The growing foreign investment in the Nigerian real estate market has led to a reduction in rate of vacancy in some cities in the country, especially in Lagos State, a report has said.
In fact, the report revealed that some foreign companies were diversifying their businesses to include the construction sector, citing Samsung as an example. This, it argued had increased the demand for residential properties to accommodate their members of staff that are expatriates.
The Managing Director, Financial Derivatives Company Limited (FDC), Mr. Bismarck Rewane, revealed this in his monthly economic report for June, presented at the Lagos Business School’s executive breakfast meeting.
Rewane also pointed out that although vacancy rate had reduced in the highbrow areas of Lagos, the Victoria Island area of the state had remained attractive for office complex development. He, however, noted that accessibility and visibility were key factors for choice of location.
“This is a positive development as stakeholders can choose amongst the various construction companies available. Choice would be dependent on service delivery and cost effectiveness. Lekki, Oniru is the strategic choice for residential purposes in terms of its proximity to Victoria Island.
“Vacancy factor for residential properties in Ikoyi is higher than Victoria Island, but the reverse applies to commercial properties. This reflects the fact that Victoria Island is more of a commercial area while Ikoyi is mostly a residential area,” Rewane explained.
But he pointed out that an increasing number of properties under construction in Ikoyi for commercial purposes, adding that there is high demand for shopping malls located close to residential areas.
According to findings by the FDC boss, people found it easier shopping within their residential area, especially in terms of movement of goods.
“There is high demand for a ‘gated’ estate as it contains its own infrastructure –security, sanitation, entertainment facilities and back-up power supply. Yet, recent developments reveal an increasing number of mini-estates springing up inside the gated estate,” he said.
Commenting on the impact of the recently constructed Lekki-Ikoyi Bridge on the Lagos real estate market, Rewane argued that the first bridge to be constructed in the Lagos metropolis in 25 years would bring about ‘premiumising’ of the “Lekki market by 40 per cent.”
He further argued: “Direct impact is the commercialisation of Admiralty Way into another Ajose Adeogun or Awolowo road. Office space and retail rents and values will escalate 100 to 150 per cent in Lekki. Mixed developments in Alfred Rewane road and high-rise residential developments on Bourdillon and Alexander
“Queens Drive will be mainly hotels, motels and serviced apartments. The traffic bottlenecks will move to the Bourdillon, Gerrard, and Osborne axis. Probyn, Glover, Cooper Roads will witness exodus of quality tenants. Oil companies are now developing purpose-built estates in the Lekki Phase II and III neighbourhoods.”