As the downturn from coronavirus pandemic squeezes the economy, higher-end and luxury real estate markets have become the hardest hit, as premium apartments property owners record lowest sales in major cities.
In the past five years, high vacancy rate has existed in the luxury segment of the market, especially in Abuja, Lagos and Port Harcourt, but worsened by depressed economic sentiment, and the excess supply of these properties – which is outstripping demand.
Following the global pandemic that has killed more than 500 Nigerians— and dealt a shock to the global economy, thousands of Nigerians have lost their jobs, millions more are staying home and wealthy Nigerians are seeing their stock portfolios plummet. Currently, some employers have cut salaries and prefer their workers to work from home.
The Guardian gathered that amid lockdowns and travel bans, the pandemic has severely impacted every facet of the luxury sector of the real estate market, and dip preliminary outlook for priciest homes. A growing number of sellers are offering large price reductions and incentives to buyers.
Besides, there has been a glut of new luxury residential buildings and a shrinking foreign-tenants pool as some countries such as United States evacuated their citizens in the wake of the pandemic. Expatriates from blue-chip companies and oil firms inhabit most of the posh homes in Ikoyi, Victoria Island and Lekki in Lagos.
Real estate professionals in wealthy locations across the country confirmed the development, and fear the spreading contagion will deal the most severe blow to the upper end of the market.
“The property sector is suffering a decline in all sectors but most especially in the high valued luxury areas. Demand has gone down while the rate of default in payment of rents has gone up,” according to Kola Akomolede, past president, International Real Estate Federation, (FIABCI) Nigeria Chapter.
More properties remain vacant for longer time because there are no people to rent them. Most of the occupiers of these properties are corporate bodies, who have been out of business since the outbreak of the pandemic virus, they are not in a position to pay their rents or rent new ones, Akomolede explained.
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