- The picture looks brighter for occupational and capital markets as the economy improves.
As the city gears to host the globally recognised real estate-focused West African Property Investment Summit (WAPI) (www.WAPIsummit.com) next week, there is a renewed sense of investor confidence in the Nigerian real estate sector.
Tom Mundy, Head of Advisory for Sub-Saharan Africa at JLL (ir.JLL.com), and one of the speakers at the event, believes 2018 will be a year of consolidation and recovery. “Nigeria is finally coming out of recession. Of course, there will be the usual lag between economic recovery and market recovery, but real estate, which has suffered from a sharp supply demand imbalance, widening vacancy rates and falling realised rents, looks close to bottoming. Yes, it will take time for confidence to return fully but there is sound cause to be bullish on Nigeria going forward.”
This positive take on the region is the subject of a paper Mundy will publish at the West Africa Property Investment Summit being held at the Eko Atlantic Hotel on the 28th – 29th Novmber 2017. In it he unpacks five key drivers that support the path of improvement.
Firstly, there is increasing optimism as the economy kicks into gear. Mundy says that as the external environment improves, and the government bolsters its fiscal position, so too will sentiment for the Naira. Inflationary pressures are under control and household income outlook is reasonably robust. Add to this the recovery of the oil price and the picture is looking brighter.
Secondly, government policy making is gaining some credibility through coherent plans to support diversification and fiscal consolidation with the backing of external bodies.
Thirdly, there is evidence that the decline in rental rates in Lagos is reaching the bottom of the cycle. While the advantage still rests with the occupier in both corporate and retail markets, Mundy believes this will close through 2018 as the economy recovers.
Fourth, the legislative framework is in place for real estate pricing to mitigate the impact of a volatile economy. This is vital to support greater liquidity. It will allow for a more efficient mediation of capital between the interests of a growing class of savers and alternative asset classes that can provide annuity income, such as real estate.
Lastly, for an economy and population the size of Nigeria’s, Mundy thinks there is a structural undersupply of investment grade real estate stock. This is changing, which will provide increasing opportunities, for both local and international investors. He says JLL’s experience of other heavily pro-cyclical markets with a close tie in to commodity exports, such as Russia, suggests that in high growth markets, large vacancy rates and volatile rental growth are necessary at the early stage of the real estate cycle.
In line with these five key drivers the WAPI Summit theme is set in the same positive tone with “Changing the West African Narrative.” Mundy lists pipeline projects like Wings Office Complex, Royal Gardens Mall, Eko Atlantic, Lekki City and Landmark Village that will support the institutionalisation of the market and greater liquidity over the longer term.
Of course, the region is not without challenge. The unwinding of quantitative easing (QE) will create uncertainty, the trend of rising public sector indebtedness is a risk across most of Sub-Saharan Africa, and there is considerable political uncertainty around a potential successor for President Buhari.
Obstacles aside, sentiment across the sector is certainly improving, underpinned by quantifiable progress across several areas.
View the full review on Five Reasons to be Bullish on Nigeria Real Estate in 2018 here: http://APO.af/XPbM7Z
Distributed by APO Group on behalf of API Events.
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JLL (NYSE: JLL) (ir.JLL.com) is a leading professional services firm that specialises in real estate and investment management. A Fortune 500 company, JLL helps real estate owners, occupiers and investors achieve their business ambitions. In 2016, JLL had revenue of $6.8 billion and fee revenue of $5.8 billion and, on behalf of clients, managed 4.4 billion square feet, or 409 million square metres, and completed sales acquisitions and finance transactions of approximately $145 billion. At the end of the third quarter of 2017, JLL had nearly 300 corporate offices, operations in over 80 countries and a global workforce of over 80,000. As of September 30, 2017, LaSalle Investment Management had $59.0 billion of real estate under asset management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit ir.JLL.com.
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About API Events
The West Africa Property Investment Summit (WAPI) (www.WAPIsummit.com) is hosted by well-established API Events, Africa’s leading real estate conferencing company. WAPI is one of four annual conferences hosted by API Events, including, East Africa Property Summit (Kenya), Africa Property Investment Summit and Expo (South Africa) and ZamReal Property Forum (Zambia).
API Events (www.APIevents.com) deliver Africa’s most renowned events in real estate investment and development. Our events across the continent have become the ultimate meeting places for Africa’s property market to learn, network and most importantly to do deals.
The company also hosts the API Awards – these prestigious awards provide a platform for distinguished developers, suppliers and owners in the African real estate industry, to showcase their best projects and services. Other services provided by API Events include training programmes and the recently launched Skyline Magazine.
For more information, you can visit: www.APIevents.com