Tuesday, 27 January 2015

SAY WHAT!! Abuja Landlords Now Collect House Rent In Dollars

Getting decent accommodation for business in Abuja is becoming increasingly hard. Business people say one of the lessons of doing business in Abuja is one may lose and lose big and there could be nothing to do. What cause all this?“Renting a small place, maybe 60 square feet room, nothing fantastic and you find yourself paying a lot of money in dollars. Most such places will take from you in this town, at least $300 per square meter [close to N60,000sqm]. We have places where they collect so much…they collect only dollars—they won’t collect naira from you. Sometimes, a very small space, you’ll be shocked at the kind of amount [of money] they’ll ask for.” Tope Fasua, an economist who does financial consulting and advisory services related his experience in the hands of property owners in Abuja. Prices for business spaces soared in Abuja following removal of what was called “corner shops” when Mallam Nasir el-Rufai was minister of the Federal Capital Territory (FCT). As the corner shops gave way, shopping malls and plazas started enjoying good patronage from those who wanted decent places for their businesses. As many turned to plazas, landlords began to pull the string, they wrought heavy charges. Tenants who cannot cough up simply let their businesses collapse. “The landlords seem not to care because they believe there is so much money floating so somehow, somebody will come to pay for the space. This feeling of good living has sort of permeated the entire system whereby people could call prices anyhow,” a business owner lamented. But are the property owners wholly to blame? Investigations showed that government might be indirectly responsible because plots for the business premises were allotted to those who had no intention to develop them. The land speculators, as they are called, in turn sold the plots to investors at exorbitant rate. This is why the buyers of the plots hike prices with scant regard for value. Because the plazas are well situated, those who own them simply charge what they want believing that there will always be rent seekers. Abuja branch chairman of the Nigerian Institution of Estate Surveyors and Valuers (NIESV) Mr Emmanuel Aloa observed, “They [plaza owners] conclude that if they had borrowed money from bank, they would have paid huge interest rates.”

Service charge fraud
Apart from huge rental fee, what greatly troubles tenants is Service Charge. This involves administration of the business place (facility management). Fasua tells his experience in the hands of managers of one of the popular plazas in the Central Business District, Abuja: “We found that because one was in a plaza, one was to pay for what other people used. You have this huge electricity bill, over N100,000 every month for a small shop. You add that to your rent and you find out that if you continue that way, you will have to close the business. One has to take a quick decision.
“There are instances administrators of the place will buy diesel, you’re not there. They will say they buy diesel too frequently, you are consuming a truck of diesel in three days in a plaza.

“In my case, 20 percent of the rent was taken as their own legal fee. That was because they told me then that electricity bill was already paid for in the service charge only for them to slam us with these huge electricity bills which often times were inflated for God-knows-whatever else was going on under the table. 
“There’s a certain security fee they charged me in that place which they never returned. When I pressed for it, they brought up all sorts of issues and a lot of variations. Lo and behold, N722,000 disappeared which should have been returned to me. I felt I was robbed. They sent me a mail saying they deducted this, that out of the N722,000, the balance was N5,000. 
“People declare huge profits in this country, do ‘big man’, making it look as if it’s so easy. Ninety percent of instances, people are involved in some sorts of fraud.”

Empty plazas
As business places are becoming increasingly expensive, a look around the plazas shows that there is so much vacancy. Those who are bothered with the matter simply ask, “Where’s the business?” Fasua said the economy is built on a huge delusion and those running the economy tend to think there is much wealth. Some people have taken places in plazas, for two years, they have not sold much. Some have abandoned their wares/equipment and ran away after owing for two or three years.He stated: “There’s this grand delusion, delusion of grandeur that has affected our bloated ego and has driven us up to this point whereby to find a decent place to do business is a problem. Landlords don’t consider the fact that when you have a house…“In Nigeria, under extant laws, you usually own a property for 99 years renewable meaning that you own it for life. Nobody lives for 99 years after buying a property. That means it’s gonna be in your family. Why the hurry to make the money and make it now. Why is anybody so vicious about making the money now and damning the consequences even at the expense of seeing businesses collapse around you? It shouldn’t be anyone’s joy.” 
Lagos and AbujaThis demand for high rent might not be limited to Abuja. It is said that landlords demand as much as $150,000, which is over N30 million per annum for rent in places like Ikoyi and Victoria Island in Lagos.The striking difference is Abuja seems to be a growing city. Lagos is quite established. Those who have done business in both cities say the kind of ambience in Abuja cannot be got in Lagos except in places like Lekki.It is said that pricing is same, i.e. overpricing. In Lagos mainland, it is tough getting a very decent place. One might get the crowd depending on the kind of business and packaging.

What should be done? 
NIESV chairman Aloa acknowledged that property owners have formed opinion on charges which makes them demand outrageous rent. He said because of this, NIESV in 2013 published an Investment Property Databank to check the phenomenon. The Investment Property Databank specifies what should be charged so as to tackle whimsical demands by landlords. “With this document, our members will advise their clients to charge appropriately. If you charge higher, you have to justify,” he concluded.Fasua has this to say concerning the business life: “We need to take a strategic point of view. We need think collectively. I think government fails to see its responsibility in all of this because government should be one with its feet on the ground, call people to order.” He charged government not to promote capitalism the way it understands it. He advised those seeking business accommodation to think before signing the contract.

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