The “Golden Jubilee Budget” coinciding with the State’s 50th anniversary is the largest budget ever by a Nigerian state. Expectedly, it emanated from the state with the highest grossing internally generated revenues- Lagos state, a major investment and commercial hub comprising of the highest priced real estates in Nigeria across the office, retail, residential and industrial markets.
With a budgetary provision of N817b, the Governor and his team have placed physical infrastructure renewal within its key capital expenditure heads. According to the Governor, “road construction, rehabilitation and maintenance would be one of the key focuses of the budget, adding that efforts would be geared towards roads that will open up the hinterlands, improve connectivity in the state and reduce travel time.
We can identify the individual economic drivers of growth in real estate values from the developmental plans of the Golden Jubilee Budget
- Road & walkway construction:
The Total Capital Expenditure of the budget is set at 512.46bn with N205.85billion representing 25.32 percent of the budget earmarked for General Public Services, road construction and rehabilitation inclusive.
In real estate, land-locked land is a disincentive to investment. The cliché “Location Location” is primarily linked to a good road network with other factors considered as secondary access to land via a good road network and an uninterrupted connection to other locations exponentially increases the value of the asset.
This is evident in new towns along the Lekki-Epe Expressway where historically inaccessible land has become a developer’s delight due to access and connectivity. Land is currently left fallow and undeveloped in many parts of the city due to lack of an effective transport system to encourage migration into those areas. Foremost in the mind of an investor or consumer of real estate is commuting- How do I commute or how would they commute?
The budgetary allocation for infrastructural renewal with physical infrastructure renewal at the top of the rung is earmarked as 205.85bn under the General Public Services. Where judiciously and efficiently utilised, this will certainly be the beginning of the journey to a mega city
The budget is also interestingly focused on the hinterland hinting an upswing in prices for lower middle class property prices. Areas such as Ikorodu, Okokomaiko, Ajah, Badagry, Abule-Egba, Epe would see a rise in demand with a corresponding rise in property prices with the extensive road construction earmarked for such locations. Retail and Industrial Investors would also benefit from the infrastructure improvement. Cost of land is relatively cheaper than the core city and movement of goods and persons is unhindered where there is free flow of traffic.
- Road expansion/rehabilitation
Infrastructure rehabilitation is a significant driver of growth in real estate locations. Where an effective long-term plan for maintenance and rehabilitation of damaged roads and infrastructure is implemented, that singular factor can tremendously increase the values in such an area. Typically, when compared to housing as an example, residential estates with outstanding maintenance cultures like Nicon Town Estate in Lekki, Victoria Garden City, Osborne Forsehore Estate in Ikoyi, Shonibare/G-Cappa Estates in Maryland has seen sustained positive growth in property prices.
Another visible benefit of road expansion is seen at the descent of the Third Mainland Bridge. This was a notorious traffic spot caused by disembarking passengers of commercial and private vehicles. This created a ripple traffic snarl usually extending beyond the bridge to Herbert Macaulay exit. With the expansion of the road and innovative creation of a bus terminal at the far end of the descent, the resultant effect is a massive 1-2 hours reduction in travel time from Victoria Island to Oworonshoki. The multiplier effect again is evident as properties around Oworonshoki, Ifako, Gbagada and Anthony have seen a gradual price appreciation as residents of those areas claim to arrive at their destination faster than their counterparts living along the Lekki-Epe Axis when leaving from the work hubs on the Island. That singular shorter commuting time from commercial centres to other part of the city drives up the value of real estate
- Urbanisation of the Marina
The Marina is undergoing a rapid transformation with the Blue-Line light Rail system nearing completion. There are 13 stations along the rail system from Okokomaiko to Marina. This can be likened to the London Underground Tube System where there is an effective demand for properties in locations with tube stations. Our Lagos locations with train stations will undoubtedly witness a surge in demand and a likely surge in prices as the Blue line is estimated to transport 400,000 passengers daily with capacity increased to 700,000 passengers daily.
- Waterways channelization
Real Estate pundits are holding their breath here when Lagos would be the new Venice. Channelling the use of water bodies for the movements of persons and goods is a vital aspect of achieving economic growth and increased productivity. As an alternative modal transport system, locations around water bodies can serve as pick up points for ferry and boat services which would tremendously improve commute times and also enhance physical wellbeing of the residents as opposed to vehicular traffic snarls.
Locations around the Lagos Lagoon like Falomo, Ikoyi, Gbagada, Ikorodu, Lekki Phase 1 and locations with shorter commute times to these “lagoon locations” would see a robust appreciation in property prices.
- Parks & Gardens/community centres
The smallest patch of green to arrest the monotony of asphalt and concrete is as important to the value of real estate as streets, sewers and convenient shopping- James Felt, New York Times
This is undeniable as a perception of luxury is attributed to locations with good landscaping and greenery. In developed countries parks and gardens are strewn around commercial centres to give a semblance of serenity within the hustle and bustle of a city. Green areas, bench seats are set in strategic areas where residents can relax and rejuvenate. The previous administration set the pace in aesthetically transforming the city landscape and it’s commendable that the present administration is continuing such legacy. Ndubuisi Kanu Park, Alausa is a great example of a family park with outstanding recreational ambience. Same should be replicated is lower income areas in the hinterland as a priority. The full benefits of greenery is yet to be felt in the metropolis as most of these green areas are not easily accessible to residents and so not a measurable driver of real estate growth. To realise the full benefits of landscaping and its resultant effect on real estate prices, parks and gardens should be created in areas accessible to residents- work hubs, residential areas and not only highways or far flung locations.
From a budgetary allocation standpoint, Real Estate prices in Lagos state should see appreciable price growth where the budget is judiciously executed in a fiduciary manner- for the benefit of its beneficiaries.
Omorinsola Ipaye
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