At the third edition of the West Africa Property Investment (WAPI) Summit which held late last year, Broll CEO, Bolaji Edu reiterated on the huge investment potential that exists in the Nigerian real estate sector. He noted that Nigeria as a power house in West Africa has the capability to attract investors. He urged that the diversification of the economy should be extended to the sector noting that “the fund managers and asset managers with the property skill sets are able to drive excess returns. The market is creating good quality grade A Stock developed by local investors and international private equity firms, as well as completed assets generating stabilized returns, which investors in West Africa are targeting”. He noted also that the capital base of real estate is to keep growing due to investments in Grade A commercial office and retail sectors. To cater for the needs of the domestic occupier market however, there has to be development of good quality Grade B or Grade B+ investment.
There has also been a rise in demand for space from sectors such as finance, oil and gas, professional services and tech, propelling a larger market for real estate investment in the country. Unlike in the past, when most of the available rental spaces were taken up by businesses predominantly in oil and gas, demand enquiries are now more diversified. The market however, remains a tenants’ market as demand and supply remain in disequilibrium due to the existing and anticipated supply in the market. This stalls the scope of rental growth in the market.
In its Occupier Service Snapshot Report for 2017, Broll Nigeria’s Head of Corporate Real Services and Research Nnenna Alintah noted that the rental trend “endured a consistent decline in the past three years due to the simultaneous increase in building stock and contraction in economic activities”.
With bullish expectations for the Nigerian economy in 2018, it is expected that Nigerian commercial real estate will mirror this development although not immediately. In the short term, as the economy improves moving towards 2019, ‘greenshoots’ of rental growth should return. The sector is expected to also attract more investors during the year due to its long term investment benefits.