A concrete growth proxy
Economic growth in sub-Saharan Africa, compared with some other economies, is welcome news. Globally, Africa dominates the list of the fastest growing economies. Of the top 10 world economies, six are African countries: Nigeria, Ghana, Mozambique, Zambia, Ethiopia, and Tanzania.
Nigeria, particularly, is a growth phenomenon. Currently, its GDP growth rate averages 7 percent per annum with an annual consumer spending growth rate of 9.2 percent, which is a lot higher than South Africa’s 6 percent. This growth can be gleaned from improved demand for, and investment in, real estate, e.g., residential, commercial, retail, industrial and hospitality.
There has been a surge in demand for hotel rooms and residential apartments mainly from the expatriate community, which analysts attribute to the slow growth in the Western economy, making Nigeria the new green field. Investors in various sectors of the economy, especially in oil and gas, are coming into the country to get a foothold. These investors need places to live, hotel rooms to stay in, and office space for their business.
As a result, Lagos is the favoured business travel destination. Eko Hotel and Suites, for instance, to complement its offering to business travellers, has devoted space for displaying and selling contemporary artwork.
Surging demand for residential accommodation has raised values in 1004 Estate, an upper-middle class settlement. About 50 percent of its residents are expatriates. A three-bedroom apartment in the estate now sells for between N60 million and N65 million, up from N50 million just 12 months ago. Elsewhere, the same type of apartment is rented for N5 million per annum, up from between N2.5 million and N3.5 million 24 months ago.
A good number of individual and private equity investors are already taking positions. A Gambian developer, whose company, in partnership with Rivers State government, is developing 750 housing units in Port Harcourt, disclosed that about 800 direct jobs have been created by that singular project.
The developer affirmed the surge in demand, saying that all the premium units including Villas and Town houses in the N14.1 billion estate were sold out in one month and that the buyers were mainly oil company workers.
Actis, Primrose and Laurus are also responding to the demand for quality office space and have, therefore, perfected plans to build a 14-floor green office building in Ikoyi, Lagos. Eko Pearl Nigeria Limited is also responding to increased demand for residential property with its 24-floor Eko Pearl Towers expected to be the first building in Eko Atlantic City, Lagos.
On the retail side, UPDC is gearing up to develop the Festival Mall in Festac Town, while Odu’a Group in partnership with Top Services is to build the Apapa Mall in addition to the Heritage Mall in Ibadan, Oyo State.
“We see demand; here, there is strong growth and buying power,” said one of the private equity investors, adding that Nigeria is a huge market that is under-supplied – and an opportunity to generate jobs and improve living standards.
Our advice is that an efficient land use system coupled with essential physical infrastructure and services will allow more Nigerians to benefit from these emerging opportunities.