property immediately and said he knew about estate and was prepared to go ahead with the purchase. I contacted the landlord as I smelt something odd going on. The landlord confirmed that three other agents had approached him on behalf of this same client for the same property, and all had fallen through!!

We do come across strange requests in the course of this job. When the client rang me again about wanting to seal the deal immediately, I mentioned to him that I understood he had approached other agents and had pulled out before sealing the transaction? He gave various reasons for this and promised that he was genuine and really wanted the property.

Friday
The desperate client from yesterday contacted us to ask if he could pay one year’s rent and pay the other with a post dated cheque to be cleared in 3 months. We do come across frequent requests for payment of rent for one year instead of the accepted norm for 2 or more years. This may be an area that landlords need to review and come up with stricter Agreement terms for one year rentals and ending the tenancies after that period. Whilst it is easier to manage shorter tenancy terms abroad due to strict regulations, the logistics of this here in Nigeria are more difficult, but need to be considered, especially if the rent is likely to double in one year

AN UNCERTAIN PROPERTY MARKET

 Monday

There are so many views on the property market. I was speaking to a property professional, who is of the opinion that the market has remained the same as last year; another says it is picking up. I personally believe that it is all a risk and you just have to take the plunge whenever you feel comfortable to do so

Banks should inject some mortgage incentives into the property market and reduce the high interest rates which are being charged at the moment, the conditions that also come with them are unrealistic. This high pay back rate is precisely the reason why so many people fail to take out mortgages or to make their existing repayments.

Tuesday

I was surprised to see a block of flats in Ikoyi back on the market after I had been told earlier this year that it had been taken by a corporate client. Apparently the client promised to take all the 6 units if the landlord carried out some remedial works to the apartments before they moved in. The landlord proceeded with the works, and then the clients decided they did not want the apartments anymore! After a prolonged battle with the clients, the landlord had to put the properties back on the market. Landlords should never proceed with extra works requested by clients unless a commitment has been made in writing and a deposit paid.

Wednesday

I have noticed some developers exclude boys quarters in their properties and instead build an extra room within the house, which is referred to as ‘the maids room’ or provide nothing at all. This can be quite limiting if you have staff as there is the lack of privacy on both sides as well as having to install extra security in the house because you have a stranger living with you. It helps when you have a BQ outside the house as drivers etc may need to use the bathroom or sleep over if they have been working late or you travel.

Thursday

On the Lekki Expressway, the VGC roundabout has opened up and the entrance into Ikota Shopping centre has been removed, creating a bottleneck of traffic. People going to Ikota now have to go all the way to Ajah roundabout, which for some strange reason is always gridlocked, and turn to come back all the way to Ikota, wasting so much time. Residents in VGC who need to go to shop in Ikota, which is a few yards away from their gate, have to take a trip to Ajah first. The road works by LCC has caused misery to the lives of residents for years. Some parts of the road have improved, but it is safe to say that the works remain uncoordinated. As for the toll gates, that is a chapter for another day!

Friday

The whole week was spent showing a client a number of properties which did not quite meet their requirements. We finally found one that they said they liked, but was next door to a MFM church! Of course they backtracked very quickly. We found another one which they loved and wanted to make payments immediately, only for the landlord to ring back and say someone had just paid 2 years rent in cash for it. Of course it was disappointing for all of us. This is the market we work with and you never know what is going to happen. It could sometimes take one day or three months to find your ideal property. The search continues!

POOR SERVICE DELIVERY

Monday

I have observed that some estates, collect exorbitant service charges from residents, yet deliver poor or nonexistent services. A lot of management companies on estates respond badly and rudely to residents complaints. Staff on these estates seems to forget that their salaries are being paid for by the same residents that they are being rude to. Residents should also learn to make formal complaints to senior members of the service teams. With a written complaint which must be acknowledged at the estate office, you will “hopefully” achieve some result to your complaint

Tuesday

I had to visit a property that the owner had recently built, stayed in for a few months and wants to sell so that he can live in a company house and concentrate on developing a large plot of land in Lekki. The property was opulently furnished with gold plated taps and four poster beds. He insists he wants to sell the house with the furniture and is therefore asking for a sum of money that cannot be realistically justified. I explained to him that he cannot value the property on the basis that he chose to leave his furniture and decorate it to his individual taste. Selling a house like this is harder than selling empty

Wednesday

The minister for Power, has confirmed that power generation is now at around 5,000mw with a promised increase of another 5,000mw by year end! What has happened? I would certainly like to know. We existed on less than 3,000mwfor years; we now have a promised output of triple what we had. Is the privatisation of the industry working so well?

I know of two estates along the Lekki expressway that have not had any power for at least 5 days. Reasons have been laid firmly at the door of PHCN, who claim they are on strike, so cannot deal with any issues

Thursday

I visited a new medium sized estate of about 200 homes along the Lekki expressway, which is selling its 2-5 bedroom houses off plan and as shell, from N12million. The roads are tarred, the estate is serviced and the completed shells appear fine. Included in the shell are a front and back security door, windows, wiring, plumbing, and plastering the walls. A buyer will need to include all fittings like floor tiles, electrical wall fittings, bath fittings, kitchen fittings, painting etc. For the amount that it is being sold, you can add another 3-5million or more if you want, to have your perfect dream home or as investment. The estate is well laid out and has a management office on site. The first phase is sold out and they are now selling the second phase.

What investors need to make certain is that the legal documentation is air tight and no extra charges outside of agreement requested. Be clear about hand over dates and service charges.

Friday

Another building collapsed in Lagos recently. It was an old building but apparently too much pressure had been put on its already weakened foundations. Tougher legislation is being taken to prevent landlords putting up substandard structures, as well as using the property for fit purposes. There is no point putting up a block of residential units and then using part of it as a printing press or for storage of heavy duty machinery. The building will eventually give way to the weight exerted on it.

Until next week!

TO BUY OR NOT TO BUY

Monday

I get a lot of enquiries about land and property prices and where the best areas for investments can be found. My advice is to do some research on what and where you want to put your money before making any decisions. I can only give my own views which may not be representative of theirs or anyone else’s views. However what I can advice on, is on the cost of land and properties, and the possible sale/ rental income that can be generated from them.

If you are buying land for development, you must first check what type of developments are allowed in that area, is it residential or commercial or is it mixed? What is it you want to build on the land? You must ensure you get your title documents and survey plans. You must obtain land information and check validation of titles from the St ate Land Registry. There are a lot of private land sales that are illegal and dishonest. Buyers beware! It is usually faster to instruct a Lawyer to carry out a search.

Tuesday

Popular areas for land development at the moment include the Lekki Epe Expressway Axis, Lekki Ph 1, Osapa, Agungi, iLekki Ph 2, Ajah, ibeju Lekki and so on. In Ph1 which is nearest to Victoria Island and Oniru, a typical 800- 1000sqm plot will sell for between N60-100million. The rate of development in this area is quite astonishing, as you can daily see luxury apartments and commercial buildings springing up. Rent will typically go from N2-5mill per year for a 2-4 bedroom property.

Further along the Lekki Expressway, developments of small and large estates are taking place in pockets. Commercial developments are springing up fast and furious. One of the largest mixed use shopping complexes in Africa is located along this area. The Ikota Shopping complex contains at least 7000 retail and office units. Located along this axis is also some of the largest well managed residential estates, the further along you go, the more availability and cheaper the land becomes.

Wednesday

I visit a property today where the security is better than Alcatraz! When we build houses, we barricade ourselves in them, as if locking ourselves in prisons and off from the world. I do understand the fear of armed robbers etc, but care and safety should be taken and allowances given for the eventuality of a fire and a route to escape, other than the entrance door.

Thursday

It appears the short period of improved electricity supply, has come to an end. Estates are now seeing an increase in demand for diesel supply once again. It was reported in the news that power generation has dipped following the resignation of the Minister for Power!  What is clear is that our days of epileptic power supply may be far from over.

Friday

I get a brief from a “friend of a friend” who seems to think that he is doing me a favour by asking me to find property for him at an unrealistic low price in a high brow area. I try to explain that this may not be possible, but his response is that he is paying me!?

Until next week!

THE DEVELOPMENT DILEMMA!

Monday

I had to go and see a developer today who had a road construction engineer with him, so I sat waiting for him to finish his meeting. I could not help but overhear their conversation, which had to do with the non completion of projects due to lack of funds.  It is clear that a lot of contractors are blamed for not completing their projects or completing them well, but what I gathered was that this is in many cases due to them not being paid by the various bodies that engaged them, whether at local, state or federal level.

This is a dilemma that is faced by many contractors, both big and small. It was also in the media that contractors may be owed over N100billion for projects they had been awarded.  Often these projects are left half completed, and in the rare instance that the project is completed before payment is received, the contractor goes bankrupt, staff are laid off and he is left with a bad bank loan and ruined name.

Tuesday

Developers are being urged by the government to seek planning information first and obtain approved development plans before commencing their building projects, as there are too many cases of dangerous building structures, which are collapsing on a daily basis. Moreover, these illegal structures are built too near roads, over canals and drains causing blockages and floods. The Lagos State Government has promised that from now on both building owners as well as the professionals responsible for monitoring and approving the projects, will be held accountable for breaches in building regulations.

It is worth noting that recently a fairly large estate towards the Lagos Ibadan Expressway was found to have been built without any approved layout or development plans!

Wednesday

It appears that Old Ikoyi is being transformed into an area predominantly filled with luxury high rises.  There is almost no street that does not have one or two multi storey block of flats. Every day a new one springs up, even more luxurious than the last. We must wait to see if they will stand the test of time. They almost always have swimming pools, gyms or squash/tennis courts (depending on the size of the land). Rent per unit usually starts from $65,000 (N10m) or sales from $750,000 (N120m+)

Thursday

More and more luxury top class international named hotels are being built on the Lagos Island, which is contrary to the perceived state of the economy. Yet if you visit these hotels every weekend, they are filled to the brim with visitors throwing parties, lodging there or just having a good time. Maybe it’s our way of distressing and coping with daily challenges. It would be great to see this amount of money and zeal, poured into building hospitals and schools.

Friday

I understand that it may cost the government about N40bn to roll out the proposed N5000 note? I am not a politician or expert on these matters, but as a lay man who is only interested in seeing some improvement in the living conditions of the ordinary man and our infrastructure, I can certainly do more for the populace with just half a billion! I could build an estate with affordable homes for the ordinary man on the street, serviced and managed by RSG Property Services!  Ahhh, If only wishes were horses…..

 

Until next week!

WILL IMPROVED POWER SUPPLY LAST?

Monday

I received a response to my diary entry last week about the remote possibility of an earthquake in far away Indonesia possibly being responsible for the ocean surge that swept over Kuramo beach recently, from a gentleman who wished to point out to me that Indonesia was not near Nigeria! He seemed to have unfortunately missed the point I was trying to make and that was that disturbances in the earth movement in any part of the world, can cause aftershocks and tidal movements called seismic waves in places far away from the country of its origin. This is a proven phenomenon, and can be checked out for further for proof.

Tuesday

When are we going to get our power provision right? Just as we had started rejoicing about the slightly improved power output and having the “audacity of hope” that we were now emerging out of the dark ages, the Nigerian Electricity regulatory Commission(NERC), has informed us that the increased electricity  output will drop by 300mw after the rainy season!? This is after the Minister for Power had advised Nigerians that we will see a more than doubling of power output to 5000mw by the end of this year! Who do we now believe?

I have postulated over and over again that there is too much at stake in the provision or should I say “non provision” of power. Even the invitation of private companies to take over the running of power generation is not clear. As I write this article, it has just been announced that the Minister for Power, has unexpectedly resigned for compromising his position in the selection of private companies!

Wednesday

A lot of serviced estates have been taking a well deserved rest from their over reliance on generators, as power supply seems to have improved. Diesel prices have dropped and therefore there will be some relief to the pockets of residents who have been groaning under the repeated requests from service providers for more money to fuel the generators, for residents comfort

Thursday

I was invited to visit a small development of eight terrace homes in Lekki1. I was looking forward to seeing the finished product as the construction had started about 4 years ago, but due to financial and other constraints including an incompetent project engineer, the project stalled and was halted for a while.

It has been finished to a good standard, with four ensuite bedrooms. It is serviced and benefits from 24hours power supply private parking, boys quarters, and is being rented out for N3,5m per year. Developing is certainly not a job for the faint hearted.

Friday

The price of land along the Lekki Expressway axis is increasing at a fast rate. A standard plot of land between Lekki1 up to the Elegushi area, is sold for between 25-60m depending of course on the exact area. Whereas five years ago, you could buy a plot of land in the chevron area for 5-10m, this now commands a price of 25-50m.

Even the Free Tade Zone is not left out. You could previously buy land there for 500k, but land owners have wisened up to this fact and are now asking about 4m per plot. Land in these areas needs extra sand filling to build on, as most is reclaimed land. We are bound to see further increases in the near future

 

Until next week!