Nigeria’s the place to be

Say property experts exploring investment opportunities in Africa.

JOHANNESBURG – Major South African property groups have set their sights on Nigeria as one of the emerging markets for property investment. Oil-rich Ghana in West Africa and Angola in southern Africa are also considered hot destinations.     

At an African Property Investment Summit in Johannesburg hosted by Liberty Properties, the Assentia Group’s William Bobie said the residential sector remained the largest and most active segment in the real estate market.

Bobie quoted the Nigerian government as saying that approximately 16m units of housing are required to plug the residential deficit. Over the last ten years the market has concentrated on the luxury end of the market to the detriment of the low to mid-income segments. Since 2008 demand for high end properties fell with a consequential fall in capital values estimated at around 40%. Bobie says opportunities do, however, exist in the low to mid income segments.

As far as the retail sector is concerned, a rising middle class together with changing demographics and consumer patterns is highlighting the demand for formal retail centres. This can also be said for many other economic hubs across Africa. The statistics are astounding. While the capital Lagos has a population of 15m it only has two formal shopping malls with a total retail space of around 40 000m².

This provides opportunities for more shopping centres in high density neighbourhoods. A delegate at the conference also pointed out that there was a need for the buying population to in fact migrate out of the cities due to overcrowding and chaotic traffic. Bokie says there is a growing trend towards themed retail malls in the vicinity of towns.

Erevuwa Gbadebo of Broll Property Services Ltd, Nigeria, says the government has recently relaxed laws which previously prohibited the import of clothes and furniture. This has opened up an entirely new shopping experience for Nigerians who are able to afford the product.

Gbadebo says in the industrial sector warehousing is short in supply, and A grade office space in the main cities.

What also emerged during the two-day conference is that while there are challenges in entering the African markets, investors are still nervous in parting with their cash due to the continent’s bad track record in conducting business. Countries wanting to participate in the global economy will have to work hard to restore confidence in the continent and its business community.

Liberty Properties’ Brett Abrahamse says delegates have agreed there is an urgent need to formalise business in order to attract investors. Broll Properties and JHI have already ventured into darkest Africa and indications are other property giants will follow suit.