Whether you are interested in investing in residential real estate or aspiring to buy a property for personal use, it helps to know what the cities in Nigeria have in stock for you.
To guide property buyers in making wise decisions, BusinessDay has done an in-depth analysis of some location’s strengths, weaknesses, opportunities and threats (SWOT), revealing that Nigerian cities are mostly segmented into low and high end areas.
According to the National Bureau of Statistics (NBS), Lagos State records the highest amount of real estate activities at 37 percent followed by Abuja state with 22percent and Rivers state with 6 percent. This means that the three cities account for 65 percent of all real estate activities in Nigeria.
Ikoyi, Victoria Island and Lekki, the three island locations in Lagos, constitute the core of high end submarkets in Lagos. Though property, land or built up, are very expensive in these locations, analysts say they offer real value and good returns to investors.
With all the qualities of a residential destination, Ikoyi’s strength is in its excellent location, ease of obtaining approvals for development, high rents and return on investments (ROI) based on demand to be in a serene environment; internationally recognized and accepted location increases value perception, and offers highest office rents in Nigeria which is second highest in Africa.
The weakness of this location is in its high cost of land and approvals; buildings are restricted to high rise apartment to enable maximisation of land; there is need for an attractive design and layout of the project based on competing developments within the axis; there is lack of storage rooms for individual green areas.
For developers who want to invest in residential properties in this area, opportunities include ease of rental as a large pool of prospective home buyers, both local and Nigerians in Diaspora buyers, would rather buy out right a finished product that meets their immediate needs in Ikoyi; amendment in Lagos planning legislation is expected to make zoning for commercial use easier.
But there are threats too. These come in as construction challenges leading to delay of delivery; lack of availability of financing for projects or mortgages for prospective buyers; presence of competing developments within the same axis and planning challenges to secure permission for commercial office use.
The qualities of the above location is not far from what can be obtained from Maitama, one of the major districts of Abuja, which is in the phase 1 development plan of the federal capital territory. It is home to most embassies and high commissions. It is an exclusive and expensive area where the crème de le crème and top politicians live. The high cost of acquiring a property in the area is one of its weaknesses.
The New and Old GRA areas in Port Harcourt also measure up to what is seen in Abuja.
New GRA is an area for the high net worth individuals of Port Harcourt. Here, there is a concentration of government officials and affluent persons. Properties here are quite pricey and would set a buyer back some hundreds of millions.
The Old GRA on the other hand was the area inhabited by the early European settlers during the colonial time and was then referred to as European Quarters. The area is well planned. No wonder the immediate past first lady, Patience Jonathan, chose this area for her Port Harcourt residence.
Coming back to Lagos, Victoria Island is a good location for a property buyer. The strengths of the area are in its excellent positioning, ease of obtaining approvals for development based on precedent, high rents and return on investments (ROI) based on demand, and a wide mix of support service companies.
The weaknesses include poor parking, traffic congestion, lack of supporting infrastructure, high cost of land and approvals, building would be restricted to high rise apartment to enable maximisation of land, and available land for residential development within this axis is extremely small.
The opportunities in this location include lack of good quality residential and commercial space and demand for this is high; there is also opportunity for corporate entities and individuals to own properties close to their offices.
But the development of the Eko Atlantic in the long term is a major threat to the continued prosperity of Victoria Island. So, potential investors should always bear in mind that this development, which is already evolving with some residential and office development coming up fast, may throw the spanner in the works.
Lekki, one of the most beautiful cities in the centre of excellence which naturally formed a peninsula has a lower land cost than VI and Ikoy but has lower rents compared to the aforementioned areas which affect profitability. However, the area is set to continue to develop as a commercial hub and hence rents are expected to continue to increase.
The Nigerian cities analysed by BusinessDay also have some areas that do not have same standards as those mentioned above and these include locations like Wuse, one of the districts in the Abuja city centres comprising seven zones.
The area is a residential location which is commercialised with a lot of noisy activities. The opportunity in this location is the fact that properties are not as expensive as they are in Maitama. However, industry sources perceive Abuja to be more expensive in terms of real estate construction and rentals compared to other states.
Ikorodu, Ebute Metta, both located in the mainland areaa of Lagos and Choba in Port Harcourt have similarities with Wuse, not so commercialised but has low ROI due to the value of properties in such
areas. Its long distance from the core business hub of the cities and the gridlock in the roads connecting them to the more developed central unit reduces the worth of the properties in such areas.
But the opportunities in the areas include the fact that there are large spaces of land and the real estate properties in those locations are more affordable than what can be obtained in Lekki.
Endurance Okafor
