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Thursday, August 11

Firm rates Lagos as most expensive African City in 2016

Firm rates Lagos as most expensive African City in 2016
3D image of The Wings Towers on Ozumba Mbadwe, Victoria Island, Lagos.



Projects increase in malls development
 
Irrespective of drop in rents and increasing number of vacant houses, Lagos has been rated as the most expensive city in 2016 in the entire African continent.
In the latest report published by a real estate firm, Savills, the firm noted that “Lagos has seen both a downward movement in office rent at -20 per cent and the effect of currency devaluation by the government -30 per cent. The amplification effect here significantly improves the city’s affordability for dollar-denominated companies.” This affirms that the impact of economic meltdown engendered by foreign exchange scarcity and drop in global oil revenue has also affected the real estate sector.


The report further submitted that despite remaining one of the most expensive cities in the world, decline in Lagos rents implies that the city now “looks 27 per cent more affordable for international occupiers.”
Yolande Barnes, director, Savills World Research, said: “Office-based businesses operating in major cities will spend one-third of their total operating costs on accommodation through a combination of commercial rents, paid directly to landlords, and demands on salaries created by the cost of employees’ living accommodation. Fluctuations in these costs will therefore have a significant bearing on how competitive a city is to employers.”
The Savills “live-work index”, which measures the yearly per person cost of renting and occupying home and office per employee and their household) in 12 world cities, also noted that London, which has maintained the position of the most expensive city in the world for the past two and the half years, was overtaken by the city of New York. This is believed to be an effect of the referendum that saw the United Kingdom (UK) vote to leave the European Union. Since the referendum, prices of properties in the UK have been on the downward slope with little signs of recovery.

In a similar development, the seeming retail revolution in some countries in Africa, particularly Nigeria, has not gone unnoticed. Going by a report from Sagaci Research, a market intelligence firm dedicated to African markets, by 2018, 223 new shopping centres are expected to be opened on the African continent.
A breakdown of this shows that Nigeria only trails Egypt in the pecking order of mall development. While the country is predicted to have an additional 25 malls built by the period in study, the North African country of Egypt will have 40; Kenya is 20; 15 in Ghana, 14 in Angola and 13 in Morocco. By 2018, the firm predicts that the total surface area of malls would reach 10 million square metres.

The latest “Shop Africa 2016” report ranked Nairobi, Kenya’s capital, as the leading shopping mall developer in sub-Saharan Africa. Knight Frank, a real estate consultancy firm, however rated Nigeria third, while Angola was second, followed by Tanzania and Mozambique. Nigeria has over 100,000 square meters of leasable area in modern format shopping centers and will be adding another 180,000 square meters of retail space this year, Nairobi alone has a mall space of 391,000 square metres.

Yet, another research firm, Real Estate Information Centre, powered by Pison Housing Company, in its report, listed Africa’s top five cities as Luanda in Angola, which is second, Lagos, has the third largest mall pipeline, and then Dar es Salaam in Tanzania and finally Maputo in Mozambique completing the top five hotspots for mall space development in sub-Saharan Africa. The report said that these five cities were large, fast growing in economies, seen rapid expansion and being targeted by investors in Africa. Currently, Lagos and Abuja have about 10 commercial and office complexes, totaling over N100 billion, that are due for completion this year. Ongoing projects scheduled for delivery in 2016 are Madina Tower, The Wings Tower, Eden Heights, Alliance Place, Heritage Place, all in Lagos, while in Abuja it is the World Trade Centre.

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