Nigeria’s commercial real estate sector performance

The commercial real estate sector in Nigeria has been showing signs of recovery with positive growth in construction activities in 2017. The real GDP in the real estate services sector in the fourth quarter of 2017 stood at -5.92 per cent, which is an improvement from the previous year. Chinwe Ajene Sagna, Head of West Africa at JLL, a global commercial real estate services company, shed light on the factors contributing to these numbers during an interview on CNBC Africa. According to Ajene Sagna, the slow growth in real estate is a common trend following an economic recession as there is often a lag in the real estate sector's recovery. The challenges faced by the sector in the past, such as oversupply of commercial properties, especially in class A buildings, due to the downturn in the oil sector, have impacted vacancy rates. However, with Nigeria coming out of the recession, there is renewed interest from investors, leading to an uptake in commercial properties. Construction activities grew by 4.14% for the full year of 2017, which contributed to the positive trajectory in the sector. Despite the rise in construction, the demand for new structures has slowed down, with existing players in the market taking advantage of more affordable prices and incentives like rent-free parking and tenant improvement allowances. There has been some interest from oil sector players returning to the market, albeit at a cautious and smaller scale than before. Companies are now more selective in their space requirements and cost-efficient in their operations. Looking ahead to 2018, Ajene Sagna predicts a continuation of the trends seen in 2017, with cautious growth in the real estate sector. Companies are expected to seek smaller space sizes, take advantage of incentives, and look for more flexible and open floor plans. Demand is likely to increase, especially in mainland areas, where the oversupply situation was not as pronounced as in the island areas. Overall, the outlook for Nigeria's commercial real estate sector in 2018 is one of cautious optimism and adaptation to market conditions.