Increasingly, investment opportunities in the retail segment of the Nigerian real estate market are compelling, as a study shows that in just one year, just one million households within eight kilometres radius of the new Ikeja City Mall, spend $18 billion on shopping.
The simple arithmetic here is that within the same period and same location, one household spends $18,000 on consumables.
Michael Chu’di Ejekam, director, Real Estate in Actis, who disclosed this in an interview with BusinessDay, observed that there exists a huge demand-supply imbalance in both retail and residential real estate in Nigeria.
Ejejam explained that the feasibility study they conducted prior to building the Ikeja City Mall, revealed that within the 8km radius of the mall, there were about four million people, which he equated to the entire Johannesburg population.
“There are roughly one million households within that 8km 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 was dramatic, showing a lot of spending power, “and for us as a private equity investor, it is quite compelling”.
He said their findings indicate the beginning of what they call a retail revolution, explaining that their two retail malls, The Palms and 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”.
BusinessDay had reported that the growing sophistication and changing shopping culture of
Nigerians, especially the emerging middle class, has swelled investors’ interest in the development of retail malls.
Not long ago, International Finance Corporation (IFC) and Artee Group, expressed strong interest in this market. Whereas IFC is backing Persianas Group, an indigenous real estate development firm, with $124 million for the growth and promotion of commercial real estate in Nigeria, Artee Group, owners of SPAR and Park & Shop, is planning to open 100 shopping outlets in Nigeria in the next six years.
Officials of IFC explained in a statement made available to BusinessDay, that the $124 million investment in the Persianas Group is aimed at supporting the group’s growth strategy in the rapidly expanding and underserved retail and commercial property market in Nigeria.
Oscar Chemerinski, IFC’s regional industry director for sub-Saharan Africa and Latin America and the Caribbean, adds that “IFC’s partnership with Persianas supports a rapidly growing, more diversified economy and encourages private investors in the Nigerian retail and commercial property industry.
Haresh Keswani, Artee Group’s managing director, revealed to our correspondent that in order to actualise their plan, they would be investing heavily in real estate through the development of shops and malls for themselves and others.
Ejekam stressed that Nigeria is underserved, pointing out that Lagos with its 18 million people, has only two retail shops, while Johannesburg, a city of four million
people ,has about 70 stores and 74 retail centers of at least the size of the Ikeja Mall and The Palms.
The patronage and human traffic at the existing malls, he observed, underscore the huge opportunities in this market, adding that Nigerians hunger for more of this new shopping experience.
Imthiaz Subrathie, general manager, Mr Price, one of the new retailers at Ikeja City Mall, affirmed this in a chat with BusinessDay, disclosing that Nigerian consumers have demonstrated huge acceptance of the company’s brand.
From the first day Mr Price, a South African retail firm opened its doors to Nigerian consumers at the Mall in Lagos State, traffic to the store has continually improved, giving the retailer more confidence, as it earnestly plans to open other outlets across the country in the shortest time possible.