Increasingly, private equity firms are taking centre stage in real estate financing and development, especially in the commercial segment of the sector.
These firms have in the past few years become quite bullish in this sector which many perceive as the only viable and dependable investment asset class in the economy.
This is however to be expected, given the disposition of the banks. Still smarting from the crippling impact of the global economic crisis, followed by the banking sector reform by the Central Bank of Nigeria (CBN) which industry watchers have described as ‘The Sanusi Tsunami’, banks have become lending- shy and a lot more choosy and cautious with the kind of projects they finance. Real estate, with its long gestation period is not always in the immediate loan consideration of most banks.
Due largely to an improved business climate and the growing sophistication and shopping culture of the Nigerian middle class, demand for commercial real estate, including shopping malls, office spaces and hotel rooms, among others, is rising by the day.
A major player in one equity firm said: “We see demand; we see prospects in the Nigerian real estate market, especially at the retail end and this is an opportunity that any savvy investor should key into”.
Actis and African Capital Alliance (ACA) are apparently the most active players in equity investment in Nigeria, with investment portfolios that run into billions of naira in Lagos and other major cities in the country.
After the huge success recorded in The Palms (Shoprite) Shopping Mall in Lekki, Lagos, Actis has also recorded another success with the $100 million Ikeja City Mall, which opened late last year, recording over 30,000 shoppers in the first three days of opening.
The company sees a very bright future in Nigerian retail real estate, and according to its head of West Africa operations, Ngozi Edozien, the retail opportunity in Lagos alone, a city with a population of nearly 17 million people, is immense. She stresses that the real estate sector will continue to drive growth across the Nigerian economy.
Michael Chu’di Ejekam, the company’s director, real estate, notes that good location/ well priced land, equity and debt capital, approvals, cost, tenants and exit, are some of the considerations driving successful real estate development, adding: “With the right collaboration between property developers, financiers, retailers and government, the prospects for rapid growth in properties are compelling”.
As a leading independent private equity firm investing in West Africa, principally in Nigeria and the Gulf of Guinea, African Capital Alliance is a well capitalised firm founded in 1997 with a mission to build Africa’s premier private equity investment firm by mobilising capital, technology and management resources from local and international sources to unlock Africa’s private sector potential. With over USD750 million in funds raised to date, ACA is a dominant player in its markets and has a significant track record of successfully exiting investments.
The company has been very active in real estate investment and is currently executing a N5 billion joint venture project with Guarantee Trust Assurance (GTAssur) Plc to deliver a world class office complex in the heart of Victoria Island, Lagos. The company’s hotel project in Benin City, Edo State, is almost ready for delivery. The 100-room facility known as Protea Hotel Select Emotan, sits on a combined land area of 1.7 hectares.
GEP Nigeria Limited, a joint venture between GEP (BVI) Limited of the Republic of Oman and the Nigeria-based TBF Group is yet another equity investor now in the real estate market to invest and build new communities.
GEP (BVI) Limited is a subsidiary of the multi-billion dollar Omani family conglomerate, The Zawawi Group, which has over 23 subsidiary companies with interest in construction, mining ,technology, insurance, banking, healthcare, tourism, real estate, oil and gas, and power.
Qais Alawi Zawawi, the group’s chairman, disclosed in Lagos recently that the core vision of the joint venture is to partner with both public and private sector stakeholders in delivering new communities of both affordable and luxury homes in different parts of Nigeria, believing that this would produce sustainable and long term socio-economic growth and development in the country.
Nigeria, according to him, is the gateway to Africa and one of the major hopes for the continent. It is his view that if they could get it right in Nigeria, they would mobilise all of sub-Saharan Africa to start moving in the direction of economic development, political stability and true prosperity.