2015–2018 LAGOS RESIDENTIAL REAL ESTATE TREND
Lagos is the economic powerhouse of Nigeria, as of 2018 Lagos accounted for over a third of the whole of Nigeria’s GDP at N136bn, according to the Financial Times. Both local and international companies are attracted to setting up businesses in Lagos state before considering any other state due to the available labor pool and the current infrastructure being way more advanced in comparison to other states.
Although one of the smaller states, Lagos contains roughly 10% of the total population, approximately 20 million people, with a constant stream of ambitious people migrating to Lagos on a daily basis. It is understandable that Lagos is currently going through a chronic shortage of liveable houses. Lagos state Government estimates the shortage to be around 2.5 million units and growing by the day.
This presents many opportunities for real estate investors who buy to let and hold for capital appreciation. However, let us have a look at the recent trends in the residential sector of Lagos real estate from the period of 2015 to 2018.
3 bed apartment/ flat
To keep things simple the common 3 bed apartment/ flat in 8 areas were analysed. Ikoyi, Lekki P1, Victoria Island, Sangotedo, Agungi, Abraham Adesanya, Magodo, Ikeja GRA.
Before we dive in, according to the World Bank, Nigeria’s GDP fell from its peak of $568.5bn in 2014/15 to $375.8bn largely due to a fall in oil prices, resulting in tighter spending from the Federal Government and incomplete projects which was aimed at expanding the economy. Basically Nigerians felt the pinch in their pockets as economic recession ensued. As expected the real estate industry was negatively affected. This analysis should determine which area was hit the hardest, and identify the breakout star ripe for investment.
Source: Northcourt
Certain areas such as Agungi lekki, Victoria Island (VI) and Lekki Phase 1 managed to stay above 0% growth levels, Victoria Island has vastly developed into a commercial centre most particularly for banks and multinational companies HQ, as a result demand for apartments was sustained in that area as organizations seek to house senior employees and foreign consultants close to base. And of course the desire to live in Lekki P1 kept price growth above ground.
Agungi on the other hand, saw the double digit price growth year on year as a result of huge demand for residential developments and land close by to Ikoyi, Victoria Island and Lekki phase 1 and 2. Agungi is the next stop along the lekki-epe expressway. Prices in such areas are also sustained due to the underdeveloped transport network, as a result people want to live close by to their area of work and entertainment. However, prices in Agungi still remain fairly affordable at N30million on average for a 3 bedroom apartment/ flat, compared to VI at N70million.
Areas on the mainland did not do as well, such as Magodo and Ikeja, either experienced consistent negative growth after 2015 or a substantial fall in price growth, for example in 2015 Ikeja declined by 11% and further declined to 25% in 2018, after 2 years of single digit growth. This could have been due to the setback incurred by the Lagos state government to start the needful to bring the 4th mainland bridge to life 2017, however in mid- 2018 talks about the bridge started up again. The 4th mainland bridge will provide an alternative route to the Island, and may result in higher demand for properties and land in the Ikorodu area (if interested further in Ikorodu contact us).
2018 price growth was slow for all areas in the state as Ikoyi, VI and Lekki P1 experienced single digit growth in 2018 lower than in 2017, Agungi experienced its lowest price growth in the period, Sangotedo, Abraham Adesanya, Magodo and Ikeja experienced negative growth. This could have been due to the re-introduction of the Land use charge and the surplus in new builds and properties already on the market competing with each other for the few buyers.
Land
Let us also quickly look at land prices in Lagos, using the same 8 areas. Land the most sought after asset in Lagos, has proven its worth. During the period of 2015–2018 land prices continued to grow for areas such as Lekki, Agungi, Magodo and Ikeja. Sangotedo land price remained stable. Both Ikoyi and VI experienced a fall in Land prices from their peaks of about N435/430,000. This is most likely to be a price correction as land prices fell back down to approx. N300,000 per sqm region.
Source: Northcourt
As expected the economic recession did affect the value of built up real estate and shifted demand to different forms of property types. Land was one of the beneficiaries as during the height of the recession people where still investing in Land and holding onto them whilst they see how the Federal government and CBN navigate the economy out of stormy waters.
Residential data for Lagos state is still opening up and it is relatively hard to determine a clear trend, but what is obvious is price growth have yet to reach the pre-recession level of 2013/14.
Agungi Lekki the investment hotspot
Despite all of this Agungi has proven to be the breakout star of all the regions analysed, and has highlighted its investment potential. Do contact for investment opportunities in Agungi, Lagos State.
Source: google
