Monthly Newsletter - Issue 3, March 2017
Welcome to the Landmark Africa monthly bulletin. The challenges in the Nigerian real estate industry have persisted, not helped by the continued slowdown in the GDP growth rate. Despite the challenges, the Nigerian real estate market continues to show potential and remains an important sector in the Nigerian economy.
Investors looking to invest in the real estate sector need to have a long-term horizon, looking beyond the current economic headwinds at the future opportunities. The opportunities in the real estate industry are supported by positive fundamentals, such as the demographic dividend that will help underpin future growth in sector. However, the real estate sector continues to be held back by bottlenecks in the sector such as the regulatory environment, which is often cumbersome and slows down basic activities such as the purchase of land and issuing of land title deeds as well as the approval process for planning permits.
Access to debt financing and funds to scale up building development projects has also slowed down the pace of growth in the real estate industry. These are some of the factors that explain Nigeria’s poor performance in the World Bank’s Ease of Doing Business index, which ranked Nigeria at 169 out of 190 countries in 2017. This further points to the need for improvements in the Nigerian business environment. The government is now making a more concerted effort to implement changes in the Nigerian economy, putting in place a turnaround plan that will make doing business in Nigeria easier for domestic and international investors. Some of these measure which are being implemented in the real estate industry include e-Planning Permits being introduced by the Lagos State government.
The government’s turnaround plan, which is based on an initial 60-day timeline, focuses on putting in place micro changes to attract investors and ease the business environment. These include the issuing of visas on arrival for business people as well as decongesting the Lagos International airport. New technology will also be used to bring further efficiencies to the market, such as easing the way financial transactions are carried out. By making it easier for investors to do business in Nigeria, facilitating the process for making financial transactions and reducing some of the bottlenecks in the regulatory environment, uncertainty and skepticism in the Nigerian economy will be reduced.
As part of its 1000 Companies to Inspire series, the London Stock Exchange has just launched its inaugural edition of Companies to Inspire Africa 2017. The report was put together in collaboration with Africa Development Bank, CDC Group and PWC. It recognises the importance of high growth dynamic SMEs on the African continent that are the driving force behind economic growth, job creation and innovation.
Landmark Africa is proud to have been nominated by PwC to be included on the list of 1000 high-growth businesses in Africa.
“Companies to Inspire Africa showcases some outstanding stories of innovation, bravery and growth across the continent. It brings Africa’s entrepreneurial spirit to an international audience…” - The RT Hon Priti Patel MP, Secretary of State, Department for International Development
Nigeria’s recession is holding back Africa’s start-up ecosystem
The current recession in Nigeria is having a devastating effect not only on Nigerians and businesses of all kinds operating within the market, but also the whole of Africa’s tech startup ecosystem.
Specialised banks needed to fund mortgages
Specialised banks to finance the construction of houses and offer affordable long-term mortgages to the public are urgently needed to bridge the country’s growing housing deficit, the Managing Director of UT Properties, Mr Kojo Kwakye Owusu, has said.
Survey cost: Real Estate Developers threaten law suit against Surveyors
Real Estate Developers Association of Nigeria, REDAN, has threatened legal action over surveyors’ proposed increment in the cost of preparing survey plans for land across the country. This followed surveyors’ decision to increase the cost of survey plans by about 300%.
The re-pricing of Africa’s economies
The downturn suffered by many African economies following the drop in global commodity prices in 2014 has resulted in a repricing of their economies – with currencies falling against a resurgent US dollar and asset markets, too, tumbling. There is a positive side to this. It could well position them to attract more foreign direct investment (FDI) over the medium term as investors seek cheap assets.
Nigeria’s real estate sector to record 5.39 per cent growth
Notwithstanding the negative growth recorded in 2016, the real estate sector is expected to grow at an average rate of 5.39 per cent between 2017-2020.
UBA Chairman pledges support for Ghana’s real sector
The Chairman of United Bank for Africa (UBA), Tony Elumelu, has assured President Nana Addo Dankwa Akufo-Addo, of his bank’s support for the growth and development of the critical sectors of Ghana’s economy, as government seeks to return the nation back onto the path of progress and prosperity.
Dangote refinery, free trade zone lift Lagos real estate
On-going public and private sector synergy leading to the development of Dangote Refinery Project and Lagos Free Trade Zone (FTZ) have been received by the real estate community last week with mixed feelings, with the leadership of the Nigerian Institution of Estate Surveyors and Valuers (NIESV) decrying the non-involvement of members in the investment opportunities along the Ibeju-Lekki axis.
Abuja sees 600,000 housing gap as luxury real estate rises
The lull in activities in the housing industry following the economic recession is apparently blowing over, with fresh facts from researchers that there is a huge demand for affordable housing opportunities in Federal Capital Territory (FCT), Abuja with an estimated gap of almost 600,000 in housing units.
South African real estate investors ask: howzit in CEE ?
Central and Eastern Europe’s property markets have been at one time or another over the past 25 years a magnet for investors from North America, Western Europe, Russia and China. Now it seems to be the turn of the South Africans.
Real estate developers slow down projects, cite August poll
Developers have slowed down projects in the real estate sector as they await the outcome of the August 8 polls, property consultancy Knight Frank has said. Building plans worth Sh314.2 billion for commercial and residential property were approved by the Nairobi county last year, data collated by the Kenya National Bureau of Statistics shows.
Nigeria ranked 169th on the World Bank’s Ease of Doing Business index, a marginal improvement from 170th position in the preceeding year. The paying of taxes, registering property and dealing with construction permits, key enablers in the real estate industry are areas where much improvement is required to improve Nigeria’s performance in the Ease of Doing Business ranking.
A notable area where Nigeria performed relatively better in the Ease of Doing Business ranking is the ease of getting credit and protecting minority investors. The Nigerian government has pledged to bring the ranking down to 100 in the next 4 years.
Ease of doing business in Nigeria, 2016 - 2017
Source: World Bank Doing Business 2017 report
INSIGHTS FROM THE REAL ESTATE DESK
THE HOTEL INDUSTRY
The hotel industry has been one of the fastest growing sectors in Nigeria. Over the last 5 years, Lagos has continued to attract international hotel brands, as well as indigenous investors. However, Lagos has not yet reached its full potential.
The growth in the hotel industry has led to fragmentation in the sector as the needs of different customer segments are being better met. Customers are increasingly demanding better quality and more personalised hotel experiences. New entrants into the market such as The Landmark Hotel, Maison Fahrenheit and The George in Victoria Island have tapped into this demand with their premium and boutique properties, offering a more customised experience. The Landmark Village in Oniru where the Landmark Hotel is located also offers a unique beachfront location and is a prime destination for discerning customers seeking a complete experience that includes entertainment, hotel accommodation as well as a good choice of high quality restaurants.
"Our aim is to create a fantastic lifestyle destination for the Lagos population" – Deborah Nicol-Omeruah, Chief Operating Officer, Landmark Africa
Click on the link to watch the full A Place in Africa show on the hospitality industry, broadcast on CNBC Africa.
UPCOMING EVENTS SCHEDULE
East Africa Property Investment Summit
Date: 5 – 6 April 2017
Venue: Radisson Blu, Nairobi
For more information: http://www.eapisummit.com/
Date: 23 – 24 May
Venue: Landmark Event Centre, Lagos
For more information: http://10times.com/city-invest
Housing for Africa Conference and Expo
Date: 23 May 2017
Venue: Gallagher Convention Centre, Johannesburg
For more information: http://10times.com/housing-for-africa
Africa Construction Summit 2017
Date: 30 - 31 May 2017
Venue: (TBC) Munich Germany
For more information: http://africaconstructionsummit.com
GRI Africa Summit 2017
Date: 30 – 31 May 2017
For more information: http://www.griclub.org/event/world/gri-africa-summit-2017_187.html
The Economist Nigeria Summit 2017
Date: 22 June 2017
Venue: Jumeirah Carlton Tower, Knightsbridge, London
For more information: http://www.economist.com/events-conferences/emea/nigeria-summit-2017
Date: 29 – 31 August 2017
For more information: http://www.rics.org/ng/training-events/conferences-seminars/cobra-2017/london/
West Africa Property Investment Summit
Date: November 2017
For more information: (TBC)