News Column

Cautious Investments May Slow Down Real Estate Activities

July 3, 2014

Obinna Chima

Real estate activities may slow in the second half of 2014 as investors adopt cautious investment strategies, a report has stated.

This according to the report will also be driven by the volatile political environment.

The Managing Director/Chief Executive Officer, Financial Derivatives Company Limited, Mr. Bismarck Rewane stated this in his latest monthly economic news and views presented at the Lagos Business School.

According to the report, the need for quick cash may also lead to a decline in real estate price.

It argued that the new lending rules by the United Kingdom would dampen demand in the UK, adding that Dubai is already heading towards a correction territory.

"Politicians will sell as the elections approach, increasing the pressure on home prices," the report added.

It showed that there has been increased interest in the Eko Atlantic project while lack of access road into the Eko Atlantic city had been putting pressure on Ahmadu Bello Way and Akin Adesola. Furthermore the report noted that there is high demand for office space and flats, saying that government policy had been affecting the use of commercial properties in Old Ikoyi.

"Commercial vacancy factor in Lekki increased to 31 per cent in June, from 23 per cent in May due to increased construction activities. Residential vacancy factor increasing in Victoria Island and Ikoyi due to high rent," it stated.

Continuing, the report stated that the N683 billion shared among the three tiers of government by the Federation Account Allocation Committee (FAAC) in June was higher but broadly in line with the annual average of N645.85 billion

Also, it stated that power outage in Lagos metropolis increased to over 70 per cent of the time in June, noting that power supply to Lagos was still below 1,000mw as against the aggregate peak time demand of 15,000mw.

Commenting on the cashless policy which was extended to other states in the country this month, the report argued that waiving the charges for one year in the states where the policy was extended to would allow money bags room to fund election primaries and conventions.

It showed that cash to electronic payment (card) ratio was still unchanged at 75:25 in Lagos, maintaining that the waiving of charges in the new states will slow down implementation and benefits of cashless policy.

It predicted increased use of electronic payment system due to the nationwide rollout.

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Source: AllAfrica

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