| Ikeja Property |
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After Ikeja/Allen where next? Residents of Allen Avenue and some parts of Ikeja have been relocating to other areas following the continued commercialisation of their neighbourhood. Where could they be moving to and what benefit is this to the smart investor? The Lagos property market could be divided into the island and the mainland markets. While the mainland covers everything from Surulere past the toll gate to Ogun State, including Ikeja, Festac and other areas, the island covers Lagos Island to Ajah, including Victoria Island, Ikoyi, Lekki and VGC. This month we are looking at three of the mainland's solid middle/upper income areas. Maryland, Ikeja, and Surulere. Ikeja Ikeja remains one of Nigeria's leading neighbourhoods. It is Nigeria's leading industrial heartland, the seat of the Lagos State Government, and a significant commercial centre, where prices have continued to grow fast over the past few years. Major trends in Ikeja include the displacement of residential tenants in the Allen/Toyin/Opebi axis by commercial customers and the migration of retail down Toyin and Opebi as the prices in Allen have skyrocketed. The questions are: are these locations going to continue to experience above average growth, where are the displaced residents going and how can the smart investor benefit? The more serene GRA hosts residential property and corporate offices, even here commercialisation remains evident. There is noticeable congestion on Awolowo Way, which realtors attribute to the relative low cost of doing business there. What makes Ikeja tick? Allen Avenue is the nerve centre of Ikeja and property prices are rapidly increasing. Catherine Ihejirika, an estate surveyor with Eloh Mba & Co. says, 'Allen Avenue has become quite hot and can be likened to Victoria Island because of the rate of commercial activity, which has transformed the once residential area to a commercial centre. The occupants of the few remaining residential properties are moving out to other areas, giving their properties up for office use or for a complete buy over.' This enables the new owner to put up any structure they desire. A consultant with a leading property company in Nigeria narrates: 'Before I came to Lagos I heard a lot about Allen Avenue and wondered what made it special. When I came to Lagos the Allen I met was different from what it is now. Now, it has become completely commercialised.’ According to Catherine, the reason for this development is the invasion by banks, telecommunications companies, eateries and boutiques whose demand for property on Allen has been high. Virtually all the banks in Nigeria have a branch on Allen Avenue. The leading banks, First Bank, Union Bank, UBA, Zenith, Oceanic, and others have fairly sized branches on both sides of the Avenue. 'Besides,’ Catherine adds, ‘people want the prestige identified with Allen Avenue and are willing to pay for it.’ Apart from being the centre of commercial activity in Ikeja, Allen also controls the largest human and business traffic and serves as a link to the other parts of Ikeja. People believe that they are more conspicuous on Allen, especially those who deal in branded consumer goods and services. We believe that the critical mass it has achieved, along with its central location, bodes well for continued appreciation, perhaps not as strongly as in recent years. Opinion of realtors and residents If one missed out on the commercialisation of Allen, then you could speculate on that of GRA. This is because the current trend there is residential losing out to commercial usage, which pays more. So, residents in some parts of Ikeja, like their counterparts on Victoria Island, look for accommodation elsewhere. One agent referred to G.R.A. as a place where two of the three major streets are already hosts to more business occupants than residents. Unless the state government stands its ground on conversion fees, it will only be a matter of time before the entire area becomes commercialised. An estate surveyor from Biodun Odeleye and Co. adds that as properties are experiencing very high appreciation it may well be a good time to buy. On price of properties On property price appreciation, tenants and realtors agree that property prices on Allen rise almost daily. When compared with properties in other parts of Ikeja, the prices are very high. While a detached duplex on Allen could be rented for between N1.5 to N3 million per annum, in places like Awolowo and Adeniyi Jones such property could be rented for N850,000 to N1 million. Even the streets off Allen experience as much as 50% discount in price compared to Allen because they are not on the Avenue. In one of such streets facing Allen the asking price for a detached duplex was N1 million. According to a realtor, the property had been in the market for a while as no one had taken it. ‘People would rather pay more and be on Allen,’ he says. Renting a 2 or 3 bedroom flat in Bank Anthony area or other parts of Ikeja could be between N250,000 and N400,000 p/a but in Allen such rental may take from N450,000 upwards. A neatly finished 3 bedroom flat on Allen could attract a rent of N500,000 per annum. Office spaces are priced per square metre. Some buildings are constructed as open plan space such that tenants can decide how to partition them. A consultant in the area says most buyers take between 80 and 100 square metres, with each square metre costing between N10,000 and N16,000. Rent could be higher or lower depending on if the tenant is existing or new. 'I pay N1.5 per annum while my neighbour pays N2.5 million per annum; now my landlord is agitating for an increase. But the advantage I have is that I have been his tenant for 15 years. A new tenant wouldn't be allowed to pay that,’ a tenant reveals. On average, realtors put rent appreciation at 30% to 40% per annum. On sale of properties, depending on the type, size and location, a seller might get anything from between N50 and N70 million for duplexes, and up to N100 million for a block of flats. Moving forward, prices are likely to double, even triple, over the next three to five years. Other locations in Ikeja Away from Allen, it is a different ball game altogether. Prices could be as much as 50% to 70% lower. A property that goes for N2 million on Allen may go for N1 million or less outside Allen, says Catherine. But in some parts of G.R.A. it is possible to get more expensive properties than in Allen because the bulk of businesses in G.R.A. are clubs, telecommunications companies that need space to mount their mast and other equipment that require space and less human traffic. Empty land For investors who would be interested in Ikeja, there is still hope. On Allen, a piece of land measuring about 1000 sqm goes for between N40 and N60 million, while an acre would be anything from N120 million in G.R.A. Outside of these locations the prices are lower. What’s in it for investors? Just like residents of Victoria Island sometime ago, former residents of Allen Avenue and other commercialised parts of Ikeja have begun to move. According to property consultants, the displaced residents are taking up properties in new areas opening up, such as Magodo, Omole Phaze I and II, Ogba, Ogudu, and Gbagada. This is an opportunity for investors; prices in these areas are likely to continue to rise as the trend continues. Demand for properties in these locations is also looking up and represents another major investment opportunity for investors. |
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