Luxury property in Lagos: “No matter how bad the economy is, they buy”

Right in front of the water of The teeming continent of Lagos, where most of the megalopolis’ 20 million people live in slums, real estate developers on upscale Banana Island are selling million dollar luxury apartments, decorated in gold, black and cream.

“What we sell is quality,” said Sijibomi Ogundele, 42, managing director of property developer and construction company Sujimoto, waving her hand around an apartment in the Giuliano building. di Medici. He points to the bathtub designed by Zaha Hadid in the master bathroom: “This design is one of the most expensive in the world.”

Ogundele is part of a luxury real estate boom in Africa’s largest city that has taken off even as the Nigerian economy as a whole has suffered from soaring inflation, sluggish growth and high unemployment.

The driving force is ultra-wealthy Nigerians looking for a place to park their money in an economy where the central bank devalued the naira by more than a third against the dollar last year.

“We have a niche market – the one percent of the one percent,” Ogundele said. “They are not many, their number is not increasing. . .[but] these people, no matter how bad the economy is, they will buy.

The view from Giuliano’s balcony – past a vacant lot filled with building materials and a pair of lazy big-horned bulls – is that of other apartment buildings Sujimoto built.

The Lucrezia, a 14-story waterfront luxury building under construction where apartments will start at $ 1.9 million, has a private Imax cinema. Nearby is the Leonardo, a 25-story resort that advertises 22 swimming pools and a ‘virtual indoor golf bar’.

“During the Covid, people. . . weren’t spending money because they weren’t traveling, no errands, nothing, so I think they felt rich ”, Andrea Geday, Managing Director of El-Alan, co-developer of the 25-story development 4 Bourdillon, the tallest residential building in West Africa. “And the devaluation of the naira was a factor, because they needed to solidify the funds somewhere, and the only way is to buy a property.”

From Geday’s 21st floor apartment at 4 Bourdillon, the construction boom in Ikoyi, arguably Nigeria’s wealthiest and most exclusive neighborhood, is clear.

Not only are there half a dozen towers going up, including one right next door, but dozens of smaller projects – four-story multi-story buildings or developments of a dozen townhouses in cookie cutter.

The luxury tours cater to the ultra-wealthy Nigerians, of whom Knight Frank estimates the number to be around 200,000 or 300,000, for whom money is not an issue and who own second homes in London, Dubai, New York or Miami.

Some analysts are wondering who will be living in all of these new properties, especially given the many existing apartment complexes in the Lekki and Ikoyi neighborhoods that only have 30 or 40 percent capacity.

The answer is that maybe it doesn’t really matter, given the usefulness of real estate as a laundry service for dirty money, said Timothy Nubi, professor of property management at the University of Lagos,

“There is a school of thought that this is a way of storing capital by people who don’t have the option of taking their money overseas or putting their money in the bank – they put just their money in real estate. . . and I hope they can sell it years later, ”Nubi said.

“It’s just crazy. You go around Ikoyi and you will see the entire left side of a street [with buildings] which are vacant.

This week, the head of the Nigerian Economic and Financial Crimes Commission, Abdulrasheed Bawa, told Channels TV that “90 to 100 percent” of money laundering is carried out through real estate.

At Lucrezia’s sales office, Ogundele said he had heard of money laundering being part of the real estate gambling in Nigeria, but had never experienced it himself. “And there is no money to steal right now anyway!” He said, joking about the precarious state of the economy.

Given the huge disparities in wealth and opportunity in Lagos and Nigeria in general, Nubi said the government should focus on investing in affordable housing in a city with a housing deficit of around 2.5 million units and in which two-thirds of residents live in slums. , according to UN estimates. “We have this problem of mismatch in the real estate market in Nigeria,” he said. “What is coming to the market is not really what people need.”

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