Real Estate in Lagos – Update on 1004 Estate, Victoria Island

Description:

After years of renovations and upgrading, the new improved 1004 complex along Ozumba Mbadiwe Street, Victoria Island is ready for occupants. Investors who bought in at the initial stage have seen an almost 100% capital appreciation, but others who cannot fulfil their obligations may have their allocations revoked. They may not be the only ones to feel that loss.

It is everything the prospectus said it would be. The facilities – swimming pool, generators etc are in place. The interiors of the flats are beautifully and well done, with air conditioners and fitted kitchen installed. However, not all of the initial investors in the 1004 estate complex would enjoy these benefits.

According to reports, up to 20% of these investors (over 200) can meet all the payments required by the developers, 1004 Estates Limited. Prior to this time it would have been difficult for the developers to demand for these monies, on the basis that they had not completely fulfilled their own obligations. However things are different now. Apparently the current lack of bank credit has hit home for these hapless owners who have up to August ending to find the money or have their allocations revoked.

The likely fallout of any revocation will depend on which price the developers decide to sell these properties. If they decide to sell them at the original price or lower than the current market prices, this would mean a drop in prices, at least until the 200 odd flats are sold. It might possibly extend for a while after that. If on the other hand the developers sell at the market prices (or even higher) this would mean that prices would remain stable, though it would take longer for flats on the market to be sold.

On the other hand, purchasers who have nothing to lose may decide to sell the flats below market price to at least gain something for their efforts. This many think is the more likely scenario and this should lead to a sharp impact on the price which could either be corrected in the short term after the sell off is over or have longer term effect as purchasers see the forced sale price as the real price.

The real test for the price will therefore be the nerve of the sellers who have made full payment. How they react to any of the scenarios listed above will determine if the loss of the 200 will be the loss of all 1004 owners.