EXTRAORDINARY liquidity in global capital markets is fueling investors to seek out new real estate markets and it is beginning
to find its home into Sub-Saharan Africa (SSA), especially Nigeria. This is largely because of the present Nigerian
macroeconomic landscape, the dwindling oil prices, the declining value of the Naira, the change in government and other
factors.
The rebasing of the Nigerian economy revealed that the real estate sector’s contribution to GDP is larger than was
previously estimated, as the current real size is 30-40% larger. The sector is now the 6th largest sector in the economy and is
growing faster than average GDP growth. The nominal contribution for the first Quarter stood at 7.79 percent, marginally higher
relative to the 7.36 percent reported for corresponding quarter of 2014.
Despite the dismal performance of other asset classes in 2014-2015, activity in the real estate sector remained robust.
Sustained economic and demographic growth in SSA countries are combining to create urban markets of global scale, which is
generating a need for significant investment in the region’s urban infrastructure. As demand from corporations and consumers
for modern office, retail and commercial infrastructure increases; SSA is entering a high-growth period of development.
For example, Lagos, one of Africa's largest cities with a population of over 13 million, is the main commercial hub of Africa's
largest economy. The city is a favoured location for international corporations. The city accounts for two-thirds of Nigeria's
business activity and contributes up to 15.2% of national GDP. This consistently acts as a driver for the on-going property
activity noted in this region. A renewed interest from international companies expanding or making a first entry has meant that
the interest and demand in the office sector remained consistent.
Developers in the hospitality and leisure space are taking an aggressive stance, based on strong economic fundamentals and
impressive growth prospects. On the retail front, Nigeria has a significant pipeline of shopping malls and still growing. The
largest concentration is in Lagos, which will aid in decongesting the tonnes of shoppers seen on any given day in the existing
malls. In the residential sector, despite various austerity measures the government has explained that initiatives like the NMRC
should have the green light for the considerable future.
Lagos comprises four main islands with seven prime residential, commercial and retail nodes: the Lagos CBD, Victoria Island
(VI), Ikoyi, Lekki, the Lekki Free Zone, Apapa and Ikeja. Rental values for commercial and residential space display show wide
variances across both neighbourhoods and building quality, despite any proximity to the city.
The Lagos region continues to attract institutional investors, and the key challenge for them remains identifying suitable highquality
stock in the relevant real estate category. Demographics, Data availability, Access to Capital & macroeconomics are
major drivers for the Lagos housing market.
New development projects such as the 14-storey Heritage Place (15,600 sqm) in
Ikoyi, where asking rents stand at US$ 1,100 per annum, Kanti Towers (6,500 sqm) and the Civic Centre Towers (11,350 sqm,
Nest Oil’s new HQ (7,500 sqm); all of which are located on Victoria Island and the Eko Atlantic City, a 10 million sqm new
district of Lagos being built on an island reclaimed from the Atlantic, shows the scale of activity taking place.
Looking ahead, we anticipate three major schemes to complete in 2016: EKO Towers II (Victoria Island), which has been fully
leased by TOTAL; the 27,000 sqm The Wings Towers (Victoria Island), one of which will house Oando plc’s new HQ; and The
ACA Building (formerly Kings Tower) in Ikoyi (~11,350 sqm), which will be home to ACA’s new HQ.
Victor Nkwocha
Real Estate, Research & Business Development Specialist
08166869455, victornkwocha@yahoo.com
Lagos – Nigeria
