Business

COVID-19 stalls construction of multi-billion naira housing projects

No fewer than 20 multibillion naira office and retail developments, which completion dates were initially scheduled for 2020, have been put on hold temporarily by developers and investors due to COVID-19. According to findings, construction of more than 265,448 square metres (sqm) office space projects are supposed to be completed by the end of this year. Also in the retail mall segment, more than eight projects of more than 79,375 sqm spaces have also been stalled. While new delivery dates have not been fixed, New Telegraph gathered that the office and retail projects had been delayed due to the ravaging Coronavirus pandemic affecting human health and global economy. Many of these projects are located in Lagos and Abuja.

A visit by our correspondent to some of the construction sites in Lagos revealed lack of serious activity apart from security guards on duty. Apart from finance, it was also gathered that the ban on international flights to the country due to COVID-19 also affected some of the projects as essential building materials could not be imported from China and the United Kingdom. Some of the office projects include Corporate Tower, Famfa Oil Tower, Sogenal Tower, Dimension Building, Atlantic Resort, Bloombury, Continental Re Building and the Waves among others.

The retail end includes Benin Mall, Capital Mall, Oasis Mall, Royal Gardens Mall, Victoria Mall and Westford, Lekki among others. Apart from the pandemic, experts have listed volatile economy and exchange rate, low purchasing power, unstable policies and high infrastructure deficit as factors discouraging investors. Lagos-based estate surveyor and valuer, Mr. Stephen Jagun, blamed the situation on bad economy. According to a recent analysis by Proshare Nigeria, research into Dayo Ayeyemi No fewer than 20 multibillion naira office and retail developments, which completion dates were initially scheduled for 2020, have been put on hold temporarily by developers and investors due to COVID-19. According to findings, construction of more than 265,448 square metres (sqm) office space projects are supposed to be completed by the end of this year. Also in the retail mall segment, more than eight projects of more than 79,375 sqm spaces have also been stalled.

While new delivery dates have not been fixed, New Telegraph gathered that the office and retail projects had been delayed due to the ravaging Coronavirus pandemic affecting human Global Real Estate Benchmark Indices as it relates to Nigeria’s commercial real estate market showed an average yield of 3.4 per cent for foreign direct investment. According to another estate surveyor and valuer, Richard Olodu, property development has suffered a setback and no new development is noticed in the housing sector.

“As usual, Lagos (Lekki axis) experienced upward growth but not as predicted. Most iconic developments like Eko Atlantic City, Lagoon City, Nimber One (former IMB Plaza) 1 Akin Adesola, VI, Ilubirin Estate (apartment by the lagoon), Falomo Shopping Centre, New Alade market etc experienced slow down as completed buildings like King Tower, Heritage Place, Mulliner Tower, Zenoil Oil Building, could not be fully let,” he said. On the continuous high vacancy rates on existing retail malls, Olodu said that affordability problem due to economic reality and competition due to property market penetration by available alternatives were responsible. According to him, wrong location, inaccurate demographics, assumptive development appraisals, expensive construction rates and wrong lifestyle focus were other factors.

“Purchasing power is also generally low. The most killing of the reasons is high e-commerce patronage (online purchases). People are buying increasingly from Jumai, Konga, PayPorte, VConnect, Kara, Printivo, OLX, Jiji, Obiwezzy and Ajebomarket,” he said.

He added that the sector experienced no growth in the first half of 2020 because of the fall in oil price in the international market. “It has been established in various real estate reports like Northcourt Nigeria Real Estate Market Outlook, Ubosi Elle & Co Real Estate Market Review, PWC Real Estate Report, Knight Frank Wealth Report, World Bank and IFC that real estate market in Nigeria is directly related to oil and gas sector performance as oil and gas contributed between 90 to 95 per cent of national revenue between 2011 to 2018,” Olodu said. In terms of sales, he stated that there was a few transactions concluded.

 

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