Hard Times Force Office Rentage Down


A new report released
last week has revealed that the recent development in the Nigerian economy, which is taking its toll on real estate has forced developers to bring office rents down if the buildings must remain occupied.
According to the report, for the first time in recent years the demand for office in the Lagos office market has dropped rather than increase as was the trend.
The reason for this, according to the report, is not far from the recent monetary and fiscal policies of the current administration, which have brought about a slowing down of business activities.
The report, which was redeased by Residential Auctions company (RAC), a Lagos-based real estate research Company, noted that though the market recorded some success in 2015 with regard to supply of new office buildings, the new stringent economic polices targeting corruption have affected business activities across all sectors and slowed economic growth.
According to the report, in the past, developers saw office building as lucrative business as rents were traditionally quoted in dollar on a square meter basis for foreign firms, ranging between $850 per square metre and $1,100 per square metre, which was quite high and only very few local firms could afford.
With recent devaluation of the naira, rents are now being paid in local currency as agreed in the lease agreement between the tenant and the developer.
It is expected that by 2017, things will improve as the Lagos Island Office Market is expected to take delivery of several office and mix-use buildings still under construction.