HIDDEN TREASURES IN THE

NIGERIAN REAL ESTATE SECTOR

LBS ALUMNI PRSENTATION

Thursday, October 29, 2015
BY
Dr. MKO Balogun

GLOBAL PROPERTY & FACILITIES

INTERNATIONAL LTD

11/4/2015

TOPICS

INTRODUCTIONS
REAL ESTATE INVESMENT OPTIONS
TRENDS IN THE INDUSTRY
HIDDEN TREASURES
Q&A

INTRODUCTION

One of the major economic drivers of Nigeria, which is currently

undervalued, is Real Estate. Real Estate (RE). RE can be viewed
from the point of various types of investors, developer,
corporation
Nigeria in recent past has seen tremendous growth in
Commercial, Retail & Residential development, the question is
Have we derived value from this growth as a nation? or as
investors?
Are we producing the right mix of RE stock for the market?

How are the investment companies and users seeing RE

development and value?
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INTRODUCTION
In the past, Real Estate value has not been seen as an
important part of a business asset.
How do you ensure you are investing rightly in RE?
How do you ensure your investment is optimized and value is
created over the life of the asset?
How do you connect your RE decision to the life cycle
modeling of the same asset?

How does your design, building and management practices

on the property affect the value of the asset on the long
term?

INTRODUCTION
How do you see sustainability as an investment in RE rather
than a cost in RE and
How is your building designed to ensure it maximizes the
value sustainability brings to your RE investment?

Globally today, commercial RE is not viewed from the point of

view of space used by corporate but seen as part of the
investment required to deliver value to shareholders,
How is your space been seen, used and are you maxing value
from your space?
Lagos is home to two major marinas and another one is been
created, how do we transform the old Marinas to major
investment and value vehicles
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VARIOUS RE INVESTMENT
VEHICLES

GLOBAL PROPERTY & FACILITIES

INTERNATIONAL LTD

11/4/2015

TYPES OF RE INVESTMENT

Industry has been estimated to be worth about 6.4trillion by Augusto & Co with an
annual growth rate of more than 10%
There are various types of Real Estate Investment
Commercial
Retail
Mixed-use

Residential (single and multiple)

Industrial
Hostel
Hotel
Hospitals
REITs

RETAIL DEVELOPMENT

COMMERCIAL BUILDING

MIXED USE DEVELOPMENT

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TYPICAL RESIDENTIAL DEVELOPMENT

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APARTMENTS

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HOSTEL

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HOTEL

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CITY DEVELOPMENT - CENTINARY CITY, ABUJA

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CITY DEVELOPMENT - EKO ATLANTIC CITY

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MIXED USE DEVELOPMENT

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OLD LAGOS MARINA

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KEY INDUSTRY TRENDS

GLOBAL PROPERTY & FACILITIES

INTERNATIONAL LTD

11/4/2015

Key Industry Trends

Prime Class A office buildings from $600 - $850 ($1000)/sq. meter and above
Retail rental is about $1800/sq. meter
Residential is between $65,000 - $120,000
Over supply in the 3 4 bed Apartments or Houses
High demand in the 1 2 bed Apartments market
Growing expansion of the retail space with more than 7 malls opening across
Nigeria in the next 5 months driven largely by the Nigerian demography that will
lead to more than 1m square meters of retail space in the next 4 years.
Corporate Commercial Development giving way to JV between Developer,
Investor and corporate anchor tenants Retail model in Commercial space
Continued lack of proper city planning and infrastructure development leading to
high cost of development
Continued use of traditional building methods leading to high cost of housing
delivery
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Key Industry Trends

Mortgage refinance and availability of mortgage a major requirement for meeting

housing requirement of the majority proposal to allow Pension fund as a deposit
for mortgage a welcome development
The need for social housing development plan
Corporations linking individual employee productivity and business productivity to
corporate real estate management
Corporations focusing on usage and efficiency of space rather than ownership
Corporations focusing on Agile Work Place rather than full employee space

Sustainable design and development a major focus in the commercial space with
green buildings earning more in terms of rental value than ordinary buildings with
an opportunity for more than 7 10% premium over only an 2% cost

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Key Industry Trends

Focus also on sustainable city development integrating Sustainable Urban

Mobility, alternative energies, public transport, efficient logistics, improving the
energy efficiency of buildings and districts, increasing the share of renewable
energy sources used and the liveability of our communities;
Big family dwellings giving way for apartments
Rent-to-Own schemes are gaining traction
Design with maintenance in mind
Proper facilities management

Alternative energy provision to drive down cost of ownership and usage

Redevelopment of existing stock of Real Estate in the Bar Beach axis and the
Marina axis through JVs

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HIDDEN TREATURE IN ESTATE

GLOBAL PROPERTY & FACILITIES

INTERNATIONAL LTD

11/4/2015

Hidden Value in RE
Investment in retail development, however, in the community mall model, rather
than the large city mall model, is a major opportunity area and will continue to
boom
Residential development in the Studio, 1, 2 bed apartments sector has demand in
major cities VI Lagos, Abuja, Port Harcourt, Kano, largely driving by need for
accommodation for young employees working in these cities China is a classic
example of this model same in Accra, Ghana
Rent to own homeownership is an opportunity due to the challenge of accessing
mortgage finance
Corporates to focus on seeing their spaces as an investment rather than a cost
Reaping value in developing sustainable buildings focusing on use of green
elements to enhance the rental value of the property.
Focusing on smart city development concept for major RE developments to
reduce cost, enhance usability, integrate all elements together

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Hidden Value in RE
Redeveloping existing buildings is a will reduce cost of entering the market and
enhance the value of the product on offer Ahmadu Bello way, Marina, broad
Street area
Developing around major big city projects will provide an alternative and also
benefit from the potential opportunities such development bring VI, Abuja
Integrated City planning and Development by government will also help drive
value in RE going back to the Ilupeju, Ikeja model
Modular development and innovative design and development will reduce
entering cost, making housing affordable and available.
Proper maintenance of buildings from design stage will enhance the value of the
property over its useful life

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QUESTION & ANSWER

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Dr. MKO Balogun

MD/CEO

enhancing real estate & infrastructure value

15th Floor, Western House, 8-10 Broad Street,

Lagos, Nigeria.
DL: +23416321446; Mobile: +2348058840888; +2348033327649
mko.balogun@globalpfi.com
www.globalpfi.com

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THANK YOU

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