ECONOMIC DOWNTURN: PROPERTIES VACANT IN LEKKI, VI AND IKOYI

A recent report by the Financial Derivatives Company Limited has stated that the number of vacant properties in the upper class real estate neighbourhoods of Lekki, Victoria Island and Ikoyi has risen by 72 percent over the last 18 months. The FDC’s Vacancy Factor Index (VFIX) for 2nd Quarter June 2016 report attributed the rise in the number of vacant properties, based on the housing stock as at January 2015, to a combination of rising inflation, GDP contraction, falling consumer confidence and increasing unemployment rates contrived to lower demand for housing. “Our urban real estate vacancy factor index increased for the second consecutive quarter as aggregate demand and supply forces remain in disequilibrium – a dynamic that continues to persist in the real estate market. “The VFIX indicates a paradoxical phenomenon where supply continues to trend upwards but effective rents remain stubbornly high,” the company stated. Specifically, the report stated that there was a 6.6 percent increase in vacant residential properties in the second quarter. “The residential VFIX has increased by 6.6 percent from 177 in March to 189 in June 2016. Commercial VFIX on the other hand has remained flat at 148. The huge gap between both indices is due to the fact that residential properties have a higher sensitivity to economic downturn. A residential property can easily be vacated without the tenant incurring a huge cost.