IMPORTANT NOTICE

Say what you will about ‘wanabees’ who aspire to live across the water, most Lagosians want to live in Ikoyi, Victoria Island and Lekki. According to a survey posted on our this site, 70% of  339 respondents who took the poll answered yes to the question If you could afford it, would you prefer to live on the Island, (Ikoyi, Victoria Island and Lekki) rather than the Mainland? . Also despite the high prices that Old Ikoyi commands, 83.5% of the 103 respondents answered 'yes' to the question Do you think you will be able to afford Ikoyi properties in your lifetime? So how do they expect to raise the hundreds of millions of Naira to purchase these expensive properties in Nigeria's prime location? With no mortgage facilities etc. an indication of where such respondents hope lies (other than in their prayers) may be that 86.7% of persons polled were fully ready to buy properties well below the market price from bank debtors despite the possibility that they may become entangled in legal issues thereafter! Aha!

Obviously not everyone is upset with the banking reforms by Central Bank Governor Sanusi Lamido as some see in it an opportunity for ‘income re-distribution’. The idea is that the banks desperate to clean up their balance sheets will be ready to give deep discounts on properties held as collateral for loans. Further because virtually all ‘moneybags’ are bank debtors, they having problems of their own will leave these properties for the ‘masses’ who can now move to Banana island and Ikoyi.

Well indeed, the property markets have seen mark down in prices but not quite the deep cuts that many were expecting. Indeed the market appears to be weathering the storms much better than anticipated. What’s happening? Our reports have shown that the banks are not finding it as easy to sell the properties as they would have expected. Firstly, there are the legal issues. The bank debtors after the initial shock and awe tactics of the banks and law enforcement officers have become adept in using the law and slow judicial processes to frustrate the banks. There are all manner of injunctions flying around and even if the banks can get victory at the High Court level, there is still the Court of Appeal and then the Supreme Court to face. This process can take as long as ten years and has led some banks to enter into renegotiations and other means of persuasion rather than beginning the process to sell the properties.  Where there is even a Court Order to sell, the debtor in possession simply refuses to vacate the property and another legal process on eviction and enforcement begins.  Of course this does not endear the property to the prospective buyers. Who wants to buy a property that he or she cannot inspect because of the hostility of the resident? Even though some banks are offering such buyers indemnity if they do not get vacant possession, it is still unattractive to the buyers. There is the case of a property in one of the estates in Ikoyi which has such issues and despite the drop in price by as much as N60million form the original price, there are still no takers. Then there is the question of internal control of the banks themselves. In a number of cases, the banks had not fully tied up the legal issues in securing the properties put forward as collateral with the resultant effect that when it came to selling the properties, the bank find that they simply do not have the power to do so. 

Another issue the banks are facing is that some of the properties though in high brow areas are too large and built to suspect tastes to be attractive to a man with ‘clean’ money.  So in spite of the reduction of price, there are few takers for some monstrosities at any price.

However, by and large the reason why the bank sales have not taken off is that even at reduced prices there isn’t enough liquidity in the system to purchase the ‘bend down boutique’ prices for the properties and it will take longer and sustained pressure for the prices to come much lower. A banker spoken to said that the state of the market is best surmised with this real life story: after herculean efforts to get a debtor out of the property, the bank approach another customer of theirs who had promised to buy the property if he could get vacant possession. After several meetings with the ‘buyer’ where another 20% was knocked off the property prices, he asked the bank officials handling the transaction if they would lend him money to buy the property!