Lekki outpaces Ikoyi, others as most prized real estate market

With a phenomenal growth driven by a combination of factors including expansion of Lekki-Epe Expressway, proposed Lekki International Airport and Deep Seaport, the Lekki corridor in Lagos has been identified as one of the most prized real estate markets in Nigeria, outpacing Ikoyi and Victoria Island.

Current market trends in the corridor shows its uniqueness in that properties are available for all types of income earners—the high, upper middle, and budget buyers.

Olayinka Omotosho, a chartered surveyor, who gave these hints in his paper titled ‘Real Estate Business Dynamics in 21st Century with Focus on the Lekki-Epe Axis’, noted that this axis has the largest concentration of new wealth on the African continent,  catapulting many families to the rank of the nouveau riche.

Omotosho, who was a lead speaker at the first Lekki-Epe Real Estate and Business Conference in Lagos recently, called for more investments in Lekki in order for investors to create wealth for themselves.

The conference paraded an array of speakers including Kayode Omotosho, executive secretary of the Mortgage Banking Association of Nigeria (MBAN); Bode Araba, principal partner of EPDM Nigeria, and Godspower Omozusi, the principal partner of GP Omozusi & Company, a firm of estate surveyors & valuers.

The lead speaker took a critical look at modern real estate business, saying, “21st Century has often been referred to as the Dot.com era”. He explained that many companies are now able to do more business using the internet, adding that more clients are more knowledgeable of the property market these days.

“The introduction of blogs, products, social media like facebook, twitter and smart phones have allowed for more interaction between professionals and their clients, beyond what was previously obtainable”, he pointed out.

According to him, new technology has brought about interface between clients and professionals, sophisticated marketing, globalization of the local property market and the need for due diligence to verify information given on the internet.

Lagos could accommodate at least 20 shopping malls, says property developer

The construction of shopping malls in Nigeria and the country’s retail potential is a hot topic, as highlighted by discussions at last month’s Africa Property Investment Summit in Johannesburg.

South African food retailer Shoprite Holdings, which has partnered with different property development companies to take the anchor position in a number of these planned malls, is emphasising the demand for mall expansion across the West African country.

According to Hakeem Ogunniran, managing director of UACN Property Development Company (UPDC) in Nigeria, Lagos could effectively hold 20 malls. The rapidly expanding city and commercial hub currently has three large modern shopping malls (with a fourth to be opened soon) and has seen a growing consumer class and a number of international retail companies enter the space.

Ogunniran told How we made it in Africa that Johannesburg, with a population of 4-5m people, has substantially more malls than Lagos. “Lagos with 17-20m could presumably take up to 20-25 malls.”

UPDC, which is also developing in the residential and commercial (office) real estate markets, is looking at the country’s potential in its “B and C grade” cities for formal retail infrastructure, office spaces and residential developments, said Ogunniran.

This is in alignment with what Resilient Africa’s managing director Holden Marshall told How we made it in Africa last month. Resilient Africa is focused specifically on developing smaller shopping centres in Nigeria, of which Shoprite is a partner.

Although Resilient Africa is securing sites to develop malls in the popular retail hubs of Lagos and Abuja, it is also targeting a number of other cities in the country. Warri in the Delta State in southern Nigeria will see the Delta City Mall completed by November next year. Marshall said the company has either secured or is in the process of securing sites in Asaba, Benin City, Port Harcourt, Owerri, Yenagoa and Abeokuta.

According to Marshall, the growing middle class population in these cities is underserviced. “And that’s why the retailers are going there… [They] have got money to spend and are looking for good brands, a nice environment, and a modern facility. And that’s what we are hoping to capture and deliver.”

Warri, where Resilient Africa’s first mall is being built, is seeing rapid growth and has a good income per capita.

“That whole south Delta region of Nigeria, a large part of it is based on an oil economy,” Marshall explained. “All those cities in that region are growing exceptionally fast. In the last three years they have all sort of quadrupled in size. So Warri is quite a substantial city. [There are] indications of a population of 1.5m that is sort of countable but there are a lot more [people].”

Actis $1.5bn investment in Nigeria, others’ property market targets middle class

Actis, a private equity company, will lead investment of as much as $1.5 billion in African commercial property to meet rising demand from international companies targeting a growing middle class, its officials have revealed.

The London-based company has a five-year plan to invest in projects including shopping centers, office towers and industrial parks in fast-growing economies such as Nigeria, Ghana and Kenya.
Kevin Teeroovengadum, director of Actis’ sub-Saharan Africa real estate unit, revealed recently in an interview in Johannesburg that the company is seeing a shift in interest from South African brands to European retailers.

Michael Chu’di Ejekam, Teeroovengadum’s counterpart in Nigeria, had noted in Lagos that African market is “huge, under-supplied and growing”, adding that there is a sharp demand-supply imbalance which they are trying to bridge.
“This is sub-Saharan Africa and in comparison with some other markets, it is one of the fastest growing in the entire world. Africa dominates the list of the fastest growing economies in the world”, Ejekam, who spoke in an interview with BusinessDay, said.
African Development Bank’s annual outlook also notes that Africa’s economy, excluding Libya and Somalia, is forecast to expand 4.5 percent in 2013 and 5.2 percent next year amid a rise in oil and mining projects and direct investment from foreign companies.
Teeroovengadum points out that Nigeria, the continent’s most populous country, grew 6.6 percent in the first quarter while South Africa, the continent’s biggest economy, expanded by an annualised 0.9 percent.
Actis has raised about $1.4 billion across seven Africa funds since 2003, according to data compiled by Bloomberg. The company is also pursuing deals in South America and Southeast Asia in sectors including energy and technology.

McKinsey & Co. says in a 2010 report that Africa is home to the world’s youngest and fastest-growing population, predicting that household expenditure in the continent is forecast to expand 63 percent to $1.4 trillion by 2020. Shantayanan Devarajan, World Bank’s chief economist for Africa, said in May last year that “this is a very good time for retailers to get a foothold in Africa.”
In Nigeria, Ejekam notes that within 8-kilometre radius of Ikeja City Mall in Lagos, household expenditure is about $18,000 per annum per household, adding that with about one million households within this radius, household expenditure per annum is about $18 billion. “For us as private equity investors, we find this very compelling”, he said.

This is the number of jobs the Federal Government is proposing to create on a yearly basis.
The Information Minister, Labran Maku said it is part of a deliberate policy to expand the Nigerian economy.
With an average official rate of unemployment put at about 18 million adults or about 23 percent of the adult population, it would take the Federal Government an average of 49 years to absorb all the unemployed even if the unemployment rate remains unchanged.
What this clearly shows is that the creation of jobs will have to go beyond what the Federal Government can do directly to enable the private sector also create jobs.

NDFF 2013 to Profile Nigerian Real Estate and Housing Finance sector as investment frontier

The 4th Nigeria Development and Finance Forum (NDFF) 2013 North America Conference will showcase the Nigerian Real Estate and Housing Finance sector as an important frontier of investment opportunities in Nigeria.

One of Nigeria’s leading experts on the sector, Roland Igbinoba, President/CEO, Pison Housing Company will make the lead presentation and will be supported by a panel consisting of senior policy and private sectors leader, with participants and delegates drawn from the real estate and housing finance sectors across the United States and Nigeria.

Official data from the office of the Honourable Minister of Lands, Housing and Urban Development, Ms. Amal Pepple, confirms Nigeria’s housing deficit of over 16 million. Lagos State, the commercial capital of Nigeria, accounts for 30 per cent of the housing deficit, according to a recent statement by Hon. Adedeji Olatubosun Jeje, Commissioner for Housing, Lagos State.

A Presidential mandate has seen the introduction of policy reforms in the housing sector, which is being spearheaded by Ms. Pepple. She said recently that:
“Mr. President recently directed us to focus on land titling, housing finance, affordable housing, low-cost/social housing and urban regeneration and regional development. We intend to vigorously pursue the implementation of these initiatives over the next two years in order to achieve the targets we have set for ourselves.”

The framework for the establishment of a Federal institution for housing refinancing is being assisted by the World Bank, as confirmed by the Honourable Minister of Finance and Coordinating Minister for the Economy, Dr. Ngozi Okonjo-Iweala, at the Spring Meetings of the IMF/World Bank in Washington DC, in April.

Nigeria’s domestic mortgage market is currently valued at 445 billion U.S. dollars, yet with rapid rate of urbanization and positive demographic structure, housing finance is seen to be critical to support human and infrastructural development.

Mr. Igbinoba says: “My presentation will cover the investment opportunities in real estate in Nigeria, spanning from residential to commercial real estate. I will do this by comparing Nigeria to its peers in the region. This will show Nigeria as the destination for real estate investment by North American investors.”