2023-02-14-莱坊-Lagos_Market_Update_H2_2022_8页_1mb

Lagos Market Update Summary - H2 2022

Core Content Overview

This report provides a comprehensive analysis of the Lagos real estate and related markets in the second half of 2022, highlighting trends, challenges, and key developments across residential, retail, office, and industrial sectors. It also touches on broader economic and infrastructure updates impacting the market.

Main Points

Economic Context

• Inflation: Nigeria's inflation rate surged to 21.47% in November 2022, the highest in 17 years.
• Oil Production: Daily oil production dropped to 1.2mbpd in Q3 2022, a -22.67% decline from previous levels.
• CBN Measures: The Central Bank of Nigeria (CBN) increased the Monetary Policy Rate (MPR) from 14% to 15.5% in August 2022 to control inflation. It also introduced new regulations to limit cash withdrawals and manage money supply.
• GDP Growth: Nigeria's GDP growth in Q3 2022 was 2.25%, down from 4.03% in Q3 2021. Non-oil sectors contributed 94.34% to GDP, with growth in telecommunications, trade, finance, agriculture, and real estate.

Residential Market

• LSDP 2052: Lagos State launched a 30-year plan to transform Lagos into Africa's model mega city, focusing on increasing formal housing to 70%, improving rent affordability to 32% of disposable income, and boosting housing supply to 150,000–200,000 units annually.
• Projects:
  • Channel Point Apartments (38 units) in Victoria Island
  • Love Garden (20 units) in Surulere
  • Purple Lekki (12,000 m², 56 units) in Lekki, completed in 2022
  • Louisville (300 units) in Eko Atlantic, a mixed-use project by Total Energies
• Demand Trends: Small-sized housing units (1–3 bedrooms) dominate the market due to their affordability and lower vacancy rates.
• Tech Integration: Property tech companies like SmallSmall Tech, Spleet, and VENCO are enhancing residential services with digital solutions.

Retail Market

• Factors for Success: Shopping malls are evaluated based on recreational facilities, product mix, tenant diversity, and security.
• Development Pipeline:
  • Lekki Town Square (2024)
  • Oasis Centre (30,000 m², 2023)
  • Resurgence Plaza (2023)
  • Falomo Shopping Centre (10,000 m², 2025)
  • Purple Lekki (12,000 m², 2023)
• Recent Projects:
  • Ikoyi Plaza, Banex Mall, and Admiralty Mall have started operations with vacancy rates of 27%, 81%, and 33%, respectively.
  • Purple Real Estate Income Plc listed an N10Bn IPO on NGX.
• Market Exit: Massmart exited the Nigerian retail market due to foreign exchange challenges, with assets acquired by PricePointe Wholesale Club.

Office Market

• Hybrid Work Trends: The shift toward hybrid working has increased the demand for quality office space over expansion of total footprint.
• Key Projects:
  • Ulesh Ikoyi (16,390 m², 2023)
  • Dangote Industries HQ (17,000 m², 2023)
  • 40 Adetokunbo Ademola Street (14,000 m², 2023)
  • A & A Towers, The Phoenix, and Stanbic IBTC HQ are under development.
• Sustainability: Sterling Towers in Marina is glazed with solar panels covering 6,500 sqm, signaling growing interest in energy-efficient buildings.
• Coworking Spaces: Walure Capital launched a coworking space in Ojodu Berger, and the Lagos State Safety Commission suspended a safety audit to engage stakeholders.

Industrial Market

• Lekki Deep Sea Port: Fully operational, handling 2.7m TEUs annually.
• Logistics Development: Lagos is building a central logistic park in Epe with a capacity of 1,500 trucks per day.
• Petrochemical Infrastructure: Pinnacle Oil and Gas Limited completed a N1Bn petroleum product terminal in Lekki Free Trade Zone with storage capacity for 300 million litres.
• Industrial Hub: The Lagos Industrial Leather Hub is 65% complete, expected to finish in Q1 2023.
• Imota Rice Mill: Commissioned by the President, managed by WACOT Rice Limited, with a production capacity of 32 metric tonnes per hour and 2.4 million 50kg bags per annum.
• Data Centres: AMS XI and MDXI (MainOne's data centres) are enhancing internet exchange services in Lagos.
• Investor Interest: Institutional and private investors are showing increased interest in industrial properties, especially in special economic zones due to tax benefits and proximity to ports.

Key Insights

• CBN's Role: The CBN's monetary policy and regulations have been central to managing inflation and stabilizing the economy.
• Real Estate Growth: The real estate and construction sectors have been key contributors to GDP, with real estate being the fifth largest and construction the seventh largest in Q3 2022.
• Infrastructure Development: The Lekki-Epe expressway is 95% complete, and the Red Line project is progressing with compensation to Ogun state residents.
• Market Diversification: Investor interest is shifting towards affordable housing, shopping malls, and industrial logistics, with a focus on sustainability and flexibility.
• New Projects: Several high-profile projects are under development, including Louisville, Marula Park, and Landmark Waterview, indicating continued confidence in Lagos as a business hub.

Conclusion

Lagos remains a key economic and real estate hub in Africa, despite macroeconomic challenges. The state government and private sector are working collaboratively to address housing deficits, enhance infrastructure, and attract investment. The real estate market continues to evolve with a focus on affordability, technology integration, and sustainability, while the industrial and retail sectors are poised for growth due to strategic developments and investor interest.