Retail soars as more shopping malls berth in Nigeria
The taste of Nigerian consumers is becoming increasingly more sophisticated by the day, especially among the upper and middle class who are big spenders at shopping malls such as Spar, Park ‘n’ Shop, Shoprite, Games, Addide, which parade exquisite products fully stocked all year-round and offering the widest range of products (over 25,000 products) to discerning customers.
Major Nigerian cities, especially Lagos and Abuja have, in recent time, seen what seems a revolution in the retail segment of the real estate market driven by the country’s encouraging demographics, changing household shopping culture, strong purchasing power and high consumer spend coming from the upper and emerging middle class population.
As the rebirth of shopping malls has redefined consumers’ lifestyle in the areas where they are established, the surge in the growth of Nigeria’s retail sector may not have seen the last of investors as Resilient Africa says it has seen a huge potential in the sector notwithstanding that it is still relatively immature.
A joint venture by Shoprite and Stanbic IBTC as development partners and Resilient Africa—a real estate investment and development company from South Africa – is out with an intention to develop as many malls as it can within the shortest possible time in Nigeria.
“The potential of this (Nigerian) market is unlimited and it is relatively immature. We see big international (European) retailers coming here in the next two to three years. I think Africa is the flavour of the moment and it is only natural for international investors to migrate to the continent,” Japie Swart, Resilient Africa’s chief operating officer told BusinessDay in an interview in Lagos.
Swart disclosed that they were already tapping into the opportunities which this market offers with the development of Delta Mall, a retail outlet sitting on 14,000 square metres gross lettable area estimated to cost $58 million on completion.
The mall which is located at Effurun roundabout in Delta State, Swart said, is a joint venture project involving his company, Delta State government and an undisclosed local businessman, adding that March 2015 has been set for the opening of the mall already 70-80 percent ready on construction side.“This mall occupies 14,000 square metres gross lettable area and there are 65 individual shops. About 70 percent of these spaces have been let and we are negotiating letting another 20 percent. So, we anticipate that the mall will be 90 percent let at opening. Shoprite as the anchor tenant and project partner occupies 3,400 square metres, Lifemate Furniture occupies 1, 100 square metres while Mr. Price occupies 650 square metres,” the COO said.
Delta Mall is one of the many shopping outlets that have come into the Nigerian retail sector to operate outside the traditional city centres of Lagos, Abuja and Port Harcourt and this development was explained by Matthew Chency, project manager, Resilient Africa at Tenant’s Forum in Lagos. “Wherever we see opportunity, we pursue it. All of us cannot just focus on the big cities. By doing that, we will be over-supplying the market there, but not tapping the opportunities in the rest of Nigeria,” he said, explaining that their choice of Effurun for the Delta Mall was based on available business opportunities and market research.
The mall promises modern facilities such as public toilets, a lift for accessing the first floor; parking space that will take 570 cars and, as an enclosed structure, it will be fully air-conditioned for climate control. The price per square metre of space ranges from $25 to $70 depending on the size and location of the shop space, and this price, according to Swart, is market-related and competitive.
For logistics reasons, Swart said their investment focus, for now, was on the Southern part of Nigeria, disclosing that they have broken ground for the development of another mall in Owerri that would be opened in December 2015.
“Our focus, for now, is on the Southern part of Nigeria from logistics point of view. We usually engage local contractors for our construction and we cannot move them about because we are not a construction firm like Julius Berger. Right now, we are using artisans and professionals from Nigeria to develop our malls”, he said, disclosing that the design of the Delta Mall was done by South African architects in conjunction with Nigerians.
In a related development, market is set to receive another major boost as Berverly & Sam Properties will be launching its upscale Purplestone Mall, Abuja into the market with not only a new development proposition but also a new shopping experience that will be pocket-friendly.
Though the developer says the choice of Abuja for the development of this mall was because of the ‘cheaper’ cost of acquiring land in Abuja relative to other locations plus the ease of doing business in the city, Abuja also presents investment and economic indices which investors find compelling.
With a rapidly growing population of 2.2 million, Abuja – Nigeria’s federal capital city – has become a very strong market comprising A and B level consumers which underpin the residents’ potential buying power. The city is said to have the highest per capita income in Nigeria and according to a recent study on the city’s consumer spend, there are over 68,000 households in the city with annual expenditure of over $150,000 per household.
Lilian Agbakoba, Berverly & Sam Properties’ MD/CEO, explained that Purplestone, in its residential and commercial developments, targets people at the lower level of the society, thus mall would be more affordable than its peers in order to reach this class of people.
The Mall, which is expected to open this November, sits on 300 square metres of land, offering 400 shop spaces and opportunities for banking halls, hair-dressing salon etc, and according to the CEO, these shop spaces go for prices 30 percent lower than those of known brands in town.
Apart from its state-of-the-art architecture, Purplestone Mall which is over 95 percent completed, parades amenities and services that make shopping a comfortable and convenient experience.
To rent a shop space in this Mall, the CEO said, a prospective tenant for the ground floor pays N25,000 per square metre; one that wants a space on the first floor pays 23,000 per square metre; rent on the second floor is N21,000 per square metre while service charge on all floors is N15,000 per square metre.
She disclosed that Purplestone as a brand has been on the vanguard for bridging the housing deficit in Nigeria estimated at 17 million housing units, pointing out however, that efforts at this commitment are constrained by factors largely beyond the control of developers like her.
The legal adviser to the company, Olisa Agbakoba, agreed, stressing that housing sector in Nigeria was in dire need of a legal framework to make it economically viable and secure for property owners.
According to him, there was need for a development law to break down development constraints which he listed as poor security, extremely weak commercial judicial systems, a generally weak legal system, impunity, corruption and an non-viable regulatory framework.
“These may be described as economic constraints. No economic policy will remove these constraints, but a development law can help remove constraints of no mortgage systems in Nigeria, by the repeal of the Land Use Act and erection of a new law on property,” he said, urging urgent action else the housing deficit which is growing at 10 percent per annum would hit 30 million units in the next 10 years.
The CEO hinted that they had plans to replicate the Purplestone Mall in Asaba, Abeokuta, Lafia, Ikorodu etc, adding that they had done some residential estates for young professionals who could afford N500,000 rent for self-contained apartments and also for those who could afford N2.5 million rent for two-bedroom apartments.
Anne Agbaje