Land prices in Nigeria’s leading and second tier cities, which are already resilient, are projected to spike over the next few years, a recent report on the Nigerian Real Estate Market has said. This projected price increase, the report adds, will happen mostly in locations with major construction projects and transportation infrastructure.
The new report, compiled by Northcourt Real Estate, explains that the price increase is to be driven by a number of factors, including private sector development activities as well as states and Federal Government’s policies and programmes on housing and infrastructure developments.
The Infrastructure Company (InfraCo), a public-private partnership company, set up to address infrastructure deficit starting from the third quarter of 2021 (Q3’ 2021), is one such programme coming from the government.
“This partnership is backed by a N15-trillion pocketbook. Federal Government’s plan to construct 400 houses in each of the 774 Local Government Areas in Nigeria will increase the demand for land, although the overall impact will vary from one state to another,” Ayo Ibaru, COO/director of research at Northcourt, explains.
The Securities and Exchange Commission (SEC) has come up with new rules for industrial warehousing. This has introduced more regulation to the industrial submarket and is expected to strengthen the demand–supply dynamic around land for this purpose.
The rules emphasise the provision of sufficient parking and loading/unloading spots for large vehicles. Ibaru says this explains the decision by the management of Flour Mills Nigeria, which, working with improved financial performance numbers (profit was up 126% y-o-y), has purchased 5,200 hectares of land as part of its expansion programme.
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The report notes that 24 states of the federation have put up 2,000 hectares of land for the Federal Government’s social housing programme, while 17 states have indicated interest in the solar power programme, predicting that both programmes, which are elements of the national Economic Sustainability Plan (ESP), will impact land demand and price positively.
At private sector level, many players are expanding their frontiers and doing more developments. Oak Homes, for instance, says it is in its next level as it is moving into a new definition of smart and luxury living.
“We need to redefine the game. So, there is a major overhaul of our team, which includes a new management staff with an expat chief operations officer (COO). He is worked with the big names and his major task is to make the Oak Homes brand even bigger. Our products in the coming months would redefine the tag ‘affordable,” notes Olukayode Olusanya, the company’s CEO.
Meanwhile, investor interest coming from local real estate investors and developers is currently on the rise at Eko Atlantic City, a world-class city rising from land reclaimed from the Atlantic Ocean, adjacent to Victoria Island in Lagos.
Officials of Arkland Properties Limited, developers of A&A Towers in the city, confirm to BusinessDay in an interview that more local developers were already taking position in the city following what is apparently their success story in that city.
“We moved into Eko Atlantic and started our first project, the A&A Tower. It is a tower of over 22 floors; we are doing it to showcase what is possible with the Nigerian spirit and what anyone can achieve when determined,” Evelyn Edumoh, the company’s chief operations officer, states.
Continuing, Edumoh reveals, “We are the first purely indigenous company doing development in Eko Atlantic City. When we started that project, a lot of people thought we were crazy because it was such an audacious project. I can tell you that the project has opened doors for us.
“The project has led us to start our second one, and even more Nigerian developers are now coming into the city. They are beginning to see that there is an opportunity for everyone there, and we have shown that there is growth in that city.”
Another developer, who does not want his name mentioned, also says that interest in Eko Atlantic was rising, disclosing that by the first quarter of 2022, his company would be mobilising to site to develop two luxury towers of 30 floors each in the new city.
Land price in the city remains a guarded secret as the promoters, South Energyx Nigeria, says it can only be made available to genuine buyers. Even at $1,250 per square metre it was sold a few years ago, Eko Atlantic City land remains the most expensive in Lagos.
It is followed closely by Banana Island and Old Ikoyi. As at the first half of this year, Old Ikoyi was selling for N514,889 per square metre, showing 18 percent increase in the corresponding period in 2020, when it was sold for N514,889 per square metre.
Lekki, on its part, has been strong. The price of land in that market node in the first half of 2021 was N246,785, representing 29 percent increase in its price as at the first half of 2020 when it was selling at N191,857 per square metre.
Victoria Island is not as strong as land price in that axis within the period under review witnessed a decline from N315,775 per square metre in 2020 to N273,000 per square metre in the first half of 2021. This is about 14 percent decrease in price.
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