Real Estate Recorded Marked Improvement In H1

During the first half of 2018, the Nigerian economy had significant improvements and the real estate sector also experienced this growth. Northcourt, a real estate investment solutions company, said that their findings have led to the conclusion that the different subsectors of real estate sector which includes, residential, retail, office, hospitality and industrial subsectors had a stabilisation of rents, revival of some abandoned projects and the starting of new ones, which is a direct opposite to H 1 2017.

Their report equally included that these growth is visible in the prices of various building materials that reduced or remained constant when compared with the massive fluctuations that was experienced in the price of the building materials last year and that a contributory to this situation is the fact that foreign exchange rates have remained reasonably stable for about 12 months now and is easily accessible.
The research further showed that , the residential market showed better price stability and levels of activity when compared to H 1 2017, despite the fact that it is quite high and there are vacancies in the high to mid income locations.

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It made it clear that in the same manner that land prices and other construction costs increased, developers continued to remain competitive by maximizing land use, reducing plot sizes, car parks and built – up areas all in an effort to supplement the decline in profitability which was a result of weakened prices since 2016/17.

According to the report, this method adopted by developers brought about all round growth in design and finishing features as seen in recent developments , but more work is needed to have a better quality of materials and workmanship could also be made better if looked into.

The office sector in Lagos, Abuja and Port Harcourt experienced a bit of struggle in the review period as the report showed that rents either stayed or refused to remain competitive. On the other hand, the security risks and environmental hazards in Port Harcourt sent office rents to the lowest it is has ever been in over five years. It noted that Grade -A office vacancies explicitly remained high. From the look of things, the economy needs to become stronger so as to make things much better and not having to wait for popular brands to open up such shops for themselves.

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For a while now the trend has been that retail has remained in a fight with the reducing middle class and the falling purchasing power of consumers .
Nevertheless, with the way that the exchange rate has remained stable , planning around operational costs and profit projections is more attainable for the retailers. The Local investors, that have the desire to make further investments , quietly opened the Next Mall in Port Harcourt and The Atlantic in Lagos.

The report also included that Vacancy rates are dwindling greatly across the Grade- A malls. The Palms and Ikeja City Mall have the record of the lowest vacancies at 0 and 2%, respectively . Novare had 28%, although previously 47% at the end of 2017. Artee’s Port Harcourt Mall , Big Treat and Genesis Centre had 8%, 15% and 25%, respectively .Ceddi Plaza and Gateway Mall in Abuja had 21% and 38%, respectively. Abuja ’s largest mall – Jabi Lake ( 20 ,000 sqm ) recorded the highest vacancy rate in city which is 40% which was as a result of some stores that closed down in Q 1 and high rentals.
The report has it that, the upside of the sector is that although some international investors are of the opinion that business conditions are not entirely conducive and are seeking retail interests in Eastern Europe and Eastern Africa , local investors are now making proper use of that and moving into the retail space to make large- scale investments.

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The Director of the Real Estate Research and Advisory, Northcourt Real Estate, Ayo Ibaru, made it clear that participants in the real estate market commenced the year with set out plans to make the most of the economy’s proposed recovery , after having to deal with enduring underperforming assets during the five – quarter long recession .

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