Notwithstanding the uncertainties in the direction of the Nigerian economy, fresh investments are still taking place in the real estate sector through which investors have shown uncommon confidence in the country.
The size of the Nigerian market is a frequently cited reason for the investor-interest and confidence, but in spite of the huge opportunity in the residential segment of the market embedded in the 17 million housing units deficit in the country, most of these investors prefer investment in commercial real estate, especially in retail.
“We see opportunities in the Nigerian market and we are not discouraged by anything; the size of our developments here is a measure of our commitment to Nigeria and confidence in its economy,” Dieter Boshoff, RMB Westport’s Leasing adviser, told BusinesDay in Lagos recently.
RMB Westport, a South African firm, is the developer of the over 11,000 square-metre Circle Mall in Lekki, Lagos, estimated to cost $800 million and touted as the first-of-its-kind because of its integrated 3,700 square metre business centre for offices on-the-move.
“We will be developing another mall – The Royal Gardens Mall – which is three times the size of this (Circle Mall) with over 30,000 gross lettable area (GLA) in Lekki here,” Boshoff said. He further stated , “we will be developing another mall of that same size in Abuja, and that tells you how much confidence we have in this economy.”
Nigeria is touted as the largest economy in Africa with compelling market fundamentals, including demographic boom, rapid urbanisation, a growing middle-class representing about 23 percent of the country’s 170 million population whose purchasing power is valued at $28 billion.
As a response to these compelling fundamentals, Nigerite Limited, Nigeria’s premier roofing materials manufacturing company, recently launched its dry construction solution in which Frank Le Bris, the managing director, disclosed that the company invested about N1.8 billion for both equipment procurement and staff training overseas, assuring that “it is going to be a high level production in Nigeria.”
The solution, known as Kalsi Dry Construction System, is a new building technology which, Adewale Ogungbe, the company’s head of construction unit, said had capacity to save for the builder about 20 percent of the cost of building with conventional methods, adding that “the system has exceptional speed and over 60 percent efficiency.”
The system, which is environmentally friendly and safe, has been used in many project sites, Ogungbe said, disclosing that the company used it to develop a 24-unit estate in Abuja, which took just two months to complete and deliver.
In the last decade, South African investors have been quite visible in most sectors of the Nigerian economy, but more than ever before, these investors are now bullish in the development of retail malls in both first and second tier cities of Nigeria.
“The potential of the Nigerian market is unlimited, even though it is relatively immature. We see big international (European) retailers coming here in the next two to three years. I think Nigeria is the flavour of the moment and it is only natural for international investors to migrate to this place,” Japie Swart, Resilient Africa’s chief operating officer, told BusinessDay in an interview in Lagos.
A joint venture with Shoprite and Stanbic IBTC as development partners, Resilient Africa is a real estate investment and development company from South Africa, looking to develop as many malls as it can within the shortest possible time in Nigeria.
They are the developers of Delta Mall, a retail outlet sitting on 14,000 square metres gross lettable area (GLA) estimated to cost $58 million on completion and, according to Swart, they have also started work on the development of another mall in Owerri that would be opened in December this year.
A recent report by Knight Frank has identified Nigeria and South Africa as the leading countries in Africa harbouring most of the massive real estate investments in the continent, noting that Africa’s population would quadruple to over four billion by the year 2100, with about 1 billion of the people coming from Nigeria alone.
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