Real Estate Investment Opportunities in Nigeria

Nigeria is sited in West Africa, South of thethat meet the standards of the discerning
Sahara Desert. It is located just above theprospect command huge rental / capital values,
equator bordering the Gulf of Guinea. Theleaving the investor with excellent returns.
country's importance to the West AfricanCOMMERCIAL REAL ESTATE
sub-region cannot be over emphasized as itIt is interesting to note that the first real shopping
accounts for 45% of the regions GDP.mall opened in Nigeria (Lagos) less than 12 months
The country runs a democracy styled after theago. Known as the PALMS it is an initiative of a
American system, with a President, ViceNigerian real estate developer with partnership
President, Senate, House of Representativesfrom South Africa. Permit me to say that
State Assemblies, Governors of States etc.Nigerians are used to shopping complexes -
Indeed in 2007 another election was held and abuildings sometimes purpose built and more times
new president sworn in.converted to accommodate 10 - 30 shops in
The climate is tropical, with 2 main seasons, rainynumber.
wet season - April - October and the dry seasonThe PALMS is the first real European / North
November - March.American style complex in the country.
The Nigerian economy is driven primarily by theRents at the PALMS started from $370 per
presence of crude oil which is our main exportsquare metre to $470 per square metre recently
and this accounts for nearly 90% of the country'spaid by Standard Chartered Bank of London. It is
foreign exchange earnings - $40bn in 2005.on record that rent for this outlet remains the
Efforts are being made to diversify the economyhighest the Bank has paid anywhere in the world!!
by the present government.Clearly, with a population of 10 million, a daily
The population is put at over 100 million peopleturnover of close to 5000 visitors daily to
and a census that was completed in March 2007200,000 visitors at weekends and public holidays,
confirms this.and rents at such high figures, several more malls
Of this population (2001 estimates) the age stratain the mode of the PALMS will turn out to be a
is broken down as follows 0-14, 3.71%, 15 - 64,worthwhile investment.
53.47%, 65 years and above - 2.82%.In terms of office space, the most popular
As a result of the dynamic oil driven anddestinations remain the Island and Ikoyi. An
deregulated economy, the huge population andaddress in that location connotes a certain degree
what these numbers represent in terms of aof class, seriousness and respectability.
market for goods and services, virtually all theThe few purpose built commercial office blocks
major commercial organizations are present orare in high demand with rents starting from $200
represented in Nigeria in one way or the other. -per square metre going to as high as of recent,
Shell, Mobil, Chevron, Total, Samsung, Peugeot,$1000 per square metre per annum.
LG, Hyundai, Halliburton, Hilton, Sheraton.In view of the high demand, for commercial
In fact the telecommunications and petroleumspace on the Island, private residencies are
industries account for about 50% of the numberregularly converted to offices with the attendant
expatriates coming into Nigeria.pressure on facilities and services.
With the foregoing,, it goes without saying thatAnnual rents payable could be anything from
Nigeria is a major investment destination currently$80,000 to $200,000 depending on the size and
with real estate investments being one of theaccommodation provided in the property.
stops. The huge population of over 100 millionOf course these rents are paid 2 - 5 years in
must be housed.advance.
There are within Nigeria many real estateIt is right to say that less than 30% of
investment, destinations, Calabar, Cross Riverscommercial organizations are properly
States, Kano, Kano State, Enugu, Enugu Stateaccommodated and many will gladly relocate to
etc, but the 3 primary locations which I will focusfunctional purpose built complexes.
on are Lagos, Port Harcourt and to a lesserMany of the State Governments and regulatory
extent Abuja.authorities are making efforts to reverse this
These will be examined in terms of theirtrend whereby residential houses are converted
residential and commercial possibilities, whilstto offices.
tourism and recreational real estate will beWhether they are successful or not, there still
discussed generally as regards the entire country.remains a huge market in many Nigerian cities for
LAGOSpurpose built office blocks.
The former capital of Nigeria until April 1990,TOURISM / RECREATIONAL REAL ESTATE
Lagos lies at the southern tip of Nigeria withOne of the areas of real estate that has not
boundaries to the Atlantic Ocean.been explored is in the area of tourism and
It is purely a commercial city hosting all the headrecreation.
offices of all major organizations, sea ports andTourism, once neglected has taken the front
air ports of the country.burner in the policy books of the Federal and
Population is estimated at over 10 million.State government and as well as private
Of this number,s statistics show that less thanorganizations.
20% are properly housed by United NationFrom a figure of 1,350,000 in 1998 tourist arrivals
standards.in Nigeria increased by 50% to 2.045 million in
The neighbourhoods with the primest and highest2002, to over 3.603 million in 2005.
land values are known as Ikoyi, Victoria Island andThough major hotels brands in Nigeria are
it serves as the choice residential and commercialgradually bracing up to meet the increased
area of embassies and diplomats, the expatriatedemand however, rooms of international
community and top executives of all the majorstandards are still in very short supply.
company's in Nigeria.Major international hotel brands are already
Land values here start from $750 per squarepresent in Nigeria - Hilton, Sheraton, Sofitel, Protea
metre for the purchase of bare land. It could be(South Africa), but statistics available indicate that
higher where there are existing developments onthere are still less than 5000 hotel rooms of
the site.international standards nationwide.
Rental values here range from $40,000 - overAs is projected, the tourism figures will continue
$100,000 for a 2/3/4 bedroom flat /to rise. Clearly, there exists a huge gap and
condominium. This rent is expected to be paid 2 -potential for developments in this industry.
5 years in advance before occupation of the flatAdd to this, the lovely tropical climate of Nigeria
is commenced.and the close to 880 kilometers of undeveloped
Recently a new trend has emerged where sale ofshoreline, with its potential for hotel development.
these apartments are denominated in US DollarsIn terms of recreational real estate, Nigeria has
and sales prices start from $400k to overnumerous golf courses, but only few golf courses
$1.50m. Examples include the Admiralty Towersthat are to international standards, - Abuja, Ikoyi
flats and Ocean Parade flats both in Ikoyi. Most ofto mention the top 2. Total membership of all the
these developments are sold at design stage inGolf Clubs nationwide is still under 10,000.
view of the shortage of and high demand forClearly, with a potential membership population of
accommodation.2,000,000 golfers, this market begs for
There are other neighbourhoods also on theinvestment.
Island, Victoria Garden City, Atlantic Beach Estate,The Ikoyi Golf Club in fact appears in the
Goshen Estate. These are gated estates withGuinness Book of Records as one of the busiest
detached and semi detached houses which retailgolf courses in the world. Tee times must be
at between $250,000 to $400,000. Annual rentsbooked several days ahead.
are in the range of $25,000 to $50,000.Finally it is necessary to point out that the nation
These estates properties rarely suffer anyhas no theme park in the mode of Disneyland.,
sustained periods of void; an indication of hugeAlton Towers in the UK, Sea World Florida etc.
pent up demand.With its huge population, Nigeria would be a
Outside the Island, real estate investmentprofitable destination for any investor in this
opportunities equally yield high rental and capitalregard.
dividends in view of the demand.To facilitate investment in real estate the
PORT HARCOURTgovernment has eased the acquisition of and
Port Harcourt is known as the oil city of Nigeriatransfer of land. All land is vested in the Federal
comparable to what Texas represents in theand State Governments by virtue of the Land
United States.Use Act of 1979. Whilst these has its own
Like Lagos, it houses the offices of some of theproblems, it nevertheless ensures that land is
worlds biggest oil companies as well as the oilavailable for developmental projects particularly
servicing companies that keep them running.now that there is a mad rush to catch up with
With a huge expatriate population, rents rangethe developed world.
from $25k to over $50k for 3/4 bedroom flats inPermit me to conclude that with all due humility
a neighbourhood known as the G.R.Athe Nigeria economy offers one of the highest
(Government Reserved Area).rates of return for investments - real estate
Many of the companies house their staff withinbeing one in particular.
estates and like what obtains in Lagos these areThe nation gladly welcomes genuine investors and
popular in Port Harcourt.there are a number of government agencies to
Market surveys once more have shown thatguide potential investors through the investment
there is indeed a huge gap in the supply of decentmaze.
accommodation, which is the reason why the few