2015 NIGERIA REAL ESTATE REPORT & FORECAST FOR 2016
It’s no longer news that Real Estate is one of the fastest growing and most lucrative sectors in Africa and anywhere else in the world. It currently contributes up to 8% of Nigeria’s GDP, and looks to expand in the coming years.
How well did the real estate sector fare in the recently concluded year? What are the realistic expectations from this profitable sector of the economy in 2016? These questions will be answered in this 2015 Nigeria Real Estate Report which takes the past, present and future into cognizance.
2015 AT A GLANCE
The year began with some anxieties towards the 2015 elections which was initially scheduled to hold in February. Experts predicted that Nigeria’s real estate industry may not perform well if the nation’s fiscal policy and the regime of naira devaluation persisted. The high-end property market value crashed when in a desperate bid to raise funds ahead of the February general elections, politicians started selling their properties in major cities of the country.
Lagos recognized the strategic importance and potentials of building and construction sector as the third largest in terms of gross domestic product (GDP) ranking in the state, and gave a boost to the sector; the Governor (Babatunde Fashola) signed an executive order slashing rates applicable to land transactions in Lagos to as low as 3%.
In Abuja, The two chambers of the National Assembly passed into law a bill which sought the establishment of the Federal Capital Territory Internal Revenue Board. The bill empowered the Federal Capital Territory Administration to establish its own Internal Revenue Board which would have, among others, the legal powers to collect tax on property.
Due to the falling oil price, The federal government announced its plan double its value-added tax (VAT) and cancel government projects, a move which caused a bit of rancor across the nation.
In Ogun State, there were fears raised by residents about fraudsters hijacking the Homeowners’ Charter program; an effort of the State Government to reduce the problems associated with land title documentation.
The month of February began with Nigerite embarking on a widespread publicity to announce Dry Construction as a cost efficient alternative to wet construction.
The Federal Government made plans to raise the share capital of the Federal Mortgage Bank of Nigeria (FMBN) to N250 billion in order to enable it tackle the country’s housing deficit.
The real estate sector was still feeling the bite of the hard economy, and Developers in Nigeria’s high end property market were compelled to drop rates by up to 20 percent.
The 2015 elections which brought about so much anxiety was eventually postponed, and this drew concerns from agencies such as Lagos Chamber of Commerce and Industry (LCCI) who thought that investors needed to have an idea of the direction of the country’s political and economic governance in order to manage policy and political risks of investments.
In another development, angry workers ambushed the President of NLC in Abuja. This was as a result of their disappointment at the leadership of the NLC over their inability to deliver the NLC Housing Scheme to them. The Vice President of the Nigeria Labour Congress, NLC, Issa Aremu later assured the aggrieved workers that their monies would be refunded with interest and an apology.
In the commercial city of Lagos, it was commerce as usual as the upgrading of The City Mall, Onikan, which had not been completed at the time, already had high profile companies taking tenancy at the Mall. Biggest among the tenants were Genesis Cinemas, a leading Nigerian cinema brand, and Playzone, a fast growing family entertainment brand in Nigeria.
Lafarge Africa Plc and Shelter Afrique, a Pan-African housing and development institution signed a Memorandum of Understanding to facilitate housing development on a large scale for low income earners in the country. The agreement, whose implementation was to commence with the development of identified sites in Abuja, is for an initial period of four years.
In a bid to reduce the housing deficit across the nation, the FG signed MoU with BASAP Ventures to create 15,000 affordable housing units across the country.
March began with some refreshing news as a highly regarded investment company based in the United States of America, signed a memorandum of understanding with the Nigeria Mortgage Refinance Company (NMRC) for $1 billion (about N200 billion) in mortgages. More good news emerged as the Federal Government showed a renewed interest in expanding the ownership of Federal Mortgage Bank of Nigeria (FMBN). A move which allows private sector intervention and fresh injection of funds into the housing financial system.
A documentary was published by Africa Independent Television, showing the amount of wealth and real estate investment owned by Former Lagos Governor, Asiwaju Bola Ahmed Tinubu. This raised some dust, and it was seen as a political move to play down the chances of his political party in the elections.
In Lagos, Former Governor Babatunde Fashola named the Sogunro housing Estate, Ogba, after late nationalist, Chief Anthony Enahoro. A move which drew applause from many circles.
The Naira lost its value against the Dollar, and in its resultant effect in the real estate sector, landlords and schools in various parts of the country began demanding payment in Dollars. The CBN was quick to rise up against this trend, but they didn’t record much success.
The General Elections finally took place – not devoid of drama – but it was successful, bringing President Muhammadu Buhari into power.
In one of the post-election promises, the Vice President, Yemi Osibajo promised Teachers across the nation a better housing scheme after the All Progressives Party is sworn-in in May. The promise is yet to be fulfilled till date.
Having concluded elections, a lot of individuals, groups and real estate bodies raised opinions about areas which the newly elected President should pay attention to. A general consensus of the real estate bodies bothered on the development of Housing and Infrastructure.
In Ogun, the documentation process to property owners was simplified via the issuance of electronic Certificate of Occupancy. The migration from paper C-of-O to the electronic format was to tackle counterfeiting of the document, eliminate fraud and ensure efficiency in land administration.
In Abuja, the Land Swap Policy introduced by the Goodluck Jonathan led government generated concerns among natives who thought the government was using it as a conduit pipe to allocate mass areas of Gbagyi land to the leaders of the government and their cronies.
Contractors handling Millennium Development Goals (MDGs) projects at the Federal Ministry of Lands, Housing and Urban Development staged a protest demanding the payment of the arrears of the 2012, 2013 and 2014 contract sums of completed projects across the country. In that light, there was a trade of blames between the then ministers of Finance, Ngozi Okonjo-Iweala and Minister for Land, Akon Eyakenyi, over who was at fault for the delay in payment.
REAL ESTATE FORECAST IN 2016.
Just a few…
Building materials are expected to go up as against Cements and Blocks which got reduction in prices in 2015. Finishing materials that are majorly imported will rise due to dollar rise.
Investors gained confidence in Lagos market due to the transparency involved in land transactions. Lagos was ranked 3rd to South Africa and Kenya in transparency index. This is expected to continue in 2016.
Corporate occupiers came into Lagos, as evident in Ikoyi and Victoria Island where a lot of skyscrapers have been erected. It is however expected that by the end of 2016, there will be 10 skyscrapers between Lagos, Port-Harcourt and Abuja valued at over 500b naira.
In 2015, we also witnessed succession of use especially in places like Admiralty way where buildings that used to be residential have become taken over for commercial purposes. The Link Bridge brought about this transformation and increased values of real estate in the area. 2016 bodes well for people looking to invest in that location.
Malls like The Circle mall, Festival Mall, Jahi Lake Mall came up in 2015. However, The Lekki Mall is planned to open in 2016 and it is set to be the largest mall in terms of land size. Shoprite is set to be anchor tenants there.
The direction of the current government is driven towards development of infrastructure as evident in Lagos, Ogun and some other parts of the state. The implication of this is that real estate value will rise.