2021 Nigeria Real Estate Market Outlook - Proshare

 
2021 Nigeria Real Estate Market Outlook - Proshare
2021
       Nigeria
    Real Estate
Market Outlook
   www.northcourtrealestate.com
2021 Nigeria Real Estate Market Outlook - Proshare
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Summary

World at Home
                                                              return to the organisational structures of 2019.
2020 will be described as the year of                         For a frontier market dependent on oil revenues,
unprecedented shifts and shocks. COVID-19                     this formed an unwieldy canvass for much of the
effects were evident in the economy and real                  year. The $30Trn global commercial-property
estate markets world over. Crude oil prices                   market was tested once more as occupiers
hovered around $42pb and employment                           required less space understanding that WFH may
numbers weakened. And while new business                      become the norm.
opportunities opened up, few firms are likely to

                             Global: Investment allocation by property use (%)

                                                                    39%
                   37.5%
                           34%

                                                             27%          28%
               25.5%                                                            25.5%

                                                       16%
                                               14.9%                                    14% 12.5%
                                                                                                10.05%
                                  7% 6.85%

                                         2%

                                                                     2020

The nation moved from 6th to 3rd in 2019 on                   Police brutality against Nigeria's young
Absa's Financial Markets 2020 Index. One                      demographic vaulted the country to the
commonality across all funding reports is the rise            international stage as the government sought to
and domination of Nigeria as an investment                    recover from poorly handling peaceful protests.
destination. Nigeria is the leading destination for           This brought to the fore recurring issues in
startup venture capital investment on the                     government transparency. The youth would
continent. But the currency remains a sore point              return to making the most of the Nigeria
and manoeuvrings by the CBN, while well-                      economy, contributing to much of the
meaning has done little to stem its.                          businesses online. Transactions value increased
                                                              from $77Bn in Q2 to $116Bn in Q3 2020.

                                                                                        2021 Nigeria Real Estate Market Outlook 04
“
                                                                  no longer the undisputed destination for new
                                                                  developments. Some suburbs are now under
     Central business districts                                   strong consideration as developers are choosing,
          are no longer the                                       as they did in the 2018 recession, to make more
      undisputed destination   “                                  research driven decisions. Both retail and office
       for new developments                                       landlords are changing to remain attractive. Real
                                                                  estate investment managers are embracing
                                                                  technology more intently to accurately forecast
Big brand hospitality chains saw bookings drop                    performance metrics.
by over 94% and are unlikely to see pre-COVID                     In the latest global report on media cities by
levels until Q3 2021 at the earliest. There has                   Savills, Lagos comes in at 20th being the centre
been no demand for student housing, a result of                   of Nigeria's media industry and gaining
the universities' strike over funding agreements                  popularity both through the Nigerian diaspora
with the central government. It is hoped that the                 and streaming services. Nigeria's film industry
armistice between the regulators and the                          has made much of the government funding it's
lecturers will be more permanent than in                          received in recent years and is a key employer in
previous seasons. Central business districts are                  the Nigerian economy.

                                      COVID-19 Vulnerability scores (10=Maximum)

          Recovery Positions
          Long-covid-19 vulnerability scores, 10=maximum
            Decline in GDP growth in 2020         Labour market vulnerability                Structure of economy
            Health-related belief scarring        Economic and nancial imbalances           Policy offset
                           0                 1     2          3           4             5            6             7
          Philippines
          India
          Spain
          France
          Britain
          South Africa
          Italy
          Nigeria
          Brazil
          United States
          Sweden
          China
          Germany
          Australia
          South Korea
          Sources: Oxford Economics; Haver; IMF
                                                                              Source: The Economist, Haver, IMF, Oxford Economics

Rack Centre will be expanding its data centre                     Tenants in 1-bed apartments are looking to add
with a $100M investment, creating a total net                     one more room and those in 2 beds are going for
lettable space of 6,000sqm. Hyprop reached an                     three – possibly to make room for WFH. Buyers
agreement with an undisclosed buyer to sell its                   appear more interested in 4-bedroom
stake in the Ikeja City Mall for $115M, good                      apartments, especially in the city centres. Most
news overshadowed only by the fact that it                        prospects now prefer locations that are either in
bought said stake for $155M in 2015. Enquiries                    secure gated communities, a safe distance from
for residential leases have been steady for much                  the highways or both.
of the year, but more so for an extra room.

                                                                                            2021 Nigeria Real Estate Market Outlook 05
“
There is a general shift toward the local investor
as a source of investment. Treasuries aren't
                                                          Enquiries for residential
offering attractive rates and well directed real
estate investments are no longer as hard a sell.           leases have been steady
The demand for last mile industrial real estate is        for much of the year, but
                                                                           “
expected to grow, a result of the growth in               more so for an extra room
online retail, logistics and pharma. Healthcare,
neighbourhood retail and residential
developments are posting respectable results,        the vaccines course their way through some
encouraged by the schisms in the global supply       parts of the world in 2021, (Mrs Okonjo Iweala,
chain and the added motivations to look local        the incoming WTO head has assured that Nigeria
first. But this forms something of a quandary for    will receive the vaccine), the expectation is that
the execution of the recently ratified AFCFTA. As    the economy will improve.

                      Select nodes in Lagos: Price of 4 Bed Apartment (N’M)

                      “
                                                                                          Source: Northcourt

                                                     cabins and the like will continue benefiting from
      Single use developments                        the heightened use of technology. Single use
        have become a fading                         developments have become a fading concept.

              concept
                      “                              The projects that will weather the present, and
                                                     increasingly, the future will be mixed-use,
                                                     combining residential, retail, office and
                                                     healthcare. We suspect that the future of real
Demand for residential leases in secure gated        estate investment management will parallel the
communities will continue to grow along with         evolution of financial services where transparent
locations a safe distance from major                 data platforms were created to support trading
thoroughfares. The Grade office market will          assets in capital markets.
return much different than what it was before
the pandemic – less occupied, not as pricey. We      Ayo Ibaru
                                                     COO / Director – Real Estate Research
expect that data centres, cell towers, power         Lagos, Nigeria

                                                                         2021 Nigeria Real Estate Market Outlook 06
Contents

04                                     09
                                       The Nigerian
Summary
“Central business districts            Economy in 2020
are no longer the                      “Between January and May,
undisputed destination                 the US cut its Nigerian crude
for new developments”                  oil imports by 11M YoY”

13
2020
                                       16
Topical Issues                         Investment
                                       Markets
“Central business districts
are no longer the                      “Security has become a
undisputed destination                 central issue and will be
for new developments”                  so for a while”

23                                     48
Real Estate
Summary                                2021 Outlook
“Demand for logistics and last         “2020; a year that has forced
mile distribution centres are likely   forward the conversations around
to remain strong investment            market flexibility, collaboration,
opportunities for most of 2021”        disruptive technologies and
                                       regulator efficiency”

                                                          2021 Nigeria Real Estate Market Outlook 07
The Nigeria Economy
                               in 2020

Low oil prices, reduced earnings and COVID-19        nationwide protests and their aftermath. The
imperatives stifled trade put pressure on other      Biden victory in the US elections suggests that oil
income sources, and forced forward the               prices will rise and climate change will return to
diversification conversation. Between January        the international agenda. With the return to
and May, the US cut its Nigerian crude oil           recessionary conditions in Q3, the economic
imports by 11M YoY. By Q2, production                outlook remains fragile. Researchers project
dropped to its lowest since 2016. The economy        1.9% GDP growth in 2021.
was under pressure for much of Q3 a result of

                                                        Source: Central Bank of Nigeria / National Bureau of Statistics

Energy exports account for an estimated 90% of       GDP in the baseline scenario and 5% in a worst-
total earnings and more than 50% of fiscal           case scenario, effectively wiping out any pre-
revenues. Growing expenditure, a weakened            COVID–19 projected surpluses. The expectation
currency, COVID–19 health and socioeconomic          is that investors will focus on asset quality and
trials are expected to reduce effectiveness of the   management, valuations (which are currently
₦13Trn budget. Lower oil exports will deepen         cheap) and high dividend yields.
the current account deficit to between 4% of

                                                                                2021 Nigeria Real Estate Market Outlook 09
Source: Central Bank of Nigeria / National Bureau of Statistics

                    2021 Nigeria Real Estate Market Outlook 10
...Changing the World with
                                                                                      World-Class
                                                                                      Engineering

                                                                                                          Senate Building,
                                                                                                   Covenant University, Ota

                                                   Completed part of construction of 75km
      Jetty for Nigerian Port Authority,                                                              Ongoing construction of the Art Hotel,
                                                   Ogbomosho-Oko-Ilogbo-Osogbo Road,
                 CMS, Lagos                                                                               Oniru, Victoria Island, Lagos
                                                       in Oyo/Osun States, Nigeria

Head Office:                                 Abuja Office:                       Lagos Office:                      Email:
Isaac’s Place, Opp. TOTAL Petrol Station,   10 Danube Close, Maitama           12 Olatunji Moore Street,         info@dutumgroup.com
Onireke G.R.A. G.P.O Box 15875,             Abuja                              Off T.F Kuboye Road, Oniru,
Dugbe-Ibadan, Oyo State.                    Tel: +234 805 831 7200             Lagos.                            Website:
Tel: +234 706 967 1901                                                         Tel: +234 805 831 7200            www.dutumgroup.com
Topical issues

COVID-19                                                 should prove resilient. Logistics startup,
                                                         Kobo360 estimated that nearly 3,000 trucks
Researchers estimate that at least $6.5Bn has
                                                         were essentially stranded in Nigeria in April due
gone into funding for a vaccine as of October
                                                         to movement restrictions, translating to a 30%
2020, more than any vaccine before. The impact
                                                         reduction in the goods moved across Africa.
of the pandemic on retail, hotel and leisure have
                                                         Google introduced a reporting tool to “provide
been deep. While demand for residential real
                                                         insights into what has changed in response to
estate is relatively inelastic, it is likely to be the
                                                         policies aimed at combating COVID-19” by
least affected in the current environment. The
                                                         charting movement trends across property uses
logistics market grew and the grade A office
                                                         using data sourced from connectivity to Google
market is generally in decline, more dependent
                                                         Maps. The data points track deviation from the
on individual tenants. While co-working, for
                                                         baseline established as the median of the
example, will likely see a longer-term impact, e-
                                                         corresponding day of the week, over the five-
commerce operators and logistics tenants
                                                         week period from January 3 to February 6, 2020.

                         Mobility trend for Nigeria: January to November 2020

                                                                                         Source: Google Mobility

                                                                            2021 Nigeria Real Estate Market Outlook 13
Residential mobility peaked on the 13th of April                                    are classified as youth, many of who are without
with an increase in movement and time spent in                                      jobs – and out of school due to the Academic
residential areas by 33% when compared with                                         Staff Union of Universities' (ASUU) strike. The
the baseline figure established at the start of the                                 central authorities promised to close the unit
year as lockdowns were yet to take their full                                       involved (The Special Anti-Robbery Squad) but
effect. Office mobility was negative for most of                                    this was unacceptable to the protesters. The
the year. COVID-19 movement restrictions and                                        Nigerian army would end the protests on the
realised efficiencies from WFH meant that most                                      20th of October. Shortly thereafter, hoodlums
workers spent more time out of the office                                           took to the streets to vandalise assets. Primero
translating to a -62% deviation from the start of                                   Transport Services (PTS) Limited, operators of
the year. Retail mobility declined the most on the                                  the Bus Rapid Transit (BRT) would lose over
28th of April by -58% as consumers moved from                                       ₦100M to vandalisations. Estimates put the cost
their purchase online.                                                              of the protests to the Nigerian economy at
                                                                                    ₦700Bn. Spar, Circle mall (Lekki), Adeniran
Post #ENDSARS Vandalisations                                                        Ogunsanya Mall, the Igbosere magistrate court
                                                                                    and the Lagos Oriental hotel and several bank
Young Nigerians took to the streets of the
                                                                                    branches were vandalised. This situation
country's leading cities to peacefully protest
                                                                                    repeated itself in many states as shown in the
police brutality and extra-judicial killings. The
                                                                                    map:
national average age is 18.1 years and 43.69%

                        Nigeria's 36 States: Looting and Vandalisation Map

                                      Sokoto

                                                                  Katsina
                                                                                    Jigawa
                                               Zamfara                                                     Yobe
                           Kebbi                                                                                        Borno
                                                                             Kano

                                                                   Kaduna                Bauchi
                                           Niger                                                       Gombe

                                                                                                                  Adamawa
                                                                                       Plateau
                                                            FCT
                                   Kwara
                                                                     Nassarawa
                        Oyo
                                                                                                  Taraba
                                                   Kogi
                                      Ekiti
                               Osun
                                                                               Benue
                                       Ondo
                     Ogun
                       Lagos                                      Enugu
                                               Edo
                                                         Anambra      Ebonyi
                                                                                                 Legend
                                                                            Cross
                                               Delta       Imo Abia         River                     Nil/Minimal vandalisation
                                                         Rivers      Akwa
                                                                      Ibom
                                                                                                      Moderate vandalisation
                                               Bayelsa
                                                                                                      Signicant vandalisation

                                                                                                                                        Source: Northcourt

                                                                                                                       2021 Nigeria Real Estate Market Outlook 14
In the short term, these disruptions will
understandably create negative consumer
sentiments. The extent of carnage will serve to
guide the development market towards more
                                                                             “
                                                               Bullish investors are
                                                                 likely to pick up
security conscious expressions. As activity
                                                                             “
                                                                  cheaper assets
gradually returns, demand will support property
prices as much as purchasing power will allow.
Some buyers are adopting a wait-and-see              will rebuild, most likely to higher safety
approach. The impact of this new level of            standards. There will be higher insurance claims
insecurity, coupled with the state of the            and some insurers may be unable to meet big-
economy has made investing in Nigeria's real         ticket claims. This turn of events will also lead to
estate market more dependent on seasoned             higher premiums. Bullish investors are likely to
advisory.                                            pick up cheaper assets.

Data trends suggest that capital values in the       In the mid-term, experts project a jump in
luxury residential market could slip. Land           demand for residences within gated estates that
investments will remain resilient. In the short      leverage the experience, expertise and network
term, capital flight may occur as investors          of estate management companies and residents'
liquidate real estate holdings and move to safer     groups – at least from a security perspective.
climes and there will also be a clear reduction in   Residential drivers as stable power, serenity and
lease transactions. Higher security votes            good roads top the list of client considerations.
represent the logical and responsible thing to do    The wanton destruction by the hoodlums and
under the circumstances while market players         the absence of the police forces opened up
                                                     opportunities for security startups. Also, there
                                                     will be a rise in local investment in commercial
                                                     real estate to fill the gaps left by foreign investors
                                                     who have repatriated their capital. Local capital
                                                     is needed in emerging markets like Nigeria to
                                                     create sustainable growth in the commercial real
                                                     estate market. This type of capital is more likely
                                                     patient. Proptech will be the go-to option to
                                                     mitigate the adverse effects of the far-reaching
                                                     and expensive difficulties created by the
                                                     vandalisations. Reconstruction and remodelling
                                                     of public and private assets destroyed will ramp
                                                     up development activity. Long term
                                                     performance is dependent on the economic and
                                                     political responses to the issues presented by the
                                                     state of the economy and more specifically, by
                                                     the protesters. There will be an increased
                                                     emphasis on leisure and entertainment, sale of
                                                     local goods; indoor sports, health, safety and
                                                     security. There will be structural scars, regardless
                                                     of how the stakeholders react going forward.

                                                                          2021 Nigeria Real Estate Market Outlook 15
“
Security

Insecurity has increased the cost of doing                    Security has become a
business, forcing the relocation of many firms to            central issue and will be
nearby jurisdictions. Asides the lives lost over the
year, much infrastructure has been destroyed –
                                                                             “
                                                                  so for a while.
and plans to restore, shelved. The aftermath of
the #ENDSARS protests saw the destruction of           Ride hailing: Pressures rising
assets over ₦2Trn in Lagos, Ogun, Cross River
and Adamawa states to name a few. While state          Since 2014, the ride-hailing industry has seen
governors mull empowering local vigilante              startups set up shop in Lagos, spreading to other
groups, the central government has sought              key cities. Gokada, MAX.ng, and ORide
partnerships with international bodies. The            employed 12,000 employees combined as of
perceived sincerity of these efforts has long been     January 2020. They also raised a combined
under question as the challenges with security,        $185M in 2019. By February, commercial
especially in Northern Nigeria has persisted for       motorcycles and tricycles were banned by the
quite a while. Many citizens have resorted to          government for security reasons. A good idea by
private arrangements.                                  some accounts, save one important point – there
                                                       were no alternatives provided, either for the
Security has become a central issue and will be so     now out of work riders, or for the end users
for a while. A recent report by the Security           looking to save 25 hours in traffic weekly.
Industry Authority suggests emerging trends            MAX.ng had completed over 1.8M trips since its
and opportunities to bolster the current security      inception in 2015. As with much of the
framework; Predictive Data Analytics, Cloud            framework regulating startups, technology and
Computing, Cybersecurity of Physical Security,         new business, the laws aren't doing a good
Connectivity and the IoT of Everything,                enough job of catching up. Nigeria's e-hailing
Touchless & Frictionless Solutions, Facial             market is currently dominated by three
Recognition, Emphasis on Data Privacy, Service         platforms Bolt, GIGM and Uber and regulators
models and Artificial Intelligence which offer the     will do well to support their contributions to the
promise of making security solutions more              nation's transportation system.
effective.

                                                                                                Source: Cenfri

                                                                           2021 Nigeria Real Estate Market Outlook 16
AfCFTA                                              by the agreement and emphasising the export of
                                                    other products through research and
Nigeria completed the signing of the African
                                                    development to avoid becoming a dumping
Continental Free Trade Area (AfCFTA). There are
                                                    ground is another way to go. Maritime
some challenges. The average tariff in Nigeria is
                                                    infrastructure requires further investment for the
high when compared to the regional
                                                    movement of goods and people. International
counterparts – Ghana and South Africa. Nigeria
                                                    trade is supported by appropriate infrastructure.
is in a comparatively disadvantaged position on
                                                    Nigeria is yet to fully attain this. One way
the ease of doing business rating. Studies have
                                                    forward is to speed up the completion of the
suggested that the government may want to
                                                    ECOWAS road corridor and invest in maritime
maintain a cautious approach and refrain from
                                                    logistics. The government should explore the
making further commitments. Nigeria's major
                                                    public-private-partnership options to deliver
export commodity is crude oil, which has a small
                                                    promptly in this direction. Related technology
in the continent.
                                                    should be adopted as soon as possible. UNDP's
As roads and maritime corridors are poor even       conclusion that every dollar spent on
by African standards, massive infrastructural and   infrastructure in low and middle-income
trade-related development initiatives may be the    countries, attracts a fourfold return is instructive.
way to go. Exploiting the opportunities offered

                                                                         2021 Nigeria Real Estate Market Outlook 17
Investment Markets

Fixed Income and Money Markets                ₦5.2Bn in profits while eTranzact International
                                              Plc recorded ₦72.6M loss in the same period.
CWG Plc raked in ₦463.5M while the African
                                              Chapel Hill Denham Advisory Limited launched a
Export-Import Bank posted a net income of
$217.06M in Q3 2020. AIICO Insurance posted   ₦20.25Bn Shariah compliant REIT with Lotus
                                              Financial Services Limited as Shariah Adviser.

                                                                                   Source: PENCOM

                                                                 2021 Nigeria Real Estate Market Outlook 19
Asset management firm, Cardinal Stone                doubled while CAGR in total AUM from 2015 to
Partners Limited, debuted its ₦5Bn Commercial        2019 was 22%. 2020 saw a fall in T-bill rates,
Paper issuance with a 148% subscription. The         which when combined with the growth in the
Series I 270-day instrument was issued at 7%         value of FGN Bonds may be a cause for concern.
yield. Total AUM in Nigeria's fund management        Dangote and Mixta Nigeria raised ₦50Bn and
market between 2015 and 2019 more than               ₦11.01Bn respectively in Commercial Paper.

                       Select Commercial Banks 9M PAT 2019 - 2020 (N’M)

                                                                                    Source: Company Reports

Equities                                             Nigerian stocks surged the most in more than
                                                     five years in November.
The equities market saw significant sell-offs this
year after dollar shortages caused by the impact     The NSE was declared the best performing
of COVID-19. Nigerian stocks rose early in May       globally Thursday the 10th of November out of
by 3.12% to record their biggest rise in three       93 benchmarks tracked by financial services data
months after the government began a gradual          platform, Bloomberg. The ASI rose by 6.2%, its
easing of lockdown restrictions. This was around     highest move since April 2015 leading to an
the same time. The Exchange moved from losing        automatic 30-minute trading halt. This would be
14% YTD to rising for the seventh session to         the first time since its introduction in 2016. This
closing at an eight-week high 23,809.31 points.      improvement in fortunes for the exchange has
Stocks began rising again in October after the       been supported by news of a COVID-19 vaccine,
CBN reduced interest rates, and as local funds       the U.S. presidential election results and
moved into equities due to low bond yields.          monetary policy announcements by the CBN.

                                                                         2021 Nigeria Real Estate Market Outlook 20
The exchange has received approval to become     stockbrokers to a profit-making entity owned by
a publicly traded company by listing 2 billion   shareholders, called the Nigerian Exchange
ordinary shares of ₦0.50. It will change from    Group Plc.
being a not-for-profit mutual company of

                                                                                          Source: NSE

                                                                    2021 Nigeria Real Estate Market Outlook 21
Real Estate Summary

Forced forward                                        change towards the end of the year as enquiries
                                                      rose for leases in gated communities a distance
The Nigeria real estate market has had to switch
                                                      from the main access roads. Looking ahead, the
gears. Whether it's the movement of demand
                                                      market for co-working spaces is likely to recover
away from Grade A office, retail and big brand
                                                      earlier than the market for grade A office.
hospitality to the adoption of technology. While
pushing the conversation on healthcare,               Grade B+ and residential to office conversions
infrastructure, security and mortgages, more          with rentals under $350psm seemed unaffected
changes have been attempted (and actioned)            by the challenges affecting the demand for
over the last 10 months than in the last 3 years.     office space. Student accommodation &
The nation's outdated infrastructure is once          religious uses were also affected – the former a
more in the spotlight. E-commerce, logistics and      bit more than the latter due to the academic
warehousing experienced significant growth as         staff union's strike. Economic challenges suggest
opportunities were uncovered. Property listing        that meeting occupation obligations might be
sites initially reported a decline in enquiries for   challenging. Projects are now more deliberate in
residential property as COVID induced lifestyle       their conception, emphasising rigorous data
changes demanded that consumers focus on              analyses. They are more likely to succeed.
groceries and pharmaceuticals. This would

                                                                                               Source: NBS

                                                                         2021 Nigeria Real Estate Market Outlook 23
The year 2020 has reinforced the need to make
property portfolios more resilient. Price shifts as
a result of the pandemic have led to a focus on
currency protection mechanisms. The pause on
                                                                            “
                                                      Most planned projects will likely
                                                        be put on hold as the sector
large retail developments will continue as they       reconfigures into the form most
are unlikely to be infeasible from a return's
perspective. Short let apartments have shown
                                                                            “
                                                         fit for long-term viability.

much resilience as they represent a sustained
demand for flexible accommodation. As some            Land
retailers have exited the market, others are
reassessing their footprint. Construction costs       Lockdown measures initially led to the closing of
have increased due to challenges with the global      land administration services which complicated
supply chain. Most planned projects will likely be    the consummation of land transactions. There
put on hold as the sector reconfigures into the       was an increased risk of losing land and
form most fit for long-term viability. Increased      properties to fraud, which put pressure on the
demand for short stay apartments and flexible         land administration office working at partial
office space near major residential areas as          capacity. The loss of employment forced a partial
occupiers come to terms with their new                exodus out of the cities, most especially to the
lifestyles. The Abuja Metropolitan Management         eastern parts of Nigeria. This put some pressure
Council (AMMC) has concluded plans to                 on rural land. The Nigerian government secured
demolish over 25 estates along the Abuja airport      $72M from the World Bank to develop a land
road as the Federal Government plans to               information system expected to improve
construct a centenary village.                        efficiencies. The AfDB is to invest $25Bn in
                                                      Gabon, Mali, Nigeria, Senegal and Sudan.

                                                                                          Source: Northcourt

                                                                         2021 Nigeria Real Estate Market Outlook 24
Infrastructure                                                                up to finance infrastructure projects, joining the
                                                                              Nigeria Sovereign Investment Authority (NSIA)
Globally, 4Bn tonnes of cement are produced
                                                                              and Africa Finance Corporation. Nigeria's third
every year, and because of the increase in
                                                                              Sukuk bond raised $2.1Bn, an oversubscription
urbanisation, this figure is expected to grow to
                                                                              of the target $533M, by 446%, reflecting high
5Bn tonnes over the next 30 years. InfraCo Africa
                                                                              prospects.
invested $27M in InfraCredit, an institution set

      Ogun state -    Bening-Sagamu Delta state Lagos-Badagry Onitcha Enugu   Lagos-Otta Cross River state Enugu - PH II    Delta state   Ibadan Ilorin
        pavement       Expressway   Sapele - Ewu Expressway    Expressway       Road      - Odukpani - Itu                 Sapele - Ewu   Expressway
      strengthening                    road                                                   bridge                          road II

                                        Sukuk payment NBn         Project Cost NBn        Level of Completion (%)

UBA Capital and Chapel Hill also launched similar                             federal government floated its first Sukuk bond
Islamic finance products. The Sukuk bond will be                              in 2017, raising $325M to finance 25 road
deployed to 44 road projects. The first Sukuk                                 projects and followed this up with $327M raise
bonds in Nigeria was issued in 2013 by the Osun                               in December 2018.
state government and it raised $45.9M. The

                                                                                                               2021 Nigeria Real Estate Market Outlook 25
France's largest hydrocarbons group, Axens has    licensing. The new refinery, expected to be
partnered BUA Group on refinery technology        operational by 2024 will produce 200,000bpd.

                                                                   Source: African Development Bank Group

The Federal Government secured $6.15Bn to         Programme. The expectation is to achieve the
upgrade electricity infrastructure, apportioned   generation, transmission and distribution of
as follows: $2.3Bn to Siemens and $1.6Bn to the   25,000MW of electricity by 2025.
Transmission Rehabilitation and Expansion

                                                                   2021 Nigeria Real Estate Market Outlook 26
Residential                                        power, privacy and good roads were common
                                                   must-haves. Research from the CAHF shows that
The preference for 1 bed and 2-bed flats topped
                                                   only 10% of the estimated 25M urban
the list of property types in demand within
                                                   households in Nigeria have incomes above
Lagos, Abuja and Port Harcourt. Security, stable
                                                   $3,000.

                                                                                      Source: Northcourt

On average, these households can only afford       commitment to affordable housing remains the
$44,681 per unit. This, however, assumes a 25%     linchpin as an estimated 13M households earn
interest rate mortgage and a 20-year loan term.    less than $1,000 per month and the national
The case for the central authority's sustained     housing deficit is well over 20M.

                                                                                      Source: Northcourt

                                                                     2021 Nigeria Real Estate Market Outlook 27
Virtual showings, drone inspections and online         numbers of divorces, marriages, and births,
project meetings were already trending before          creating demand for housing. Professionals now
COVID-19. The lockdown accelerated adoption.           seek larger apartments that can accommodate a
COVID-19 has produced above-average                    home office.

                                                                                               Source: Northcourt

The bias for homes in the suburbs, away from           better living environments fit for social
the major streets has increased. This is largely for   distancing with open spaces, lower density and
security reasons. There's also a gradual shift         greater air circulation unlike most high-rises with
toward garden-style communities as they offer          their closed hallways and elevators.

                                                                              Source: Northcourt, Castles Magazine

                                                                           2021 Nigeria Real Estate Market Outlook 28
In CBDs, there is a growth in demand for micro    growth in demand for short stay apartments
apartments - small studio apartments typically    further spiked and is likely to increase.
under 35sqm with a kitchen and bathroom. The

                                                                                       Source: Northcourt

The desire for better organised (and moderately   youth demographic, specific on their
priced) rental housing has led to the growth of   requirements for complete space autonomy,
coliving in Lagos and Abuja. These arrangements   convenience and flexibility will continue to direct
are not expected to disappear anytime soon. The   successful residential projects.
increasing rate of urbanisation and a growing

                                                                                       Source: Northcourt

                                                                      2021 Nigeria Real Estate Market Outlook 29
Source: Northcourt

Office                                                interrupted given that some employers are
                                                      finding that not all functions perform efficiently
Informal enterprise represents 92% of
                                                      remotely. Few companies are expected to close
businesses in Nigeria. To reduce costs,
                                                      their offices altogether even as the pandemic
businesses had begun cutting down on office
                                                      evolves. Others may need more space for their
floor space since the 2018 recession and was
                                                      employees who come in to accommodate social
losing share to the then growing coworking
                                                      distancing. Overall floor space may not increase
space service providers. This trend is likely to be
                                                      as fewer individuals come into the office and

                              Prime Ofce Yields - Selected Cities (%)

                                                                                           Source: Northcourt

The demand for private offices could also rise as     environment and also tend to be significantly
employees may be reluctant to work in open            less expensive. Companies now retain their core
plan arrangements. For some industries,               office space in central business districts while
however, WFH could become a more permanent            allowing nodal office structures and flexible WFH
feature. The larger open spaces associated with       opportunities
suburban office parks is perceived as a healthier

                                                                          2021 Nigeria Real Estate Market Outlook 30
10

                                                                                              Source: Northcourt

Analysts suggest that demand could return as       ranging from changing floor plans and
companies seek short-term leases for employees     redesigning common areas combined with
working remotely. Building designs that are not    increased janitorial hours, improved air filters,
conducive to changing working preferences          touchless lighting control, faucets, and
stemming from social distancing practices, could   automatic doors.
become obsolete. It will require investments

                             Number of coworking service providers

                                                               Source: Coworking resources, Coworker, Northcourt

There has also been an accelerated interest in     COVID-19 industry leaders, recasting the
smart building technologies, particularly those    category more in favour of member experience.
relating to building access control, HVAC system   Stiff environments where people work almost
monitoring, and the ability to track density       shoulder to shoulder in poorly lit spaces will no
within spaces. Nimble coworking service            longer be attractive.
providers could potentially emerge as post

                                                                         2021 Nigeria Real Estate Market Outlook 31
Source: Northcourt

There will be greater awareness of hygiene and          people and be productive in a professional
hot-desking will more likely be considered a            environment will still be important.
health risk. The opportunity to connect new

                                                                                             Source: Northcourt

Industrial                                              and are competing for the limited number of
                                                        available deals. The demand for last-mile logistics
Positive industrial real estate fundamentals
                                                        is expected to grow, driven by the transition of
drove asset values to record highs. This was
                                                        retailing from brick and mortar to online.
amplified by the COVID-19 pandemic, which
                                                        However, making it all work seamlessly with
hastened the trend to online retailing,
                                                        under par infrastructure is challenging. The
intensifying the pressure on logistics
                                                        supply of standard buildings is restricted, and
frameworks. This shift is expected to continue
                                                        those that exist are unsuitable, creating a market
well after the pandemic has subsided. With
                                                        for small to mid-size warehousing facilities.
increased online sales, competition among
                                                        Grade A warehouses which provide an
online retailers as well as delivery times with
                                                        opportunity to mark rents to international
additional emphasis on quick delivery are set to
                                                        benchmarks are particularly attractive. The
rise. The increasing need for inner city fulfilment
                                                        question of where to locate a warehouse has
centres, as well as portions of strip/big box
                                                        historically been a trade-off between low cost
spaces as fulfilment centres are all but
                                                        but easily accessible facilities, road transport
guaranteed. The demand for inner city
                                                        networks and final product destinations.
warehouses has increased.
                                                        However, as technology begins to influence how
This is especially so for last mile assets in central   goods are distributed, operators' locational
business districts. Investors have taken notice         decisions may change.

                                                                            2021 Nigeria Real Estate Market Outlook 32
Source: Northcourt

                    “
                                                 administrative offices and road infrastructure,
                                                 each warehouse has a GLA of 7,200sqm. Key
  Demand for logistics and last                  occupiers include Geely Automotive who owns
    mile distribution centres                    rights in Volvo Car Group, Daimler AG Group
   are likely to remain strong                   and London taxis. Another driver for industrial
                                                 space demand is an increase in inventory levels
   investment opportunities
                    “
         for most of 2021
                                                 for safety stock inventory. Retailers will seek to
                                                 have critical goods for shoppers in the event of
                                                 another lockdown and they stockpile. Demand
                                                 for logistics and last mile distribution centres are
                                                 likely to remain strong investment opportunities
                                                 for most of 2021. If just in case demand spikes,
Spain took over from India as Nigeria's top
                                                 which requires a larger inventory over the long
export destination in Q2 2020 with 14% of the
                                                 run, the demand for additional warehouse space
total export trade as against 9.87% in Q1. Not
                                                 will grow accordingly.
too far behind is the Netherlands with 10.98%,
up from 9.72% recorded in Q1 2020. While         The list of e-commerce retailers is growing,
China and India received 9.93% and 8.81%         encouraged by rising demand and the nation's
respectively, South Africa got 7.76%. BUA        growing unemployment. Analysts estimate that
Group Plc partnered France's Axens for a         e-commerce retailers require as much as
200,000bpd refinery to convert oil and biomass   approximately three times the warehouse space
to cleaner energy. Mikano International has      to generate comparable revenues when
developed Karameh City Industrial Park located   compared with brick-and-mortar sales. To better
on a 120,400sqm site in Ogun state. Asides       manage purchase risk, companies are also

                                                                      2021 Nigeria Real Estate Market Outlook 33
moving from stocking up at warehouses before         COVID-19, will likely increase. With many having
shipping to customers following an order to          more time to browse online at home, shopping
buying products directly from a distributor only     habits ingrained over the past 10 months will
after receiving a customer order. The demand         likely endure.
for groceries online, strengthened during

                                    Purchasing Managers’ Index

                                                                                              Source: CBN

Refrigerated storage and transportation              limited, is growing. An estimated 180,000sqm
constitute key subsectors of the global cold chain   of industrial space is expected in 2021.
market. The current value of the sector is
estimated at $218Bn and is projected to reach        Hospitality
$320.2Bn by 2025. With the increase in online
grocery shopping, the cold storage segment           Global hotel brands operating in Nigeria are
likely represents another opportunity for            unlikely to return to staffing levels and
investors. Would-be service providers will           organisational structures of 2019. Managers are
however need to navigate the country's power         carefully assessing every aspect of how revenue
challenges. Cool rooms while scarce can be           is generated, and at what cost with a focus on
purchased or leased in-country.                      the essential tasks. Much of the demand going
                                                     forward will be from the local buyer. Like much
The 830-hectare Lagos Free Zone, Nigeria's first     of the real estate market, hotels are looking to
privately owned special economic zone in             do more by leveraging digital tools, special
Nigeria, aims to host more than 100 businesses.      packages and commissions. COVID-19 has
Major humanitarian organisations who lease           forced the end of an age and the building of a
warehouse space include UNICEF, WHO and the          new order. Researchers suggest that hotels were
WFP with specialist forward logistics capacities     paying 25-40% on commissions, transaction
to support their partners. The WFP has               fees, loyalty costs and office management costs
established storage facilities for commodities       to acquire their revenue. Rate growth is more
and related equipment in hard-to-reach               likely to slow for the large brands as was
locations. There are over 30 mobile storage          increasingly apparent in 2019. Conversion costs
facilities, each over 8,500MT in Adamawa and         are also on the rise.
Borno states. Pharmaceutical storage, while

                                                                        2021 Nigeria Real Estate Market Outlook 34
Source: W-Hospitality Group

The current situation puts the smaller hotels,      government is stepping in, disbursing ₦5Bn in
guest houses and short stay conversions at a        bailouts – ₦4Bn to domestic airlines and ₦1Bn to
strong advantage. They have lower overheads         other aviation related agencies. They have also
and can afford to stay open for much longer.        temporarily suspended the planned
They are also up for consideration by a broader     international airports' concessions in Lagos,
range of potential clients than they would have     Abuja, Port Harcourt and Kano. The Enugu
previously. This may be the situation for much of   airport has also reopened.
2021 as larger hotels redefine their business
models to reduce costs and create more               Certain types of travel may never fully return to
innovative offerings.                               pre-pandemic levels. Much of business travel has
                                                    transitioned to video conferencing and will most
The global airport operations market is             likely remain following the return of more
estimated to be $8.3Bn as of 2020 and is            frequent business travel. This will invariably lead
predicted to reach $14.3Bn by 2025. CAGR is         to a reduction in demand for lodging. Many
estimated at 11%. The effects of the pandemic       major conferences have moved online, another
suggest that these estimates will likely be         trend that will contribute to the reduction in
reviewed downwards and the Nigerian                 demand for rooms and conference space.

                                                                        2021 Nigeria Real Estate Market Outlook 35
Less Volatile                                      Lagos
                                                                                  Muscat
                                         100%
                                                            Nairobi
                                                                                                   Tehran
                                                                                                                         Cairo
                                         80%                                                          Mecca                      Tel Aviv
    Domestic & share of total arrivals

                                         60%                                                                   Tunis

                                         40%
                                                                                                            Abu Dhabi

                                         20%

                                                                 Sharjah          Dubai                             More Volatile
                                          0%
                                                0%              20%            40%             60%              80%              100%
                                                                                          Long-haul % share of international arrivals

                                                                                                                           Source: Tourism Economics

Hotels have developed standards in line with                                              become the new industry standard. Cleanliness
government regulations to keep guests and                                                 ratings are likely to become a new standard for
employees safe – from increasing cleaning                                                 hotels. These additional expenses, capital
budgets and installing new equipment to                                                   expenditures, and reduced occupied room
allowing extra time to sanitize between guests.                                           percentages are expected to adversely affect
A 24-hour buffer between room occupation may                                              both operational cash flow and available funds.

                                           3,500
                                           3,000
                                           2,500
                                           2,000
                                           1,500
                                           1,000
                                            500
                                                 -
                                                                2014                   2017                       2020
                                                                       Accra   Dakar   Lagos      Abidjan

                                                                                                                          Source: W-Hospitality Group

                                                                                                                2021 Nigeria Real Estate Market Outlook 36
Over the years, Airbnb has put pressure on the                     than Marriott International, Hilton Worldwide
hotel market. However, in May 2020, Airbnb let                     and Hyatt Hotels at $43Bn, $39Bn, and $8Bn
go 25% of its workforce due to the impacts of                      respectively.
COVID-19 but recovered when bookings
                                                                   Family bookings which account for a larger share
increased overall between May 17 and June 6.
                                                                   were up 55% in reservations when compared to
This is when compared with the same three-
                                                                   pre-pandemic levels. Many foreign holiday trips
week period in 2019. Shares of Airbnb moved by
                                                                   were replaced with local private parties. The
as much as 120% during the long-awaited first
                                                                   shape of industry’s recovery is still unknown but
day of trading, more than five times its last
                                                                   what is certain is that things have dramatically
private market valuation of $18Bn in April
                                                                   changed and will continue to evolve as the
reaching $103Bn by early December, higher
                                                                   conditions surrounding the pandemic unfold.

                                  140                                                                    80%

                                                                                                         70%
                                  120

                                                                                                         60%
                                  100
               Number of Hotels

                                                                                                         50%
                                   80
                                                                                                         40%
                                   60
                                                                                                         30%

                                   40
                                                                                                         20%

                                   20                                                                    10%

                                    0                                                                     0%
                                        2015   2016        2017        2018         2019       2020
                                               Scheduled      Actual          Actualisation
                                                                                                        Source: W-Hospitality Group

Radisson will be opening a new hotel at Abuja to                   reached $3.53Trn worldwide. They are now
complement two hotels currently under                              projected to nearly double to $6.54Trn by 2022.
development in the city, Radisson Collection                       COVID's transformative impact on retail in
Abuja ASO Tower, scheduled to open in 2022                         Nigeria stretches far beyond increasing
and Radisson Blu Abuja City Centre due to open                     eCommerce sales to causing a shift in human
in 2024.                                                           behaviour. More than ever, consumers are
                                                                   focused on value. Online sales have accelerated
Retail                                                             and this is only expected to increase as a wider
                                                                   range of shoppers change their buying habits.
While physical stores made difficult adjustments                   One of the major beneficiaries of this has been the
to the new season, online retailers blossomed,                     delivery service which has thrived as a key element
for a world at home is a world that shops online.                  of omnichannel strategies used by retailers to
In 2019 retail e-commerce sales had already                        better manage the reduction in footfall.

                                                                                              2021 Nigeria Real Estate Market Outlook 37
Source: Northcourt

A decent amount of the population now shops       alternatives.
online, as opposed to physical stores, and food
                                                  This has also led to the emergence of Dark
delivery has seen a sharp increase in placed
                                                  kitchens, where food providers lease space
orders as restaurants have seen their numbers
                                                  customised to their needs and deliver the end
for in-store purchases fall. There is a growing
                                                  product to the consumer over apps and logistics
preference for locally produced goods and
                                                  delivery services. Currently, apps & websites
services, if only due to the limited foreign

                     “
                                                  account for 6 out of every 10 meal orders.
                                                  Advantages include low startup and operational
                                                  costs, competitive pricing, a wider selection of
Estimates put the global value for                chefs to ensure high meal quality and corporates
dark kitchens at $35Bn, projected                 and professionals (currently highest users).
                     “
    to cross $360Bn by 2030.                      Estimates put the global value for dark kitchens
                                                  at $35Bn, projected to cross $360Bn by 2030.

             Leading Online Food Delivery Markets ($’M) / Road Network (’000/Km)

                                                                     2021 Nigeria Real Estate Market Outlook 38
“
Barring the introduction of innovative offerings,
there will be more home delivery and less
physical shopping at large retail centres. The         A movie theatre may keep
neighbourhood shopping centre and the small         customers for up to three hours.
side shops will be the exception. There is also a   A gaming tournament keeps the
decline in group-based activities, especially
around large shopping centres and cinemas.
                                                                           “
                                                    customer for 10 hours over 2 days
Gaming could provide a solution to Grade A
retail mall vacancies. A movie theatre may keep     over 2 days. Taking advantage of this in the
customers for up to three hours. A gaming           Nigerian context may require the development
tournament keeps the customer for 10 hours          of new revenue models.

                                                                                         Source: Northcourt

As a result, off-price stores will likely have a    edited, and consumed. Established centres and
backlog of merchandise from department stores       challenger locations offer unique opportunities.
that need to move their product. These have         Traditional core locations still lead the industry.
been appearing in underused parking lots at a       Going forward, however, a more globalised
few shopping centres. Recent research suggests      media industry will provide content for
that Global media cities are hubs of creativity     consumers and resilience against future
where films, television, and music are produced,    uncertainty.

                                                                        2021 Nigeria Real Estate Market Outlook 39
Access to creative talent          Demand for entertainment                  Government incentives           Cost of hiring and working
               70
               60
               50
 Total score

               40
               30
               20
               10
                0
                    Los Angeles

                                  New York

                                             London

                                                      Atlanata

                                                                              Montreal

                                                                                         Mumbai

                                                                                                  Paris
                                                                 Beijing

                                                                                                          Madrid

                                                                                                                   Toronto

                                                                                                                             Meibourne

                                                                                                                                         Berlin

                                                                                                                                                  Vancouver

                                                                                                                                                              Austin

                                                                                                                                                                       Seoul

                                                                                                                                                                               Dublin

                                                                                                                                                                                         Buenos Aires

                                                                                                                                                                                                        Tokyo

                                                                                                                                                                                                                Auckland

                                                                                                                                                                                                                              Lagos
                                                                                                                                                                                                                           Source: Savills

Lagos is the centre of the Nigerian media                                                                                    towards the ownership of soundstages and
industry and Nollywood movies are expanding                                                                                  production centres, rather than leasing space.
rapidly through streaming services. And while                                                                                This has pushed demand for apartments in mid
more government funding has been made                                                                                        to high end residential nodes.
available for domestic productions, there are no
                                                                                                                             JSE-listed REIT, Hyprop Investments has
specific tax rebates. Nigeria's media industry is
                                                                                                                             announced the successful conclusion of an
one of the larger employers. Media industries
                                                                                                                             agreement for the sale of Ikeja City Mall. The
require real estate assets across all aspects of
                                                                                                                             mall is co-owned with Attacq Limited. The
their business. Studios, sets and media offices
                                                                                                                             agreement was concluded with two new
constitute a significant driver for the success of
                                                                                                                             property funds that form part of the Actis Group.
media companies. The movie industry is shifting

                                                                                                                                                                          2021 Nigeria Real Estate Market Outlook 40
Source: Northcourt

Healthcare                                         investment. West Africa has a population of over
                                                   401M. To maintain a standard level of
Developing sustainable healthcare in West Africa
                                                   healthcare, Nigeria will need over 300 hospitals
will require over 750 new 200-bed hospitals by
                                                   with over 8,000 doctors – for a start.
2030. This will require an estimated $39.5Bn

                                                                                     Source: Budget Ofce

                                                                      2021 Nigeria Real Estate Market Outlook 41
The country's health sector has an estimated        healthcare in Nigeria has rarely ever been in
annual deficit of $10Bn. Nigeria imported           doubt. Supply however has been lacking,
$1.45Bn in pharmaceuticals in 2019. This is a       requiring updated policies and innovative
182% increase YoY. And the demand is                financing. The Nigerian government is having to
growing, more so as the global supply chain will    prioritise healthcare projects. ₦132Bn has been
be stretched further still as the delivery of the   allocated to healthcare under the 2021
COVID-19 vaccine takes priority. The demand for     Appropriation bill.

                                                                                    Source: Fitch Solutions

Over 30% of Nigerians who visited India in the      Center in Lagos, the 180-bed, 18,750.15sqm
last 12 years did so for medical treatment,         Lagos Medipark estimated to cost $247.3M and
spending over ₦50Bn. Leading areas in demand        the 165-bed Evercare hospital.

                                                                         “
include primary healthcare, cardiology,
nephrology, oncology and orthopaedics. COVID-
19 has led to the release of ₦100Bn by the CBN
in loans for building new hospitals and health
                                                         Leading areas in demand
facilities, advancing the conversation around a        include primary healthcare,
large number of health sector investment such             cardiology, nephrology,
as the 50-bed Lagos American Specialty Hospital
for diagnostic services, the 50 Bed Lakeshore
                                                                         “
                                                        oncology and orthopaedics
Cancer Center II and the Diamed Diagnostic

                                                                       2021 Nigeria Real Estate Market Outlook 42
Health spending (N’Bn)                                                Health spending (N’Bn), % y-o-y

                                                                                          8.72%       8.54%
                                                                                                                    8.35%

                                                                     4,284,469
                                              3,988,283
                      3,709,120

                                                          1,477.77
                                  1,329,779
           1,190.71

               2019                    2020                   2021                         2019       2020           2021

            Government Healthcare Expenditure
            Private Healthcare Expenditure
                                                                                                         Source: Federal Ministry of Health

There were some developments in the Enugu                                        State University of Science and Technology
state which include the completion of the State                                  Teaching Hospital. The Teaching Hospital of
Medical Diagnostic Centre, the reconstruction of                                 Borno State School of Health Sciences and some
the Infectious Disease Hospital (formerly known                                  projects at the University of Maiduguri Teaching
as Colliery Hospital), a specialist Hospital for the                             Hospital were also completed.

                                                                                                    2021 Nigeria Real Estate Market Outlook 43
Source: National Budget and Statistics Ofces, Northcourt

Student Housing                                    usually leased for ₦350,000pa on average are

With the discovery of a new COVID strain in        closing at ₦300,000. The              Tertiary Education
Nigeria (and South Africa), there are more         Trust Fund approved ₦12Bn to 12 institutions of
unknowns related to managing the pandemic          higher learning to aid growth, infrastructure
and its impact on the gathering of large groups.   development and fund research.
This also extends to purpose-built student
accommodation (PBSA). But the trends               Proptech
supporting further investments are strong.
Nigerians are known for prioritising education.    It has become clear that the current IT
and as the global economy continues its            infrastructure was not built to handle the nature
transition digitisation, tertiary education is     of demand that a dispersed workforce will
increasingly important for employability in the    generate, the impacts of rapidly increasing data
modern economy. Private sector-led provider,       consumption from the property and facility
Greenage Student Housing is developing a 248       management industry, data streaming and the
room development at the University of Abuja.       use of multiple platforms created specifically to
The project aims to utilise resource-efficient     manage the online communications ecosystem.
design to reduce water and energy use.             Zoom reports that employees held 20 times
Landlords are also offering concessions. Single    more meetings and content providers saw an
room apartments in the Akoka area of Lagos         uptick in demand.

                                                                           2021 Nigeria Real Estate Market Outlook 44
Source: Atlas Group

Private Equity and Venture Capital                   largest share of funding in 2019 with Nigeria
                                                     raising $ 747M in total, a growth of 144% on the
South Africa ($112M), Nigeria ($74M), Kenya
                                                     previous year. This was followed by Kenya
($62M), and Egypt ($51M) received the most
                                                     ($564M) South Africa ($205M) and Egypt
funding in Q1. They also collectively received the
                                                     ($211)

                                                                                          Source: Partech

While January and February sprang few                South Africa's Jumo ($55M). Healthtech startups
surprises, March saw an 80% drop in funding, as      saw some of the largest funding rounds as
the COVID-19 pandemic raised more than the           54gene and Helium Health raised $15M and
familiar round of questions. The quarter saw         $10M respectively.
Nigeria's Flutterwave raise $35M, second only to

                                                                        2021 Nigeria Real Estate Market Outlook 45
Total private infrastructure investment, by equity and debt (2010-2019)

                                                                                        Source: IJ Global & GIH

Banks will be impacted based on their business         raised funding from Ingressive Capital. The
model, property investment portfolio, risk             startup raised $20,000 from LABS by ARM
appetite and profitability levels. It seems likely     accelerator and $10M from Ingressive Capital.
that, very similar to the capital market crisis back   Transport startup, Plentywaka announced the
into 2007/2008, it will take some time for banks       launch of WakaCab, a car-hailing service that will
to return to normalcy. GTB is restructuring to         operate in Delta State raised $300,000 from
support its foray into fintech. Nigerian startup       EMFATO, Microtraction, and Niche Capital.
Kwaba which enables monthly rentals recently

                                                                           2021 Nigeria Real Estate Market Outlook 46
2021 Outlook

The country's foreign reserves have been under     Saudi Arabia. The external reserves moved from
pressure due to dwindling oil earnings and         $32 to 38Bn over the past 11 months. The supply
reduced capital inflows from risk averse foreign   of the vaccine and restructuring the creation and
investors. The decline in oil prices was largely   delivery of economic value is expected to revive
driven by weakened demand, the global              the economy starting Q2. Trade is also expected
pandemic and oil price war between Russia and      to grow.

                                                                              Source: National Budget Ofces

Underpinning many market movements has             Occupiers, faced with reductions in revenues
been the realisation that landlord and tenant      that will extend into 2021 have reduced space

                     “
interests are more closely aligned than ever.      demand and reached out to landlords for
                                                   concessions. The best landlords have tried to be
                                                   sympathetic. This has led to increased
     2020; a year that has forced
                                                   transparency on both sides, one of the good
  forward the conversations around
                                                   things to come out of 2020; a year that has
   market flexibility, collaboration,              forced forward the conversations around market
     disruptive technologies and
                     “                             flexibility, collaboration, disruptive technologies
         regulator efficiency                      and regulator efficiency.

                                                                       2021 Nigeria Real Estate Market Outlook 48
Adjustment in the investor market has led to a        2021 heralded predatory capitalism and
revision of mid and long-term strategies,             governments may be tempted to attract
transactional activity, development objectives        investments to finance the recovery from the
and refinancing requirements. There are also          crisis without observing the necessary due
conversations around managing the emerging            diligence, some of which may result in the
cycle of lockdowns and releases and their effect      acquisition of land to the detriment of the
on property values. Each of these revised             underserved.
considerations, together with the time horizon
for the global deployment of vaccines and             Residential
treatments, will inform forward-looking
investment strategies and return expectations.        A major shift is required in the approach to the
The outlook for Grade A retail remains                affordability question and the number of
uninspiring, save swift changes to operational        housing units delivered by all development
models reflective of reduced footfall. Logistics is   actors across Nigeria. Harnessing non-
on the ascendancy. There are some concerns            government funds; say cooperatives and
around the future demand and use of office            diaspora collectives may be the way to go.
space.                                                Accommodation units are produced yearly,
                                                      some of which are vacant due to a lack of
Lower returns on treasuries and travel                effective demand. The central authorities may be
restrictions that reduced holiday travel              more impactful by easing the process of titling
contributed to the increase in funds available for    land, removing development constraints and
investment in land. Some analysts argue that

                                                                         2021 Nigeria Real Estate Market Outlook 49
Developments expected to play a larger role in real estate investment decisions
     as a result of COVID-19

              (% of respondents)

              0               10               20                30   40          50          60             70       80

              Emphasis on secondary and tertiary cities

              Emphasis on rental properties

              Revival of more affordable locales

              Non-traditional residential developments

              Declining popularity of traditional ofce blocks

              More opportunities in co-work spaces

              Other

              Lodging and infrastructure of digital nomads                                         Fund Managers     Investors

                                                                                       Source: SEI (2020) The Future of Real Estate Investing

It may take time for change to spread. There are                           due to the demand for 1 and 2 beds. Short stay is
structural constraints that have overstayed their                          projected to expand, taking some market share
welcome. Strategic asset management will be                                from big brand hotels and luxury apartments.
central to positive yields in 2021. Technology                             Retail is expected to be most active at the
and disruptive service delivery models will be key.                        neighbourhood levels as Grade A service
The structural changes accelerated by COVID-19                             providers tweak their models. Healthcare is
are likely to continue. The office market will lose                        unlikely to slow down but will continue to
some ground to residential, which is growing                               require patient capital.

                                                                                                             Source: Global Construction 2025

                                                                                                      2021 Nigeria Real Estate Market Outlook 50
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