Office space market growth pushes land price up 56% to N381,169/sqm in prime locations

Growth in the office space market in prime locations of Lagos has pushed land price up to N381,169 per square metre as at March 2014, from N244,000 per square metre in April 2013, representing a 56-percent increase, a report by MCO Real Estate (MCORE) Limited on Lagos real estate investment has revealed.

The report notes that stable demand for choice office spaces in the Victoria Island and Ikoyi axis of Lagos has pitched these highbrow locations as the most priced office markets in Lagos in particular and Nigeria in general.

According to MCORE, prices have also increased by 8 percent to an average of N267,881 per square metre in Ikoyi, with Oniru rising by 37 percent to N132,871 per square metre as developers scramble for choice office locations for their developments in these sought-after areas.

A similar Lagos office market report conducted by Broll Nigeria – Africa’s leading commercial property service provider – also shows that the Lagos office market space has witnessed a significant growth, with Ikoyi and Victoria Island still the most highly-priced locations in Nigeria.

The Broll report notes that the recent sale of a prominent office building in Victoria Island to a global institutional investor is an example of the growing interest in Nigerian fixed-income assets from investors in the office space sector.

The report points out that despite the availability of prime properties in major city centres such as Lagos, the needs of some international tenants seeking befitting office spaces are yet to be met, thus increasing the rents of the available spaces as demand outstrips supply.

However, analysts are of the view that with the upcoming 15-floor Civic Centre Towers along Ozumba Mbadiwe Street, the 15-floor Kanti Towers on Ademola Adetokunbo Street, The Wings, Waves, Churchgate II Towers and the Eko Towers, all in Victoria Island, there are strong indications that the demand for grade-A office space will meet a sufficient supply in the near future.

Findings by MCORE show that Victoria Island, with approximately 290,000 square metres of leasable office space available, is expecting an additional 130,000 square metres which are under development. This, the report says, signifies a growth in the sector which had in previous years seen a slow supply of grade-A office space.

The report adds that growth has also spread to the Ikoyi axis which currently boasts of approximately 55,000 square metres of leasable office space and also expecting more 51,500 square metres which are under development.

ODINAKA MBONU