Ask The Broker with Delani Adewuyi (CWRE, Lagos)
1. I have a property portfolio mix of 1 and 2-bedroom flats in Lekki Phase 1. With this in mind, should I put them up for short lets or full rental?
We all have different investment goals and risk appetite. To better answer your question, I have to know what your investment goals are. A typical investor might want certainty and security of income flow, if you are this type of investor, a full rental option is the best. However, if an investor wants more cash flow, a high-profit margin in terms of yield, and a great deal of property maintenance, a short let is advised.
2. I am considering buying property to offer for rent. I am looking at two similar offers within the same budget, one of which is a commercial property located within Victoria Island and a residential property located within Ikoyi, which should I go for?
Advancement in technology has changed the way we do loads of things and now a sizeable percentage of the working population have an option to work from home. These are factors that will affect the face of commercial letting in the nearest future. Till then though, commercial letting especially retail commands the most return. However, for long term investment a multi-tenanted residential property is advisable.
3. I am considering selling my property, is it really worth it to have my house staged?
Yes, it is very important. Our studies at CWRE have shown that properties that are staged sell faster and have a timeline reduction of about 30-45 days on the market. The whole concept is aimed at improving and making sure the property is all around pleasing to prospective buyers or tenants. Tenants and clients are attracted to buy something good and appealing, a house staged will definitely attract interests.
According to the National Association of Realtors, “a staged home will sell for 17% more on average than a non-staged home, and 95% of staged homes sell in 11 days or less. That is statistically 87% faster than non-staged homes.” Real life example: We took over the sale of a client’s home last August after it had spent almost 90 days on the market, we staged it with the help of our interior designing team and it was sold within 45 days and 5.5% above listing price, so yes staging a home is not just necessary, it is important.
4. What average number of days does it take to sell a property?
This depends on the market. The market has different cycles and different types of properties with its own peculiarities such as; price and style. It takes less time to sell a flat than a mansion. Through our in-house analysis, we found out that different properties in different locations have different timelines. For a four-bedroom in Lekki Phase 1, it will spend roughly about 160 days. In the same neighbourhood, a 2-bedroom will spend about 90 days on the market. So, price points and location go a long way in determining the absorption rate of properties.
5. We’re a startup company looking for an office space with the best value in Ikeja. Should we rent or buy?
At this stage, you need to keep operational costs down until you become fully established in the market. From another perspective, I need to know what kind of startup you guys are, because before advisory comes research. I need to understand the nature of your business and what your long-term and medium-term goals are, I also need to understand the dynamics of the startup before I can give any advice.
6. Can you please share some details on how rental increases are determined in Lagos?
In other climes, rental increases are determined by the government, but in Lagos, rent increases are determined by demand and supply. So basically, rental increases are determined by the demand of the said properties and the location. Also as a matter of extension, we have urban migration, macroeconomic indices prevailing e.g forex, inflation, disposable income, exchange rates all playing a part in this.
7. What property features should I prioritise in listing my apartment for sale?
The Pareto principle states that 20% of our efforts bring 80% of our results and vice versa. Applying this to the question, you have to ask yourself, what the “unique selling point” of the property is? Remember that it is the 20% that makes the difference. This depends solely on the location and what the “catch” is in the location.
When working with clients in the selling of their properties and looking for what should be emphasised, we do an analysis of the community and decide what will stand out when advertised. Having a large lot in an area where the average land size is small will surely pique the interest of a buyer. And as you can imagine, selling a house in Banana Island and placing emphasis on it having a pool or maybe its rooms en suite won’t do much for listing as these features are expected in the area. The key to marketing your property is placing emphasis on the most important and unique features of your property.
8. Can you explain the term CMA?
Comparative market analysis is used to form an opinion of the current market price of a particular class or type of property by comparing similar properties in the same locality, making necessary adjustment and assumptions. It’s very useful and you should request your broker does one for you which should be updated quarterly.
9. Is there an oversupply of high-end {luxury} houses in the Lagos market? If yes, how does one know for sure?
Luxury is relative, depending on who you are asking. We don’t think there’s an oversupply, what we do think we have is a liquidation problem. First, a large number of the houses passed as high-end are not. In our opinion, the reason why we feel there is a large number is because of the downward turn of the economy and low luxury standards. As a country, we have really fallen short of what “real luxury” means in comparison to what is attainable in other African countries and the rest of the world. Overpriced, sure but definitely not an oversupply.
Featured in Prestige Nigeria Issue 1. Vol. 4
