Property price drop in Ikoyi, others averages 29% in two years

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Property price drop in Ikoyi, others averages 29% in two years

•Price decline opens more options for buyers Property prices in highbrow neighbourhoods of Ikoyi, Victoria Island, Lekki and the (Government Reservation Areas) GRAs have seen an average drop of 29.2 percent. The drop which specifically relates to residential properties put in the market for outright sale is being attributed to the lingering global economic downturn that has slowed down activities, especially in the real estate sector in the past 24 months. Ikoyi, Victoria Island and Lekki represent the upper segment of the property market that gained immensely from the capital market boom, rising prices in the world oil market and the liquidity glut in the banking system arising from the 2005 consolidation. Conversely, that segment has been receiving the worst of beating since the feeder sectors caved in under the heavy impact of the global credit crisis and the crash in the world oil prices. In the same locations and within the same period, residential property put in the market for lease have seen an average price fall of 25 percent while office space and undeveloped plots of land within the locations have seen average price drop as high as 52 percent and 45 percent respectively.  Bismarck Rewane, chief executive officer of Financial Derivatives, in his annual Economic Review released recently, noted that what is happening in the property market has thrown up a surprising convergence in house prices in Victoria Island and the GRAs, pointing out however, that VI is experiencing a sharper price drop which, according to him, "shows that VI is more cyclical than the GRA".  According to him, in 2008, a detached house for sale in Ikoyi went for N450 million but in 2010, the same house goes for N300 million, representing about 33 percent drop in price while a detached house in Victoria Island put up for sale in 2008 for N350 million, sells for N200 million in 2010, thus registering a 43 percent drop in price. In Lekki, a detached house sold for N120 million in 2008, but in 2010, the price had gone down by 29 percent to N85 million while the GRA has seen a price drop of 23 percent as a detached house selling for N260 million in 2008 now sells for N200 million.  Rewane's review further revealed that in Ikoyi, a detached house which  was leased out for N15 million per annum in 2008 has seen a drop of 33 percent to N10 million in 2010. Similarly, a detached house in Victoria Island that was leased for N10 million per annum now leases for N8 million representing a 20 percent drop just as a detached house in Lekki that was leased for N7 million has gone down by 28 percent to N5 million in 2010.  The GRA has also seen a price drop of 20 percent as a detached house leased for N5 million per annum in 2008, now goes for N4 million while the GRA luxury flat now goes for N3 million as against N4 million it went for in 2008, thus recording a drop of 25 percent.  Office space in Victoria Island has seen as much as 47 percent drop. An office space that was leased for N75,000 per square metre in 2008, now goes for N40,000 per square metre. And at Ligali area, also in VI, an office space that was leased for N70,000 per square metre in 2008 now goes for N30,000 per square metre, about 57 percent drop.

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