Retail revolution: Investors find customer-interest outside epicentre compelling

The retail segment of Nigeria’s real estate market is, clearly, undergoing what a private equity investor describes as a revolution, swelling investment appetite and satisfying hunger for modern and convenient shopping experience among consumers.

The growing population of the middle-lass who find themselves predominantly outside the city centres (the epicentre) with their relatively sophisticated lifestyle has significantly increased customer-interest in shopping malls.

Investors find this quite compelling and, in the next two to three years, more shopping malls, the size of The Palms in Lekki, will be coming to the market outside Ikoyi, Victoria Island, Lekki, and others considered markets for big spenders.

BusinessDay had reported of huge investment opportunities in the retail market, quoting Actis, a private equity firm in emerging markets, as saying that there exists a huge demand-supply imbalance in both retail and residential real estate in Nigeria.

Michael Chu’di Ejekam, director, real estate in Actis, told our correspondent that the feasibility study they conducted prior to building Ikeja City Mall revealed that within the 8-kilometre radius of the mall, there were about 4 million people he equated to the entire Johannesburg population.

“There are roughly 1 million households within that 8-kilometre radius, and some households, from our research, were spending about $1,500 per household, per month across the various expenditure classes, which gives $18,000 per annum per household,” he said.

According to him, that discovery is dramatic, showing a lot of spending power, “and for us as a private equity investors, it is quite compelling.”

With what they have done so far, they think that they are just at the beginning of a retail revolution, Ejekam said, explaining that their two retail malls – The Palms and Ikeja City Mall – are not enough; “we are going to do more here in Lagos alone and, of course in other parts of Nigeria and West Africa.”

The Odu’a Group is another investor that has been driven by growing customer-interest to build a shopping mall for the quite ancient city of Ibadan where, ordinarily, no investor would have considered investment in that asset class.

“The development of the mall was a response to perceived demand by high net-worth individuals in Ibadan who spend time and money going to Lagos for their weekend shopping,” said Adebayo Jimoh, the group’s managing director.

Estimated to cost N2 billion, the mall with 18,640 square metres lettable spaces, will debut on May 29, 2013, and, according to the GMD, Shoprite, the South African retail chain, is the anchor tenant, occupying 4,750 square metres of the mall.

The mall, he added, has 370 underground parking spaces where shoppers have to park and pay, pointing out that the Oyo State government has improved on the CBD environment, where the mall is located, by dualising most of the roads in the district.

The group, he disclosed further, has perfected plans to build another mall in Apapa, Lagos, which already has its anchor tenant.

Festac Town, a predominantly middle-class community, also harbours top-notch company and business executives whose hunger for new and enhanced shopping experience is growing day-by-day.

Though Actis is not categorical on where it intends to site the malls it plans for Lagos, Festac Town may not be completely out of its consideration.

That notwithstanding, AUCN Property Development Company (UPDC) plc, has also perfected plans to build what it calls Festival Mall in this town.

Hakeem Oguniran, the company’s managing director, who disclosed this, said the building plan for the mall had been approved while discussions were on advanced stage with reputable retailers as their anchor tenants.