Nigeria is moving away from its oil markets dependency to the growing technology and agriculture sectors to diversify its economy and attract global investor interest after a challenging recession. The real estate sector is expected to benefit from this new direction.
Nigeria’s emergence from its worst recession in 25 years brings good news to the economy and previously non-oil underwhelming sectors.
The new focus should bring greater stability to real estate markets in Nigeria’s big cities, according to Tom Mundy, Head of Advisory, Sub-Saharan Africa, JLL.
The cities have suffered from a sharp supply-demand imbalance, widening vacancy rates and falling rents in recent times due to the typical oil-reliant economy and fluctuating cycles of liquidity. These cycles are now expected to normalise.
In Lagos, boom times in the oil cycles led to an oversupply of prime commercial buildings entering the market from 2014 onwards at expensive rates which posed a challenge to investors, said Mundy. Rising vacancy rates pushed rental prices down, in turn reducing investor confidence.
There is evidence that the decline in rental rates in Lagos is reaching the bottom of the cycle, and the supply and demand for the commercial real estate are balancing out. According to industry experts, opportunities present in B-grade, good-quality buildings that suit the price requirements of corporations who are reluctant to expand.
The technology sector and its support industries, warehouse and manufacturing, are the driving forces of new opportunities in real estate developments. A new interest in logistics facilities and A-grade warehouses and commercial buildings will open the market for good-quality products and international-grade data centres.
Global technology companies including Facebook and Google have announced plans to develop African headquarters in Lagos, where a thriving start-up scene includes well-known consumer tech businesses such as Hotels.ng and iRoko TV.
Read more about Nigeria’s optimistic markets outlook here.
Mobus Properties Ltd. is a privately-held Ghanaian property investment, development, and management company focusing on commercial and residential property development in Ghana and Nigeria.
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