HOUSING TYPOLOGY: TERRACE VS APARTMENT
In Lagos, like in any rapidly urbanizing city, we have become more accustomed to living in small and smaller spaces. Over the last 20 years, apartments and terrace houses have become more commonplace than previous typologies of the bungalow or semi-detached/detached house. However, when embarking on a building project, we need to consider the pros and cons of these different typologies and what they mean to the developer, the land-owner and the end-user in the context of today’s housing economy.
Text: Tosin Oshinowo
Driving along the Lekki Peninsula, which is arguably the fastest growing corridor in the West Africa sub-region, it is not uncommon to come across several new developments and wonder what factors informed the decisions on the choice of development. As an architect, I instinctively question this. When a brief is received, sometimes we go with a gut instinct, often times we push our perceptions of the area based on site analysis when advising a client on what kind of development would be the most appropriate.
There are several factors that will influence what typology of development to go with. Is it appropriate for the area? Where is the land located? What is the state of the current infrastructure? What is the current demographic? Is the demographic expected to change? Demography is now particularly more important as people are starting families later, rates of divorce are increasing and the middle class have a higher level of disposable income. All these and other factors influence market forces which play a significant role in determining what type of development is best for an area. So here, I want to address two principles that should be considered by developers, land-owners and end-users in considering between a terrace or an apartment.
One needs to ask oneself when deciding to develop, buy or rent a property – is this an ‘investment’ or is this an ‘asset’? It is not uncommon to not have a clear idea on what the differences are. After all, both involve parting with a significant amount of money. In my view, an investment’s sole purpose is to generate ‘consistent’ returns over the course of its life, while an asset may or may not generate periodic revenues but is usually a lifestyle decision. The latter tends to be our traditional model of savings and wealth preservation.
“One needs to ask oneself when deciding to develop, buy or rent a property – is this an ‘investment’ or is this an ‘asset’?”
The question remains, what is the most ideal typology for the land? There is no straightforward answer but this depends on who the stakeholders are. For example, a developer who is in a joint-venture with a land-owner is more than likely to want to exit the arrangement as quickly as possible. For this reason, it may be seen as more appropriate to develop terraces than apartments. This is due to the belief that, in a middle to high income borough, a terrace will sell faster than an apartment. On the other hand, a land-owner may be more amenable to holding the land in perpetuity without developing it in line with the Yoruba belief that “ko sa ki’n jeun” (it does not eat) meaning undeveloped land requires no maintenance but will only be a store of value. In this situation, a land-owner might prefer to lease the land/property to the developer in exchange for pre-agreed lease rentals over a period of time. This can be a great investment opportunity for both parties but caution should be exercised.
Leasing of a property or land brings a consistent return, however, each new tenancy comes with additional capital for repair costs before the next tenant occupies. In addition, newer development coming up may mean that the development is not as marketable as once thought. Moreover, in order to maintain a favourable income, the property and its amenities need to be well maintained. It is also important to add that in Lagos, we do not yet have a mature/saturated real-estate industry, like in Europe where the value of a property can appreciate based on its age, character and location. There’s really no guarantee that the intended value of the property as valued at build will appreciate if the owner eventually decides to sell. It also means that if one is buying a flat for investment, it is important to consider if the facility manager is fully committed and that only quality products and fittings that are durable and will stand the test of time were deployed.
There are several different opportunities in real estate and several possibilities for the various stakeholders. In the lower to middle incomes, the end users are more likely to have the means to rent. In the middle to higher brackets, there are more opportunities to buy. Whichever section that the developer, landowner or end user finds themselves, the important thing is to understand the pros and cons when making a decision on what to build, buy or rent.
Tosin Oshinowo (MNIA, ARCON, RIBA) is the founder of cmD+A, an architecture consultancy firm registered in Nigeria with experience spanning from Skidmore Owing & Merril’s LLP London and the Office of the Metropolitan Architecture Rotterdam.
@tosin.oshinowo
@cmdesign_atelier
Featured in Prestige Magazine Issue 3. Vol.3 2018
