“Real Estate Is Impacted By The Economic Crisis” Report Says

According to a report by Ubosi Eleh & Co., the real estate sector has been negatively impacted by the state of the nation’s economy in 2024.

The report, titled “The Nigeria Real Estate Report 2024”, noted, “Although Lagos is the economic nerve centre of Nigeria, the current state of the nation’s economy has affected office real estate adversely.

“A significant number of enterprises have shut down entirely, while some are barely surviving thanks to workforce reductions and smaller office spaces. A factual visit to Victoria Island, when Lagos’s main business sector opens, provides a vivid image. The economy is the main reason for the slow rate of vacancy in the commercial office space market.”

The article claims that a lot of businesses implemented the work-from-home model after the COVID-19 outbreak, which turned out to be an affordable fix.

“Many companies maintained the work-from-home policy after the Covid-19 pandemic and its introduction by evaluating its cost-benefit and applying the concept to lower their space requirements and, ultimately, long-term operating expenses.

The majority of Mainland Lagos’ commercial real estate had a respectable year in 2023, with rental values rising by 25–30% over the previous year’s values. An even greater increase of 30-35 percent was documented by Ikeja GRA.

The information stated, among other places, that N60,000 per square meter of commercial space will be available in Ikeja CBD Alausa, N80,000 per square meter in Ikeja GRA, N40,000 per square meter in Computer Village, N30,000 per square meter in Ikorodu, and between N40,000 and 60,000 per square meter on the Ikorodu Expressway in 2023.

It was observed that land values in Ikoyi experienced a 50% increase, rising from N600,000 to N900,000 per square meter.

The report went on, “In Banana Island, it climbed by 15.38%, from N1.3 million to N1.50 million per square meter. The price of a four-detached home in Parkview climbed by sixty percent, from over N300 million in 2022 to approximately N500 million in 2023.

“Surulere does not have typical open plan office spaces but fixed spaces in apartments that attracted N1.60m N1.80m per annum on the average in 2023. Most of the Grade A Office Buildings are located on Lagos Island, notably Victoria Island, Ikoyl, and Lekki Phase. They are doing pretty well because of the excellent environment they offer for business.

“They are often fully or nearly occupied. Seven such prominent buildings in Lagos are Victoria Mall Plaza 2, Civic Center Tower, Eko Tower 1, Pier Point all in Victoria Island and Rising Sun in Ikoyi during the period of study recorded 100 per cent optimal occupancy rates while Heritage Place and Temple Tower located in Ikoyi recorded 94 per cent and 93 per cent, respectively.”

On Lagos Island, office letting rates witnessed a minimal increase in rental values between 2022 and 2023, the report disclosed.

“While office space on Admiralty Way/Road, Lekki, let in 2022 for between N60,000 – N80,000 per square metre in 2022, it increased to between N80,000-N100,000 per square metre in 2023. However, it stagnated in the other parts of Lekki between 2022 and 2023 at the rate of N50,000-N60,000 per square metre.

“In Ikoyi, rental values are lower on Awolowo Road but high in Old Ikoyi where it rose from between N200,000-N400,000 per square metre in 2022 to between N400,000 and N700,000 per square metre in 2023,” it stated.

According to the Ubosi Eleh & Co. report, rent in Victoria Island, which was between N80,000-N100,000 per square metre in 2022, rose to between N200,000 and N400,000 per square metre in 2023.

It added that rental values remained the same in Banana Island for both periods at the rate of N500,000-N700,000 per square metre.

“Grade ‘A’ office buildings will continue to do well in 2024 because of the niche they have created in this property genre. They control ready demand also influenced by their elite locations. Aside from this, we do not envisage a remarkable change in commercial real estate values in Lagos whether land or rental in 2024. The astronomical cost of construction would also ensure the supply curve remains largely the same,” it declared.