Thursday 23 November 2017

Nigeria’s real estate market has potential

According to Peter Evans reporting for the Wall Street Journal, Africa's second-largest economy has an emerging middle class and a shortage of all types of modern space, raising the likelihood that the market will favour landlords for years to come.

Nigeria’s real estate market has potential

Actis also is spending about $100 million to develop the 194,000 square-foot Heritage Place office building in Lagos, which is set to open in 2015.

August 18, 2013

Nigeria’s economy, powered by a booming oil-and-gas industry, is expected to expand by 6.6% in 2013, significantly above the average for the region. Lagos is predicted to reach a population of 20 million by 2020, up from just under 8 million at the last census in 2006, which would make it one of the world's biggest cities.

However, Nigeria’s low ranking (96) in the Jones Lang LaSalle global real estate transparency index means the market that is seeing an increase in deals with high price tags from opportunistic funds willing to take a chance on Nigeria's potential, but the world's largest and most established investors continue to steer clear of the country.

The foreign players in the country include Actis LLP, a London-based private-equity firm with $1.7 billion invested in Africa. Its Nigeria projects include the Ikeja City Mall, a 307,000-square-foot mall in Lagos which cost $100 million and opened in 2011.

One of the problems facing potential foreign investors in the Nigerian real estate market are the lack of reliable statistics.
However, prime office rents at $70 a square meter per month in Lagos are the highest in sub-Saharan Africa excluding South Africa, according to Broll Property Services Ltd. The next closest is Accra in Ghana, at $37 a square meter.

Apart from the lack of transparency in the real estate market, another obstacle to investors is that there isn't much of a secondary market for modern developments. In many other countries, once developers build and lease out projects, they can sell them to institutional investors. In Nigeria, such demand currently doesn't exist.

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