Despite improved investment climate in some other cities in Nigeria, such as Enugu, Kaduna, Akwa Ibom, etc, Abuja the country’s administrative capital, Lagos, the commercial nerve centre, and Port Harcourt, the country’s oil city, remain top real estate investment considerations for investors.
The cities, commonly called traditional cities, also account for as high as 65 percent of all the activities in this asset class, and according a report by National Bureau of Statistics, Lagos has the highest amount of real estate activities at 37 percent followed by Abuja with 22 percent and Port Harcourt (Rivers State) with 6 percent, all covering 65 percent of real estate activities in the country.
Despite the economic recession in the country, the tempo of activities in real estate development and much of the investments that have gone into real estate in the country are were concentrated in these cities.
In Lagos, particularly, a lot has been invested in the various segments of real estate including residential, retail and commercial office, leading to the delivery of close to 100,000 square metres space last year alone with many new projects at various stages of completion.
Over all, Nigeria has a thriving real estate sector which, going by the GDP rebasing in the country a couple of years ago, was discovered to be the fastest growing and 6th largest sector in the Nigerian economy which explains the rising level of investment in the sector by both local and foreign investors.
PricewaterhouseCooper (PwC) in a report on Nigeria’s real estate, revealsthat the value of investment in the sector was expected to rise by 4 percent to USD13.65 billion by the turn of 2016, up from US$9.19 billion, and this is because in spite of the recession, real estate market fundamentals remain intact.
“The combination of a growing economy, rapid expansion of the emerging middle classes, continued urbanisation, and a younger generation with high aspirations are accountable for the growth and the level of investment we have seen in this sector”, said John Strang, former Fine and Country’s Managing Director who spoke at an investment forum in Lagos.
The sector presents immense opportunities which the World Bank estimates at $385 billion and, according to Strang, these opportunities are not for the ‘Big-Boys’ alone, noting that “the demand and supply equation in this sector is out of balance”.
“But investment in real estate is not just for the Big Boys; opportunities are available in all real estate asset classes and at all levels of entry price”, he said, pointing out that real estate has become an investment destination because it is more stable than stocks or bonds; has long term growth and income return and financing is available.
Lola Olaide-Stephen, MD/CEO of Realty Concept, notes that investment in real estate is a product of inner and personal conviction that one is ready to make the move, explaining that people should be ready to take risks coming from the decisions they have willingly made.
Olaide-Stephen who also spoke at an investment forum, advised that potential investors should embrace what she called ‘crowd funding’ for their investment.
“This is an investment strategy in which a number of potential investors come together, pool resources and use same to invest in real estate”, she said, pointing out that there are cases where somebody who has land but not money meets another who has money but not land, and they strike a balance based on what each contributes to the pool.