Casafina Delivers Investment Property, Targets Higher Rental Returns

Fadekemi Ajakaiye

The Chief Executive Officer of Casafina Development, Mr. Olufemi Seyi said his company has delivered some housing units that can have high rental returns than what obtains presently.

Seyi stated this at the unveiling of some housing units built by the company in Anthony Village, Lagos, recently.
On what inspired this project, he said, “One of the things we’ve noticed is that rental income in Nigeria is pretty very low. It’s usually in the range of 3% to 5%, so we set out to say, can we actually build a purpose built investment property and target a higher return, maybe 10 to 15% so that real estate can also compete with maybe federal government bonds that is giving significant return or other fixed income instrument, and is actually still more secure because there is the element of capital appreciation, it goes up in value, apart from the cash return. 

“So we acquired this property in prime location, and renovated it. Its a total of 24 units of one bedroom apartment. I’m glad to say that we did pre-launch reservation, and we were sure that we will do at least 30% to 40% occupancy for our clients. And with the current rental rate, you probably will be able to rent it out. An average investor will get about 20% to 25% return annually on these properties. And you know, the figures speak. So it’s not just about so if you look at it, do 30% occupancy which is possible, meaning 10 days in a month, N50,000 per night. That’s 500 times 12. That’s December. It’s a bit busier, so that’s N6 million per annum. There are very few instruments that will provide that kind of return. So that’s basically the inspiration behind it. And then we also want to use this to showcase what is doable, and then to launch a second project like this, which is another 24 units of one bedroom maisonet, a bit more luxurious, somewhere in Adeniyi Jones, we think that we can repeat what we have in terms of return for investors.

“It’s total of 24 units with a rooftop lounge, of course, armed security, 24 hour water and 24 hour security, as the case may be, those are the basic features because this was a test case, and we’ve seen that it’s successful. “So, subsequent projects will now include other amenities, like the next one, we’re doing rooftop swimming pool, apartment swimming pool on the ground floor. We’re doing a party lounge. You can actually do 60-man party on the rooftop with a pool and all. The beauty of this place. And significantly, all the location we are going to pick is the fact that we take into consideration where do people want to go. So if you are here, you are like 20 minutes away from the airport. You are like 20 or 30 minutes from Victoria Island, if you want to exit Lagos, you’re coming from US, UK, wherever you drop, you come here. You want to quickly go to visit your relative in Ibadan you actually can easily go. So it’s like center of town. It took us a while to get the property that fits what we wanted, but it’s a good fit for what we wanted.

“We are located within a neighborhood that has coordinated security, and then we have an elevator that will be on the opposite side of this staircase. 
“Speaking on affordability. Affordable is relative. Affordable does not necessarily mean cheap. But what we’ve done, even with N24 million or N30 million, if we say look, for those of you that want mortgage, you can pay back over 10 years. Your property will more or less pay for the cost of your mortgage. So do like 20% or 30% deposit and you get a mortgage for the balance. So there are some people who own units today and they have mortgage running on it. As this becomes operational, you will probably find their rental income liquidating their mortgage and providing a little bit more for them to hold in their pocket. This is one of the very first projects that would have that kind of feature, because it was planned into the structure. “We’ve been on this project for two years plus, we bought it in 2021, there about, we had a bit of issue kicking off with the development. “You know, the normal issue, there were tenants there. So it took us about a year and eight months to eject tenants. So we were renovating and building while some tenants were there. Technically, it took us 12 to 14 months after we’ve ejected the tenants to complete. So, the total is about nearly three years of holding the property and then transforming it into the dream that we have.

“One thing that we do and are very sure about is the fact that we want to deliver return. So, we built with return in mind. For example, we have a project coming up in Maryland, and we’re telling people that you will buy apartment for about N220m to N250m, but we can guarantee you that you would get N18 million to N20 million rental from that particular property. So that’s like the foundation of any project we do. So that’s one. Then number two is we are very particular about location. So if you take a look around at what we do today, we have project at the center of Maryland. We have one coming up in Admiralty, Lekki phase 1. We have, you know, quite a number locations. And then return. We can virtually guarantee the return that people are going to get upon delivery. So for example, we did a project we sold at N50 million, and we told people that bought that in 24 months, you will be able to sell at N121, N130, the last sales, which was about 30 months later, sold at N180. So we buy with investors in mind, knowing that you can either get your return via capital appreciation, or you can get it from rental returns.”