MAXIMISING OPPORTUNITIES IN THE CHANGING PROPERTY MARKET

ESV Oluseyi E. Oshadare,ANIVS, RSV
 
Change is constant. Refusal to adapt to and take advantage of opportunities as they emerge will lead to obsolesce, irrelevance and loss of income stream / economic returns.

What are Investment properties? These are properties that are owned strictly for investment purposes i.e. for increasing economic returns and yields over the years.

These can either be residential or commercial properties such as studio apartments, blocks of flats, office spaces etc.

To maximise the opportunities that abound in the Real Estate sector, each investor in real estate must be ready to adapt to these changing trends to ensure a continuous income flow from the assets owned.

The emphasis of this paper is on residential properties.

In the property market, it is has been observed that some properties built over 10 years ago have designs that have become obsolete which is impacting negatively on the demand for such, thereby reducing the income stream from those assets.

In some locations, I dare say most locations, the demand for smaller accommodation types has risen astronomically such that the rents passing for such apartments is almost at the same level as the rents for bigger houses.
Several reasons can be deduced / are responsible for this emerging trend.

They range from the societal shift to smaller family sizes, available home ownership opportunities (rent to own, mortgage facilities etc), higher demand in the city centre amongst others.

The need to maximize land use in densely populated areas has also become the Policy of some state governments.

An emerging trend observed recently is the conversion of detached houses, bungalows with multiple bedrooms to studio apartments, short let apartments, Airbnb etc.

To maximise these changing pattens most times require a slight modification of the existing design and in some cases, an outright conversion of the existing property to smaller accommodation units.

An investor who wants to maximize these opportunities must first conduct a feasibility and viability study.

An Estate surveyor can assist in this regard. This is to ascertain that the proposed conversion is possible and profitable.

Feasibility studies will entail considering the need for government agency approval for the proposed conversion, what kind/type of conversion should be carried out based on the demand patterns in the property market etc.

Viability studies on the other hand will consider the profitability of the proposed conversion both in the short run and long run i.e. capital needed for the conversion viz a viz the expected income flow.

It is necessary to say here that the location of each property is a huge determinant of the kind of conversion to be embarked upon.

A property in the city centre may be profitably converted to luxury (and serviced) studio apartments, Airbnb apartments or short let apartments, whilst a property at the outskirts may be more profitable by converting to traditional smaller apartments without any added luxury or improvement.

The Estate surveyor will advise on the proper conversion to be considered.

In conclusion, key requirements for a proper conversion (having conducted a proper feasibility and viability report) are.

1. It is mandatory for relevant government approvals to be sought and procured before any major conversion.
2. Also, the requisite professionals (the Architect, structuralengineer etc) must be engaged to ensure that quality work is done.
3. An Estate surveyor must be engaged to ensure that the apartment is leased out to prospects with good profilesand that the apartments are professionally managed to enhance the useful life of the assets and ensure continuous income flow.

ESV Oluseyi Oshadare is the Principal Partner of Oluseyi Adenekan & Co., a firm of Estate Surveyors and Valuers based in  Abuja, Nigeria.