Lagos, Nigeria is set to become one of the world’s next great cities. No longer a place associated with economic distress, Lagos is the seventh fastest growing urban area in the world and the heart of Sub-Saharan Africa’s rapidly expanding economy. Naturally, the changing nature of the city has led to the development of a substantial real estate market.
We’ve compiled a brief report on the market in Lagos, Nigeria that will tell you what you need to know:
1. Positive Economic Trends?
Sometimes called “Africa’s Big Apple,” Lagos overlooks the Gulf of Guinea in the southeastern corner of Nigeria. Within the city of 21 million, business, industry, and arts are thriving, which has played a large part in Nigeria displacing South Africa as Africa’s largest economy.
Trendy areas of Lagos, like Victoria Island, Ikoyi, and Ikeja, are home to an increasing number of well-regarded restaurants, hotels, and nightlife establishments. “Nollywood,” the name given to Nigeria’s burgeoning film industry, is also centred in the city, and serves as one of many draws for the estimated 640,000 people moving to Lagos every year.
Nigeria’s rapidly expanding economy has led to dramatic changes in the country over the last twenty years, and growing pains can still be felt. Lagos is now home to sizeable wealthy and middle classes, but many of the city’s residents still live on less than USD $4 a day. Scams abound in Lagos, and streets are often still congested as residents struggle to move around large areas of their growing city.
However, like much of the continent it is located in, Lagos has the hope for a very bright future. Two new power plants are expected to take care of the city’s current power problems, and new roads, transit systems, and commercial properties are being developed at a rapid pace. Smart economic decisions made by Lagos’ governors and industry leaders has ensured that within a few short years, their city may just be worthy of it’s “Big Apple” moniker.
2. Luxury and Commercial Properties are Big Business
In Lagos’ most expensive areas of Victoria Island and Ikoyi, luxury apartments are put on the market for prices which can exceed USD $1 million, and they are selling fast. Many international businesses are opening offices in the city, which has led to an influx of expats. They, along with Nigeria’s own wealthy and middle classes, have led to high demand for property in Lagos’ safer, business-centric areas.
The demand for new commercial and residential property in Lagos has caused the city’s real estate market to rapidly gain value, topping nearly USD $17 billion in 2014. Growth in the market is expected to continue at an estimated rate of 10% annually through 2015. Luxury and commercial properties are also expected to become more and more valuable assets as Lagos continues to modernize.
3. Oil, a Love and Hate Story
There is no denying Nigeria’s economy has strong ties to the nation’s oil industry. It is the main generator of GDP in the country, and has led to massive amounts of state revenue since the turn of the millennium. But, since the country relies on oil for nearly 95% of its export earnings, the fate of the national economy is intimately tied to oil prices.
Lagos owes a lot to oil for the growth of its commercial sector, but the recent fall in oil prices has led many to nervously watch the city’s new fate play out. Luckily, Lagos was prepared.
Real estate values, along with the value of other markets in Lagos, have not been shaken as hard by falling oil prices as some predicted. Some credit for this can be given to Lagos State’s Development Plan, which the World Bank has said could potentially promote development.
One of the Development Plan’s goals is to provide decent housing for all residents by 2025. This fact, along with the billions of dollars worth of diverse investments that are still flowing to Lagos from overseas, should help to ensure a stable, developing housing market for years to come.
Should I Invest?
Despite its great promise, Lagos still has some maturing to do before it can be seen as a surefire destination for international real estate investment. The political and financial systems are still prone to corruption, and the housing market, being primarily luxury property based, has a high entry cost.
Smart investors, however, would be wise to keep their eyes on what has the potential to be one of the most dynamic real estate markets in the world within twenty years’ time.
Carson Pfahl, a graduate of political science from UBC, is a Vancouver-based curator and freelance writer who contributes frequently to RESAAS Blog.
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by Carson Pfahl