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Real Estate Investment Opportunities in Nigeria
Nigeria is sited in West Africa, South of the Sahara Desert. It is located just above the equator bordering the Gulf of Guinea. The country's importance to the West African sub-region cannot be over emphasized as it accounts for 45% of the regions GDP.

The country runs a democracy styled after the American system, with a President, Vice President, Senate, House of Representatives State Assemblies, Governors of States etc.

Indeed in 2007 another election was held and a new president sworn in.

The climate is tropical, with 2 main seasons, rainy / wet season - April - October and the dry season November - March.

The Nigerian economy is driven primarily by the presence of crude oil which is our main export and this accounts for nearly 90% of the country's foreign exchange earnings - $40bn in 2005. Efforts are being made to diversify the economy by the present government.

The population is put at over 100 million people and a census that was completed in March 2007 confirms this.

Of this population (2001 estimates) the age strata is broken down as follows 0-14, 3.71%, 15 - 64, 53.47%, 65 years and above - 2.82%.

As a result of the dynamic oil driven and deregulated economy, the huge population and what these numbers represent in terms of a market for goods and services, virtually all the major commercial organizations are present or represented in Nigeria in one way or the other. - Shell, Mobil, Chevron, Total, Samsung, Peugeot, LG, Hyundai, Halliburton, Hilton, Sheraton.

In fact the telecommunications and petroleum industries account for about 50% of the number expatriates coming into Nigeria.

With the foregoing,, it goes without saying that Nigeria is a major investment destination currently with real estate investments being one of the stops. The huge population of over 100 million must be housed.

There are within Nigeria many real estate investment, destinations, Calabar, Cross Rivers States, Kano, Kano State, Enugu, Enugu State etc, but the 3 primary locations which I will focus on are Lagos, Port Harcourt and to a lesser extent Abuja.

These will be examined in terms of their residential and commercial possibilities, whilst tourism and recreational real estate will be discussed generally as regards the entire country.

LAGOS

The former capital of Nigeria until April 1990, Lagos lies at the southern tip of Nigeria with boundaries to the Atlantic Ocean.

It is purely a commercial city hosting all the head offices of all major organizations, sea ports and air ports of the country.

Population is estimated at over 10 million.

Of this number,s statistics show that less than 20% are properly housed by United Nation standards. The neighbourhoods with the primest and highest land values are known as Ikoyi, Victoria Island and it serves as the choice residential and commercial area of embassies and diplomats, the expatriate community and top executives of all the major company's in Nigeria.

Land values here start from $750 per square metre for the purchase of bare land. It could be higher where there are existing developments on the site.

Rental values here range from $40,000 - over $100,000 for a 2/3/4 bedroom flat / condominium. This rent is expected to be paid 2 - 5 years in advance before occupation of the flat is commenced. Recently a new trend has emerged where sale of these apartments are denominated in US Dollars and sales prices start from $400k to over $1.50m. Examples include the Admiralty Towers flats and Ocean Parade flats both in Ikoyi. Most of these developments are sold at design stage in view of the shortage of and high demand for accommodation.

There are other neighbourhoods also on the Island, Victoria Garden City, Atlantic Beach Estate, Goshen Estate. These are gated estates with detached and semi detached houses which retail at between $250,000 to $400,000. Annual rents are in the range of $25,000 to $50,000.

These estates properties rarely suffer any sustained periods of void; an indication of huge pent up demand.

Outside the Island, real estate investment opportunities equally yield high rental and capital dividends in view of the demand.

PORT HARCOURT

Port Harcourt is known as the oil city of Nigeria comparable to what Texas represents in the United States.

Like Lagos, it houses the offices of some of the worlds biggest oil companies as well as the oil servicing companies that keep them running.

With a huge expatriate population, rents range from $25k to over $50k for 3/4 bedroom flats in a neighbourhood known as the G.R.A (Government Reserved Area).

Many of the companies house their staff within estates and like what obtains in Lagos these are popular in Port Harcourt.

Market surveys once more have shown that there is indeed a huge gap in the supply of decent accommodation, which is the reason why the few that meet the standards of the discerning prospect command huge rental / capital values, leaving the investor with excellent returns.

COMMERCIAL REAL ESTATE

It is interesting to note that the first real shopping mall opened in Nigeria (Lagos) less than 12 months ago. Known as the PALMS it is an initiative of a Nigerian real estate developer with partnership from South Africa. Permit me to say that Nigerians are used to shopping complexes - buildings sometimes purpose built and more times converted to accommodate 10 - 30 shops in number. The PALMS is the first real European / North American style complex in the country.

Rents at the PALMS started from $370 per square metre to $470 per square metre recently paid by Standard Chartered Bank of London. It is on record that rent for this outlet remains the highest the Bank has paid anywhere in the world!!

Clearly, with a population of 10 million, a daily turnover of close to 5000 visitors daily to 200,000 visitors at weekends and public holidays, and rents at such high figures, several more malls in the mode of the PALMS will turn out to be a worthwhile investment.

In terms of office space, the most popular destinations remain the Island and Ikoyi. An address in that location connotes a certain degree of class, seriousness and respectability.

The few purpose built commercial office blocks are in high demand with rents starting from $200 per square metre going to as high as of recent, $1000 per square metre per annum.

In view of the high demand, for commercial space on the Island, private residencies are regularly converted to offices with the attendant pressure on facilities and services.

Annual rents payable could be anything from $80,000 to $200,000 depending on the size and accommodation provided in the property.

Of course these rents are paid 2 - 5 years in advance.

It is right to say that less than 30% of commercial organizations are properly accommodated and many will gladly relocate to functional purpose built complexes.

Many of the State Governments and regulatory authorities are making efforts to reverse this trend whereby residential houses are converted to offices.

Whether they are successful or not, there still remains a huge market in many Nigerian cities for purpose built office blocks.

TOURISM / RECREATIONAL REAL ESTATE

One of the areas of real estate that has not been explored is in the area of tourism and recreation. Tourism, once neglected has taken the front burner in the policy books of the Federal and State government and as well as private organizations.

From a figure of 1,350,000 in 1998 tourist arrivals in Nigeria increased by 50% to 2.045 million in 2002, to over 3.603 million in 2005.

Though major hotels brands in Nigeria are gradually bracing up to meet the increased demand however, rooms of international standards are still in very short supply.

Major international hotel brands are already present in Nigeria - Hilton, Sheraton, Sofitel, Protea (South Africa), but statistics available indicate that there are still less than 5000 hotel rooms of international standards nationwide.

As is projected, the tourism figures will continue to rise. Clearly, there exists a huge gap and potential for developments in this industry.

Add to this, the lovely tropical climate of Nigeria and the close to 880 kilometers of undeveloped shoreline, with its potential for hotel development.

In terms of recreational real estate, Nigeria has numerous golf courses, but only few golf courses that are to international standards, - Abuja, Ikoyi to mention the top 2. Total membership of all the Golf Clubs nationwide is still under 10,000.

Clearly, with a potential membership population of 2,000,000 golfers, this market begs for investment. The Ikoyi Golf Club in fact appears in the Guinness Book of Records as one of the busiest golf courses in the world. Tee times must be booked several days ahead.

Finally it is necessary to point out that the nation has no theme park in the mode of Disneyland., Alton Towers in the UK, Sea World Florida etc. With its huge population, Nigeria would be a profitable destination for any investor in this regard.

To facilitate investment in real estate the government has eased the acquisition of and transfer of land. All land is vested in the Federal and State Governments by virtue of the Land Use Act of 1979. Whilst these has its own problems, it nevertheless ensures that land is available for developmental projects particularly now that there is a mad rush to catch up with the developed world.

Permit me to conclude that with all due humility the Nigeria economy offers one of the highest rates of return for investments - real estate being one in particular.

The nation gladly welcomes genuine investors and there are a number of government agencies to guide potential investors through the investment maze.

Chudi Ubosi leads a carefully selected team of surveyors and support staff in Ubosi Eleh & Co, a leading firm of Estate Surveyors & Valuers with branches in major cities of Nigeria. For more than eighteen (18) years, Ubosi Eleh & Co. has become firmly established in the market place as a leading provider of professional real estate services to Prospective Purchasers.

Services we offer to meet your specific needs include valuations, estate agency, project and property management, investment advice. Others are feasibility and viability studies, as well as building and financial services.