Despite the challenges in the Nigerian real estate market which are deep in highbrow locations or up-market neighbourhoods, Victoria Island in Lagos remains an attractive destination for investors, experts have said.
The experts explain that talking in terms of Strengths, Weaknesses, Opportunities and Threats (SWOT), which guide investments, opportunities are quite significant in this location, especially for prime office facilities.
According to David Mba, former commercial manager at Fine and Country West Africa, an analysis of SWOT as it relates to Victoria Island shows that it is ahead of other neighbourhoods, including Ikoyi in Lagos, in terms of return on investment.
Mba explained to BusinessDay that, though the rental yield on residential property in this location is quite attractive, it is more attractive with prime office space.
He cited a recent study which found that “the commercial investment with the highest average total return value is office space in Victoria Island with 9.59 percent while the investment with the least average total return is office space in Ikoyi with a value of 4.29 percent.”
This explains why out of a total stock of 1.4 million square metres of office space in Nigeria, Victoria Island alone harbours 371,762 square metres with about 97,603 square metres in pipeline projects, according to a survey by Estate Intel, an online real estate research platform.
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Major office developments in Victoria Island include The Wings, Civic Tower, Nestoil Tower, Churchgate Tower I, Churchgate Tower II, Standard Chartered Bank Head Office building, etc.
Over the years, this neighborhood has maintained its reputation as a major commercial hub and has, therefore, attracted some of Lagos’ top office developers including RMB Westport (Now Lango Real Estate Limited) who were the developers of The Wings Towers, the Chagoury Group who developed C & C Towers.
Other developers that have presence here are Pier Point who are the developers of Pier Point Tower, Churchgate who also developed Churchgate Tower I & Tower II, including Quantum Capital and Nestoil Group who developed Civic Towers and Nestoil Towers respectively.
This residential turned commercial neighborhood sits adjacent to Eko Atlantic City where the New US Consulate General Office is located alongside other notable projects. It has also seen some of the A grade contractors such as Julius Berger Nigeria Plc, I.T.B Nigeria, and Cappa and D’Alberto Plc, coming to execute most of its prime buildings.
Though Ikoyi is a bit ahead of this neighbourhood in terms of residential rental values and return on investment, putting money into residential properties in Victoria Island is not a bad idea.
“On the average, rental values in Victoria Island stands at N1.5 million per annum for 1-bedroom apartment; N3.5—8.5 million for 2-bedroom; N5.5—15million for 3-bedroom and N6-25million for 4-bedroom apartment,” Mba said.
However, in Ikoyi, he said, it is N4—5 million per annum for 1-bedroom; N6.5 million for 2-bedroom; N10 million for 3-bedroom and N10—25 million for 4-bedroom apartment.
Return on investment on these apartments, according to Mbah, is quite significant. In Victoria Island, the return on the different apartment sizes stand at between 2.7percent and 6.1 percent per annum.
