As the Pillars Remain
The supply side of the residential real estate market continues to show signs of life. Tenants, yet to recover from the weak economy pushed for better rents to Landlords who conceded – but only negligibly. Middle income ‘work, live and play’ projects were announced by developers. And land values have appreciated with frontier land investments in Lagos offering impressive rates of return. Also, the real estate sector came out of recession in Q1, growing by 0.93%.
Online retailer, Jumia listed in London after a few fits and starts. Local retailers have continued to display confidence leaning on improved distribution networks. Logistics firms Gokada and Max.NG raised $5.3M and $7M respectively. Konga plans to list on the New York Stock Exchange by 2020. Hubmart also opened a new store. Eat N’ Go Africa, franchisees of Domino’s Pizza opened its 100th location and plans 300 more over the next 5 years. Analysts believe that the Federal Government scored its highest ratings in infrastructure. And it has continued to push its growth agenda, signing a 25,000MW six-year electricity deal with Siemens.
Green buildings continue to feature in conversations, waiting for a generally traditionalist market to catch up. Projects as the Recycle Pay project, which allow school fees payments in plastic bottles join the list of sustainability initiatives. Still, long term profitability through sustainability, when compared with current systems, remains a more complex calculation. Land values have continued to appreciate and the Grade A office markets struggle with unhealthy vacancy rates remains the case. Coworking models are also evolving and, for the first time, we will be including properties prices from emerging cities for your investment consideration.
400,000m2 of Grade-A office space is expected in 2019. Coworking continues to grow as business owners are unable to meet up to the dollar rents obligations for Grade A office space. Nigeria’s commercial real estate market is going green. Most ongoing prime office developments – or those that have been delivered in recent years are a testament to the fact that green buildings have come to stay. The US government acquired about 50,000m2 of land in Eko Atlantic City for the Consulate’s new head office. A 21-storey smart office tower is being constructed in Uyo, Akwa Ibom state at an approximate cost of â‚¦19Bn, funded via a PPP. Upon completion, it is expected to house leading oil services firms.
Security has grown as a critical selector tool in the residential market. Secure gated communities are priced higher than estates perceived to be less so. Investment thinking in property is shifting. Some expect the new administration to devalue the currency with the uncertainty around this delaying property purchasing decisions. Some investors are opting to buy assets out of the country. Many are looking to sell local assets. On this backdrop is the migration of young and middle-aged professionals to Western economies, a fact not lost on the balance sheets of local agents. The residential real market is gradually picking up. Tenants pushed for better deals with Landlords making little or no reductions. Mini flats, 1 and 2 Bed flats remain favourites.
Residential vacancy rates in Port Harcourt have moved – but only slightly when compared with EoY 2018. Old GRA, GRA Phases 1, 2 and 3 recorded vacancy rates of 7%, 9%, 9% and 15% respectively. Abuja’s Apo and Gwarimpa are 14% and 2% vacant. Ikoyi and Victoria Island in Lagos state are respectively 41 and 23% vacant.