The economic reality is reshaping the real estate landscape with developers and investors alike becoming more flexible and fast paying attention to mixed-use schemes. The attendant return on investment and lower risks, among other benefits, are worthwhile motivations, VICTOR GBONEGUN reports.
As urbanisation continues to trigger multiple challenges in major cities, such as Lagos, Abuja, and Port-Harcourt among others, property developers are embracing mixed-use among new developments in urban areas to address housing shortages and meet consumer desire for a community-oriented lifestyle.
In an uncertain economic climate in Nigeria, multi-use developments appeal to investors, diversifying income streams to ensure greater long-term earning potential and Return on Investments (ROI). In addition, the projects put developers on the cutting edge of smart city and sustainable planning initiatives, positioning teams as innovators with industry longevity.
Mixed-use developments offer residents, workers, and visitors the convenience of having commercial, residential, entertainment and recreational facilities in close proximity of barely five to 10 radius walk, limiting the need for long commutes and enhancing the quality of life.
Since the outbreak of the COVID-19 pandemic in 2020, there has been a shift in the way people live and work, as well as a rise in new innovations in the real estate industry. For many firms, higher institutions, churches, the vast advantage of remote and virtual work was deployed.
For the real estate industry, the shift is towards the new concept of live, work-play developments, which has gained increased popularity. The increase in population growth has also increased the demand for well-designed spaces that accommodate various needs and activities in a single location, especially within the city centres.
Mixed-use schemes, also referred to as live-work-play communities, are designed to accommodate all the needs of their residents and have become a global trend in urban planning, driven by the desire for more efficient land use, reduced commuting, and the creation of vibrant, and self-contained communities.
Currently, investors and developers in the real estate market are exposed to an uncertain economic environment caused by hyperinflation impacting construction costs, the high cost of borrowing for projects at a 30 per cent interest rate, instability in government policies and high exchange rate. Many of them have become flexible, deploying alternative schemes to de-risk investments
The Guardian learnt that under town planning regulations, mixed-use schemes are allowed to a certain percentage layout plan for a zone to halt arbitrariness, while those who plan conversion of use must necessarily obtain new planning permit approvals for such conversions.
Past Chairman, Faculty of Estate Agency and Marketing, Nigerian Institution of Estate Surveyors and Valuers (NIESV), Mr Sam Eboigbe, confirmed the ongoing transformation of city space due to the concept of mixed-use developments being lately embraced by developers, investors, and other stakeholders in the real estate sector.
He argued that the hitherto sector space development, including residential, retail, office, and recreational, among others, are totally being integrated into mixed-use developments to create a fusion of comfort, space, functionality, convenience, sense of community, and dynamic environment
He stated that the concept was fueled by the work-from-home culture that started during the COVID-19 era, adding that since people living in luxury apartments could work from home instead of the offices, then, it could be possible to provide both in one location.
“The idea to expand the scope to include retail stores, restaurants, and entertainment became attractive. Also, the concept guarantees a high rate of returns to investors, luxury living to beneficiaries of the scheme having access to high-quality amenities and infrastructural provisions,” he said
The Chief Executive Officer, UACN Property Development Company (UPDC), Mr Odunayo Ojo, said that mixed-use development has become the way to go in modern project developments as it essentially promotes the live-work-play concept.
Ojo said most cities are getting congested and urbanised, which implies that many people spend more of their time in traffic, moving from one location to another.
Traditionally, you have a situation where the Central Business District (CBD) is far from where people live and residents have to commute about an hour or two either way before getting to work. “However, with mixed-use, everything is brought together, which improves the quality of life,” Ojo explained.
He noted that the firm is investing in mixed-use schemes, especially in most of their new projects, where there are amenities for people to ‘work-from-home’ with consumer stores, recreation and entertainment within a five to 10-minute walking radius from their homes, which improves quality of life.
“The key drivers are urbanisation and infrastructure; before a mixed-use environment can be provided, there must be critical infrastructures like power, water, good road networks and other things that will make it easy for multiple uses to co-exist within an environment,” he said.
Ojo noted that as a new concept, many people are still grappling with the idea of bringing multiple uses within one location but it is a trend that more people are adopting. But the absence of primary infrastructure is limiting the ability of many promoters to develop mixed-use schemes.
Former Chairman, Nigerian Institution of Estate Surveyors and Valuers Lagos branch, Olurogba Orimalade, said most people who were used to building residential and commercial, the economic reality has set in a situation, where people have to become flexible in development options.
He said to a large extent, a mixed-use scheme is a means of ‘spreading your risks’ and creating multi-areas, where investors can be sure of getting good returns on investments.
“When you talk of commercial, retail, there is a big opportunity there. A lot of people who were traditionally doing residential have seen that even in terms of returns on investment from rental or sales perspectives, the yields they are getting from shops are by far more than those from residential units.
“In Lekki areas, a lot of shopping complexes are coming up because they have realised that why should one spend so much resources building 10 semi-detached houses, when with the same similar cost build shops and within several shops, and they get three times the return and lesser risks than building a residential.
“It is a mixed fortune and the bottom line now is ROIs. No sentiment in what you are building either retail, office or residential, and that is why you are seeing a lot of mixed-use developments.”
Orimalade, who doubles as the principal partner, Rogba Orimalade & Company also affirmed that the challenges in mixed-use schemes could arise from not doing the right thing from the beginning of the project, which may give rise to management problems of selling or letting.
According to him, there is a need to understand the electricity needs of occupants in the office and residential, which operate during the day and the latter during the night respectively.
He noted that there has to be clarity in the form of services, and how they can be decentralised in those different areas, adding that a lot of work has to be done from the onset.
A town planner, Mr Rasheed Osinowo, observed that mixed-use schemes are permissible under planning regulations. However, he said, it is permissible to a certain percentage in the layout.
For instance, Osinowo said within a layout, a mixed-use scheme is not expected to be more five to 10 per cent within a layout. He said: “Mixed-use scheme is a special development and within the society now, we can’t do without it. In Lagos Island now, you will see more mixed-use schemes, especially in the Central Business District. If the use is strict, you may have no problem with it but at the same time it is possible to have a use and you want to change it to mixed-use.
“Besides the mixed-use schemes, we are now having more of a change of uses within the residential zones. That is the conversion of residential to commercial; this implies that you will have to apply for change of use from the authorities.” (Guardian)
