As Nigeria and its economy recover gradually from the severe impact of coronavirus, real estate investors and sundry developers are already picking the pieces, adjusting and rethinking their products offering in response to the post-Covid-19 market demand.
Commercial real estate in general and Grade A office space market in particular, remains slow with high vacancy rate and virtually no new ground-breaking for new developments in any of the major nodes, especially Ikoyi and Victoria Island in Lagos, Nigeria’s sprawling commercial city.
But, on the contrary, the residential and logistics (warehousing) segments of the market are relatively active. Besides conversion of residential buildings to other uses, investors are doing developments, offering small family units such as 1 and 2-bedroom apartments which are in high demand.
It should be noted, however, that even before Covid-19, economic recession and political shifts had encouraged moderation in the luxury real estate market. A recent survey indicates that most residential occupiers in Lagos are renters with only 29 percent confirmed to be homeowners.
For this reason, high-end areas in Lagos (Ikoyi, Victoria Island and Banana Island) and Abuja (Maitama and Asokoro) have the most luxury houses even though a steady proportion of these have been empty for the last five years.
Paul Onwuanibe, CEO, Landmark Group, confirmed to BusinessDay in a telephone interview that developers were already adjusting to what is now called the new normal and rethinking their product offering for the future of work and also for apartment buyers.
“We are already thinking in line with the new normal and preparing to respond to the future of work. Apart from observing all the protocols—washing hands with soap, applying sanitisers, and maintaining social distancing, we are already taking businesses online,” he said.
Landmark Group is the developer of the expansive Landmark Village in Lagos which is a mixed use development and one stop destination for living, working and leisure. Some of these facilities may be affected by the new approach and attitude to work.
A recent report on the Nigerian real estate market by Northcourt Real Estate notes that developers have continued to rely on flexible payment plans to attract new buyers. But the report raises concerns, saying, “rising construction costs will be aggravated by local currency devaluation and the influence of the coronavirus pandemic.”
Rising demand has encouraged some state governments to invest in residential developments. Borno state, for instance, has launched N5 billion residential project consisting of 400 two-bed units and 100 one-bed units for low-income earners. Bauchi state has also started building 2,500 housing units under the Family Home Funds (FHF) scheme, estimated to cost $33 million.
Unity Homes’ 500-unit residential project has started in Alaro City with plans to expand to 2,000 apartments. Ayo Ibaru, Northcourt’s chief operating officer, notes that infrastructure quality and availability of space have started directing investors and property owners to low-income areas as Mowe, Ajara and Badagry.
It is understandable why commercial office space is slowing. The lockdown order given by governments at federal and state levels as part of measures to contain further spread of the deadly virus revealed a lot of things that are possible, especially with regards to working at home and virtual conferences that have now become part of the new normal.
The implication of this is that the 2000-5000 square metres office space, sometimes in two to three floors, are no longer necessary just as same size conference and event centres with all their fantastic designs and facilities are no longer needed.
What the market has seen in recent time is a situation where residential houses are converted to offices and even event centres of not more than 50-100 square-metre space. This is highly pronounced in Lagos where places like Isaac John Street in Ikeja GRA, Admiralty Road in Lekki Phase 1, and Awolowo Road in Ikoyi have literally become commercial zones due to property conversion.
