Business
Demand for accommodation boosts real estate in campus towns
…as developers, landlords convert properties to hostels
The proliferation of higher institutions in major cities and towns across the country has spurred a massive demand for hostel accommodations in host communities, with house rents hitting the roof, Business Hallmark findings have revealed.
The surge in the numbers of tertiary institutions, BH findings indicated, has led to a shortage of on-campus accommodations in public-owned institutions, with the management of these institutions, made up of universities, polytechnics and colleges of education, unable to meet up with demands.
However, the development is a good one for landlords, who are capitalizing on the shortage by converting their properties, including old commercial and tenement buildings to students hostels.
Likewise, some wealthy landlords and property developers have embarked on constructing new hostel projects from the scratch in a bid to benefit from the housing boom.
According to a data by the National Universities Commission (NUC) obtained by our correspondent, the number of universities in the country as of June 30th, 2023, including federal, states and privately owned, stands at 264.
However, while on-campus residency is compulsory for all degree students (100 to 500 levels), where solid efforts are made to provide accommodation for students, checks in several universities in the South West, South East, South South and North West geo-political zones, as well as the Federal Capital Territory (FCT), including University of Ibadan, University of Abuja, Federal University of Agriculture Abeokuta (FUNAB), University of Port Harcourt, Ahmed Bello University (ABU) Zaria and University of Nigeria (UNN) Nsukka, revealed that available hostel facilities couldn’t go round, leaving a huge deficit due to the increasing students’ population being offered admissions yearly.
As a result, these higher institutions of learning allocate accommodations on a ‘first come first served basis’ to “freshers” and final year students, who account for about 50 percent of the schools’ entire population .
The remaining students, who are about 50 percent, are forced to either squat with their colleagues lucky to get hostel allocations on-campus, or look outside the schools for alternatives.
Private investors, meanwhile, are moving in to fill the gap by building new structures or converting existing properties to hostels for willing students at a premium.
In Lagos, several communities around University of Lagos (UNILAG), Lagos State University (LASU) and Yaba College of Technology (Yabatech) like Akoka, Abule-Oja, Yaba, Bariga, Ilaje and Idi-Araba, as well as Ishahi, Iyana Iba, Isheri, Ikotun, Igando, Ipaye, Iyana School, Igbo-Elerin and Iba New Site have largely become students communities with most houses, residential and commercial, converted to hostels.
In Akoka, Yaba, Abule-Oja, Bariga, Ilaje, Idi-Araba and other communities bordering UNILAG, many structures have been converted to hostels, which go for a yearly rent of between N280,000 to N700,000 per bed space (4 occupants per room) and N1.2million to N1.8million for one room self-contained for wealthier students.
Also, residential apartments like flats and duplexes in Akoka and Yaba, which go for between N1.4million and N4.6million have been largely taken over by senior staff of UNILAG and Yabatech, who can afford them, while relatively liquid middle-level workers seek abode in communities like Maryland, Onigbongbo, Onipanu and Palmgrove for as much as N1million annual rent.
Likewise, landlords in Ojo, Iba and newer campus communities like Iyana School and Iba New Site, which house Lagos State University (LASU) charge high rates of between N300,000 to N850,000 for a bed-space in a room of four.
Students with modest background go as far as Ikotun and Igando, where they get a bed space for between N180,000 to N300,000, depending on the age and condition of the hostel.
According to BH calculation, property owners in these campus communities earn between N720,000 to N3.2million annual rent on a room housing four students. Rooms in these converted or newly built hostels range from 20 to 120.
This means that a landlord with 80 students distributed across 20 rooms earn N7.2million in rental income annually, while property owners, who have more rooms with higher rents earn much more.
This scenario is replicated in campus communities around the country, where landlords and property developers are cashing in on students housing needs to make more money.
In Ago-Iwoye, a town in Ogun State that host the state university, Ogun State University (OSU), our correspondent observed that over 40 percent of properties in the town have been converted to students hostels, forcing many indigent residents, who are not buoyant enough to pay the huge rents demanded for living accommodations relocating to other towns.
A former resident of Ago-Iwoye, who now resides in Sango-Otta, Ayomide Peters, said he was forced to relocate outside the town after his house rent was reviewed upward four times in a spate of five years.
“Initially, I started with N350,000 annual rent for a 3-bedroom flat when I moved into the city in 2016. At the expiration of my rent, the fee was pushed up to N500,000.
“It was subsequently moved to N700,000 and N1 million respectively. I protested to the landlord, who stood his ground. At the end, I decided to search for cheaper options in the city.
“To my surprise, I found out I even had a good bargain as tenants in other facilities were paying as much as N3 million for similar apartments.
“I later found out that most of these tenants can afford to pay the high rents as they provide services for the university and its students.
“For instance, a former neighbour, who decided to pay the new rent runs a business centre inside OSU, where he charges as much as N200 to print a page of black and white document.
“When I informed him of my decision to move out, he said he cannot afford to leave as his business was doing well. According to him, he earns between N25,000 to N35,000 daily on Saturdays and Sundays when sales are usually poor and about N50,000 daily during weekdays when sales are good.
“I did a quick calculation by multiplying his lowest daily profit figure of N25,000 by 30 days and got N750,000 monthly returns and N9 million in yearly income.
“Meanwhile, my monthly salary that time was N150,000. I quickly beat a retreat by looking for jobs elsewhere and got a better one in Sango-Otta, where my yearly rent is presently N280,000.
“If you are not a staff of the university or servicing the school or its teeming students population, you don’t have any business in Ago-Iwoye”, Peters stated.
A landlord in the town, who agreed to speak to BH on the matter, Mr. Timothy Onanuga, maintained that landlords should not be blamed for the high rates of hostel accommodations in Ago-Iwoye as they were only responding to market forces.
“You can’t blame us (landlords) for charging high rents. Most times, it’s desperate students that offer us deals we cannot resist.
“When I finished the construction of my 4-units 3-bedroom apartments in 2014, I gave it out at the rate of N350,000 per flat. A year after, some students from Delta State approached me, advising that I should convert the rooms in each flat, as well as the sitting room and dining area to stand alone rooms, making five rooms in one flat.
“They even offered to pay N250,000 on each room in the reconverted flat, meaning I’ll be making N1.250million on each flat instead of the old rent of N350,000 and N5 million annually on the four flats combined, compared to the N1.5 million my four tenants were paying.
“I caved in after two years of pressure and converted the building to twenty self-contained rooms and I’ve never regretted taking the decision.
“About five years ago, some landlords in the community paid me a visit and advised that I should convert the building to a full hostel, where four students can conveniently share a room.
“I followed their advice and within four years, I was able to offset the loans I obtained to build the house. I have since added five hostel buildings with 350 rooms capacity to the initial one.
“I plan to build more as I repay the loans I secured from banks to build them”, Mr. Onanuga declared.
BH findings revealed that the ‘properties to hostels’ trend is not limited to campus communities like Akoka, Yaba and Ojo in Lagos and Ago-Iwoye in Ogun State, but cuts across several sleepy towns and cities across the country, where public tertiary institutions are sited.
While the cost of goods and services have become excessively high in this former sleepy town and villages, they have largely been transformed into bustling cities through numerous regenerating projects initiated by governments, donors and old students associations, as well as housing schemes that have continued to attract students, staff and support services providers.
In the traditionally idyllic town of Nnewi, in spite of its industrial status, even with its hosting of the Nnamdi Azukiwe Federal University Teaching hospital, it was the hospital that has transformed the demand for real estate. Before its coming over a decade ago accommodation was cheap and rarely a problem. But since then, it has turned to gold, with a mini flat or 2-bedroom flat going for as high as N450,000 N600,000 depending on the nature of the building – whether new or old – and location. A staff of the hospital, Rose Amaechi, recounted her experience securing her place.
“It was really difficult, where do I get such amount? Afterward, we had to borrow money from here and there to be able to make it. Now, how do they expect a worker, who earns just N1.2m per year and lives on his salary to get such money with the rising cost of living? This is why corruption will not go in our society, because people must find a way to survive,” she said.
Speaking on the trend, experts in the real estate industry advised investors to allocate more resources towards acquiring more stake in the industry as such venture promises high returns on investment.
According to the First Vice President, Nigerian Institution of Estate Surveyors and Valuers (NIESV), Mr. Johnbull Amayaevbo, there’s no part of the country that investors will not recoup their investments if they focus on student accommodation.
“We know in Nigeria we have so many schools – higher institutions, and one of their major deficiencies is accommodation.
“Authorities in some of the institutions cannot account for 15 to 20 per cent of accommodation requirements for their students.
“Developers can invest in executive students’ hostel, which promises a huge return on investment”, the NIESV boss admonished