Following rising demand for
commercial space and housing for middle-income and young professionals in
Nigeria, the nation’s real estate market has continued to grow with the sector
now valued at N6.4 trillion ($41.2 billion).
According to a report by Agusto &
Co., the Lagos sub-segment of the market accounts for at least 40 per cent of
the Nigerian market.
Growth, the report revealed,
continues to be driven largely by new to market residential and commercial
properties in Lagos, Abuja and Port Harcourt.
The report estimates the market to
grow by an estimated average of 10 per cent in 2014 and 2015 respectively.
“The Lagos real estate market, which
has evolved in the last decade, continues to report significant growth in both
the residential and commercial sub-segments. The key growth factors include
population growth, economic growth, rapid urbanization, rising consumer
disposable income and the introduction of mortgages.
"Supply of real estate
properties in Lagos have been supported by the improvement in land titling and
ownership transfer, government’s development plans and improved security
framework in the state. The Lagos real estate market was delineated under the
residential and commercial segments for adequate coverage, “Agusto & Co.
said.
The report added that the Lagos
residential market remained strong across the various sub-markets adding that
new residential investments were prominent in the prime markets comprising
Ikoyi, Victoria Island, Lekki and Ikeja GRA.
“Our research also revealed that new
residential investments in the prime markets targeted the growing expatriate
community and affluent indigenous tenants. Supply of new residential
investments in the most mainland markets remained subdued due to shortage of
land, leaving property developers with the option of buying and remodelling old
properties.
“However family holdings in the
mainland market remained a limiting factor to the buying & remodelling
option. Owing to the low concentration of affluent and expatriate tenants on
the mainland, residential property developers are strongly attracted to the
prime markets, “it added.
Rentals and sales prices, the report,
revealed, were higher in the prime market compared to the mainland market.
According to the report, typical
rental for a 3-bedroom luxury residential property was highest in Ikoyi at an
average of ₦10.4 million ($65,000) per annum, with a rental yield of 9.9 per
cent. Conversely, rental price changes were prominent in the mainland market,
with Surulere recording a high cumulative rental price change of 29 per cent
from January 2011 to April 2014.
It further stated that sale prices
were also highest in the Ikoyi sub-market, with the price of a 4-bedroom
detached house on a 2000m² land trending up to ₦856 million in the first half
of 2014. Land prices in Lekki and Victoria Island reported the largest
cumulative change of 23 per cent and 22 per cent respectively between 2011
& 2014. The Ibeju-Lekki development plan remains a strong driver of land
and property price changes in the areas.
“Market perception for the Ikorodu
sub-market declined in the review period due to the slow infrastructural
development in the area. Although the on-going construction of the mono-rail
and the Lagos-Badagry expressway has negatively impacted real estate activities
on the Badagry axis, we believe completion of the projects will support growth
of real estate properties in the sub-market," the report revealed.
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