The 21-storey structure in Lagos that went down is likely to dampen the property market and may worsen problems in the country’s embattled real estate sector, professional agents said.
They also anticipate some apathy on the short-term from investors in the purchase of real estate on multi floor developments, with regulatory authorities paying more attention to approval granted and monitoring of project to ensure they meet building codes.
Currently, the property market has been facing multiple headwinds due to the impact of recession, COVID-19 pandemic and challenging real estate environment such as rise in building materials prices, lack of skilled artisans, inadequate long-term funds and unstable government policies.
Already, Lagos State Government has announced a raft of changes intended to restore public confidence. It also warned developers and property owners to adhere strictly to all building codes and planning regulations to ensure safety of life and property, while those who ignore such regulations, breaking seals and defying enforcement, will be prosecuted.
Specifically, the agents, who are members of the Nigerian Institution of Estate Surveyors and Valuers told The Guardian that the market will slow down, as investors will query developments within these neighbourhoods. They also expect more robust requirement for due diligence from investors.
The Chief Executive Officer, Knight Frank Nigeria, Mr. Frank Okosun, said there will be apathy by investors in the short-term, saying “with recent spike in demand in certain locations, sub-prime developments are not unexpected, especially when not properly checked.
“In certain locations that are densely populated, or the land is very expensive, multi-storey buildings will continue to be the order of the day.
“However, with this recent occurrence, people will need more quality assurance than previously. I also believe this will cause attitudinal change in the general public toward government physical planning and control agencies.
“We will see new regulations in the construction sector and this will be backed by better enforcement. Adherence to building codes and construction standards will improve. Even, the agencies will now see their work as much more critical towards perseveration of lives and investments.”
He also foresees more emphatic advocacy from professional bodies directed towards government in finalising enabling laws geared towards elimination of quackery and stricter measures put in place for on-site construction, which will promote engagement of registered professionals.
Mr. Sola Enitan agreed with Okosun on the temporary setback, “The market will cool off for six months and up to about six years. Once again, low-rise buildings would see a surge in demand across board with detached buildings being the darling of the market.
“For the next 24 months, I would apply a 16-32 per cent discount on apartment buildings valuation in Ikoyi, premium may reasonably be applicable for a range of 8-15 per cent for low rise buildings with detached buildings receiving the higher band premium.”
Enitan expects harshest regime of buildings regulations for high-rise buildings, “while unknown developers may not get approval for high-rise buildings, financiers too would move away from apartment block funding unless they’re probably specifying contracting and building team.”
The former president, Africa region, International Real Estate Federation (FABCI), Mr. Chudi Ubosi, said the impact would be minimal for low-rise developments.
“For the high-rise developments, we will see a lot of knee-jerk reactions from government that will result in shutdowns of mid and high-rise developments. This will lengthen delivery periods.
“We will see greater scrutiny from government officials and more concern from prospective buyers. I foresee more scrutiny on the quality and track record of the contractors being used to deliver such developments, which will give prospective buyers and investors’ confidence to invest in those projects,” he said.