Joint-venture initiatives swell on back of growing investor-confidence
The Nigerian property market has seen significant increase in joint venture initiatives that cut across private and public sectors, involving private equity and institutional investors with government or/and individual investors.
Close market watchers say this trend is rising on the back of growing investors’ confidence in the market, pointing out that the market has seen about 80 percent rise, up from 40 percent in the last quarter of 2008 when the housing and stock markets suffered major setbacks.
According to them, the market has seen significant investment especially by institutional equity investors whose interests are mainly in the commercial segment of the market.
BusinessDay had reported that this market was a major investment destination for the multi-million US dollars raised by private equity firms including Actis, FirstRand Limited, the investment banking arm of FirstRand Bank, the International Finance Corporation among others.
The report noted that The Artee Group, which already runs SPAR and Park & Shop in Nigeria, was planning to open 100 shopping outlets in Nigeria in the next six years and the proposed outlets wouldl come as hyper format units comprising between 400-500 shops.
Presently, a Gambian property developer is in Port Harcourt, Rivers State, developing an estate that promises to be one of the largest mixed use estates in the oil rich region. The project, according to a source close to the developer, is a joint venture with the Rivers State government.
“We see demand in this market and are therefore, making strategic investment in other to tap into the opportunities which the market offers”, a private equity investor reveals, adding that investors are putting their money into the market because “Nigeria has a large market with its over 160 million people who need homes, office spaces and shops for their businesses”.
Gbenga Olaniyan, an estate developer, affirms, adding that as a trading economy, the commercial segment of the Nigerian market has all the potential for good returns on investment. “This segment is booming despite the relative lull in the upper end residential market”, he said.
Adebayo Adeleke agrees, adding that investors see commercial real estate as one where the economy is actually going to boom, pointing out that “as it is now, the level of development we have in the economy actually justifies the demand we have seen in this market,”
Olaniyan explained further that part of the reasons for the rising investor-confidence in this market is that a lot of developers are embracing joint venture initiatives. “A lot more people are now doing joint ventures. People have started realizing that you don’t need to find all the cash to develop your property”, he said.
By: Chuka Uroko