Amid economic slowdown and impact of exchange rate challenges on import business, industrial real estate is gaining momentum, attracting investment interest from both local and foreign investors.
Close watchers of this segment of real estate note that there has been an appreciable increase in enquiries from firms based in the Middle East, Eastern Europe and Asia looking for Grade A warehouses and factories in Lagos, Ogun and Edo states.
Not too long ago, German chemicals manufacturer, BASF, opened its West Africa head office in Lagos to better coordinate its growing operations in the region, including the construction of a chemical plant.
Morocco’s OCP Africa started construction work on three ultra-modern Fertiliser Bulk Blending plants in Ogun, Kaduna and Enugu states. With expected completion this year, these plants will add a combined 470,000 metric tonnes per annum to Nigeria’s total output.
“Nigeria is a trading economy. Business interest will continue to grow in this economy. After getting a business premise, the next consideration for any business concern, especially a producing or manufacturing one, is warehouse or factory for its products,” Johnson Chukwuma, a civil engineering consultant, explained to BusinessDay.
Local cement manufacturer, BUA Group, has commissioned 1.5 million metric tonnes (MMT) Kalambaina cement plant in Sokoto State, at an estimated cost of $350 million, in addition to the ongoing $1 billion Obu Cement Complex in Edo State. This will raise the company’s total production capacity to 8MMT once completed, representing an estimated 35 percent of Nigeria’s total output.
Local assembly firm, Globe Motors, partnered China’s Higer Bus Company to build a $200 million vehicle assembly in the Eleko-Ibeju-Lekki area of Lagos and rolled out its first units at the end of Q3 2018.
At public sector level, Ayo Ibaru, chief operating officer at Northcourt Real Estate, recalls that Edo State government entered the final stages of a $500 million auto assembly plant project.
To create more opportunities for participation in Nigeria’s industrial market, the Federal Government is finalising the approval of the Nigerian Automotive Policy, which includes the gradual transition from the importation of used cars to the manufacture and distribution of new passenger vehicles.
French car manufacturer, Peugeot, is to begin production in the Kaduna car assembly by the first quarter of this year. The state government also unveiled a $200 million tractor assembly plant to improve the sector’s productivity.
“The Chinese and Edo State governments signed agreements for the development of the Benin River Port, which includes dredging 40km and the construction of a link road to the Benin by-pass,” Ibaru said.
Ibaru said Eastern commercial hub, Abia State, acquired 9,800 hectares of land for the proposed $25 billion Enyimba Economic City projected to take off by the first quarter of this year.
The Shandong Ruyi Technology Group will be investing an estimated $200 million in the development of an industrial park and textile manufacturing plants in Kano, Katsina, Abia and Lagos State.
AJEAST Nigeria, carbonated drinks maker, has also demonstrated confidence in Nigerian economy by securing a $50 million investment from Duet Private Equity Limited to further expand its operations. The company’s modern factory in Nigeria is one of only two located in Africa.
On the flip side, the hospitality industry is under-performing and, according to available World Bank record, Nigeria earned $1.09 billion from international tourism in 2016 as against Kenya’s $1.62 billion, Tanzania’s $2.16 billion, and South Africa’s $8.81 billion.
This is a reflection of not only the parlous economic situation in Nigeria, but also the frightening security challenges. Tourists perceive these other countries as safer than Nigeria and their respective tourism sectors have stronger government support.
Ibaru noted, however, that, with the gradual growth in the economy, key hospitality performance indices have improved. “The 2018 Mastercard Global Destination Cities Index report ranked Lagos as the most visited city in sub-Saharan Africa with 1.5 million international overnight visitors generating over $580 million,” he said.
