Home-to-hotel conversions threaten housing market
A decade’s worth of new hotel supply in Lagos is cause for concern for operators and authorities. Investors in hospitality development are now converting homes to hotels in many viable locations in the metropolis. They are targeting the huge population for their market. This growing investment has resulted in many residential buildings giving way for hotels in areas like Oshodi, Bariga, Agege, Ilasa, Mushin, and Isolo.
With national housing production put at approximately 100, 000 housing units per year, the reality is that Lagos as an urban centre, bears the brunt with about 2,904,000 units in deficit, representing 66 percent of the nation’s 17 million housing deficit. Also, about 14, 520,000 of its inhabitants live in slums, which made Lagos being dubbed the “mega-city of slums”.
Before now, investments in hospitality development are limited to choice areas like Ikeja, Lagos Island, Victoria Island and environs but with the boom, investors have been forced to expand the space, thereby threatening the housing market.
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According to surveys, the African hotel and tourism sector was forecasted to grow by almost 17 percent, with accommodation demand increasing from the business travelers connecting to big African cities and many other African commercial capitals, as a reflection of strong economic growth. As the continent remains attractive to investors for business, trade and capital investment, it leads to an increasing demand for accommodation and hospitality products.
The hospitality sector is developing at a rapid pace, with large investments planned in sub-Saharan Africa. It has shown a 29 percent average yearly growth rate between 2012 and 2016 in terms of room capacity. At the end of 2016, hotel developments were planned for 35 of the 49 sub-Saharan African countries, with western Africa absorbing 45 percent of the capacity of rooms planned.
For an investor, his main attraction to the area was the recent attempt by the Lagos authorities to resurrect its urban renewal drive to meet the growing demands of Lagos megacity status. He listed the redevelopment of Oshodi into a transport interchange at the cost of $70 million to be at the center of the new effort. According to him, there is a major urban renewal of the area, started during the Babatunde Fashola administration, and crystalized into a partnership with Planet Projects through a Public-Private-Partnership (PPP) model to remodel Oshodi into a transport hub.
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Another investor is taking advantage of the situation to meet the need of the middle class, who may not afford higher hotels because of the high rate charged by operators. He further added that conversion of old buildings offer greater returns on investment. But the Lagos state government said the situation, is not in sync with its urban renewal drive for the area.
The General Manager of Lagos State Urban Renewal Agency (LASURA), Lateef Sholebo, said most of the conversions are done without approval as they are often completed before they come for approvals. He stressed that Urban renewal has to do with upgrading or redeveloping a site and not converting existing buildings to hotels. Explaining the theory of urban growth boundary, he said the principle, as being done in the western world is that, a certain location would be earmarked for physical development for the residents and that such development will not pass the delineated boundary.
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“Outside the boundary, we can then have amenities such as school, hospital, recreational ground, park and so on. This is because to allow sprawl development is to invite chaos”, he said. According to him, building of hotels is not the right thing to do. People, he said, should be thinking of a mixed-use development, comprising residential and offices to make it easily accessible to people to join the mass transit. “For a state where there are over three million housing deficits, why should we encourage conversion of existing houses instead of building new ones. “They don’t suppose to convert one use to the other without approval,” he added.