Lagos City/State: Africa’s Foremost Economic Sub-national Powerhouse
With over 20 million residents, the about 3,345 sqr/km landmass city/state, Lagos is home to the Lekki Free Trade Zone is a multi-billion dollars project whose concept was designed to maximize all known economic potentials of Lagos.
Lagos is a city that is not only acknowledged as the economic, financial and trade hub of Nigeria and West Africa but also accommodates over 95% of the financial institutions in Nigeria.
Lagos raked 6th largest economy, in nominal GDP terms, in Africa, and provide a formidable base for over 60% of Nigeria’s industrial and commercial activities.
Lagos also accounts for 80% of total imports and 90% of Nigeria’s foreign trade with commerce as its hallmark. The Lagos economic indices are quite compelling, and have given impetus to the establishment of several oil & gas, financial, industrial, multinational, real estate, construction and other economic activities in Nigeria.
Lagos State; The Hotbed of Nigeria’s Real Estate And Economy
The moving average irons out any price spikes and clearly outlines a three-tier prime market comprising of Eko Atlantic City as the premium priced location in Lagos, followed by Victoria Island and Ikoyi in the middle and Lekki and Oniru as a lower priced alternative. Eko Atlantic City has jumped in price in Naira terms by circa 16 percent over the last year due to a re-pricing from the official USD rate of 306 to the investor and exporters foreign exchange rate of N360/US$1.
The high standard of infrastructure does however come at a price with Eko Atlantic City at N612,000 / $1,690 p/sqm, a circa 60 percent premium over the average price range of Ikoyi (N366,000 / $1,007 p/sqm), Banana Island (N397,000 / $1,093 p/sqm) and Victoria Island (N388,000 / $1,068 p/sqm) prices and a 157 per cent premium to Lekki Phase 1 land which currently stands at N238,000 / $656 p/sqm.
Lekki Phase 1 core land particularly leading off Admiralty Way is now at a premium and no longer readily available for purchase on the open market.
This can only put a premium on price values and demand has already led to an increase in land reclamation at the bottom of Freedom Way leading to new developments including Orange Island, Periwinkle Island, Imperial City and others yet to come.Prices have remained stable over the last year showing an average growth rate of only 3 per cent across the board with Lekki Phase 1 showing the greatest percentage increase of 10 per cent and Ikoyi falling in value by 8 per cent over the year.
The Lagos Residential Development Trend
With bank lending rates of circa 25 per cent, residential developers are avoiding loans which are seen as too expensive and prefer joint venture arrangements between the landowner, the developer and the provider of capital.
Residential developers are still able to source off-takers, particularly for well-located mini estates in proximity to a good road network and for sale at a competitive price.
Developing up to shell level enables the developer offer a product at a more competitive sales price with the buyer able to complete to his own price and standard of finish and at his own time.
The Lagos Residential RE Market Trends
1) Pockets of attraction for residential development include Lekki, Ikoyi and mature mainland destinations such as Ilupeju and Yaba.
2) For prime residential, there is a move away from high priced detached houses to higher density high quality multi-family apartment complexes within mixed-use developments branded as live-work-play schemes inclusive of office and retail uses.
3) High densities are needed to maximize returns from a high percentage of land plots in desirable locations.
4) Value for money apartments are priced for a quick sale with the expectation that profits are derived from a higher turnover rather than single large sales.
5) Apartments are priced from N35m–N60m for mainland Lagos and from as low as N90m in Ikoyi.
6) The recession has led to a weeding out of speculators with long term focused professional developers able to weather the storm.
7) The Lagos State Government is actively seeking to enter into joint venture partnerships with private developers to bring fallow government land into use for residential housing and commercial development.