‘Why many Abuja properties remain vacant’

Adamu Kasimu is the immediate past chairman of the Nigerian Institution of Estate Surveyors and Valuers (NIESV) Abuja chapter. In this interview, he speaks on why many properties in Abuja are still unoccupied and how to remedy the situation. Excerpts:

How would you describe the property market in Abuja at the moment and are politicians in FCT selling off properties to fund campaigns?

Well, politics requires money and if a politician does not have money and he wants to sell, so be it. But we don’t have that evidence. The market is facing a slump, prices of certain categories of properties have gone down, market activities have gone down. There is stress in the economy and access to land in the Central Area of Abuja is very expensive because all the plots are committed. Number two, the demand side of the market is also not too robust, if you look at the central area there are lots of unoccupied commercial properties.

Government should refrigerate plots; you don’t release your entire plots to individuals because the future is there.

 How do we check vacant houses?

We were informed that the Federal Minister of Works, Power and Housing recently raised the same issue, that when we are quantifying housing needs, we don’t factor in the fact that some houses are vacant. So I think we need to understand one point. The Constitution of Nigeria guarantees everyone fundamental human right and one of the rights is that to property. Once you have your property, nobody can take it from you illegally.

So if someone builds a property and leaves it vacant, that is his asset. For example, I have had cause to advise my clients not to admit tenants into their houses. Because if you are an investor that is investing in real estate in the FCT right now, the best bet is for you to develop and sell and go for capital gains than for annual benefits.

 Why is that a better option?

Because of the institutional framework that we have in the market and that is why we have vacant houses all over the place. You as an investor, you buy a plot in Wuse for N100 million, you put up another N100 million to develop it, say a block of six flats, each can fetch you say N2 million per annum i.e. N12 million in a year.

Remember you have invested N200 million, now you have N12 million in the first year, in the second year, go for renewal, not more than 50% of the tenants can renew. Now you find yourself having to deal with tenants in the courts. And an ordinary tenancy issue can be dragged by a tenant in a court for between two to three years. And some will vacate before you get a court order. So the legal system is fraught with problems and is therefore not promoting investment.

So assuming our legal system promotes investment and accepts tenancy agreement as agreements in their rights, these things will not be there. Remember that N200 million has an opportunity cost. So it may be better to take that N200 million and invest elsewhere, say treasury bills and I will be getting my N12 million regularly without any risk.

That is why many property owners leave them empty because some of them have gone through hell to get people out of their properties. So the current laws governing tenancies are terribly faulty and anti-investment and so people will not want to build more houses because that sector is not attractive, and supply and demand issues continue.

What is the way out, can National Assembly members resolve this problem?

Yes, it is very simple. In some countries, tenancy agreements are declared as debt judgements in themselves so the moment your tenancy expires and you can’t renew, it is your tenant that should run to the court to seek protection. Because some people took loan at high interest rates, so investment in real estate is no longer becoming attractive because the industry regulation is very weak.

Our members in the National Assembly should therefore work towards streamlining laws that govern tenancy agreements in order to further promote investment in real estate. The FCT landscape is dotted more with residential properties so the commercial component of the FCT is yet to reach its high potential.