The Impact of Nigeria’s Economy on Real Estate in 2024
Lagos Office Real Estate Takes a Hit
The report “The Nigeria Real Estate Report 2024” by Ubosi Eleh & Co. highlights how the country’s economic condition has negatively impacted the real estate sector, particularly in Lagos. The economic downturn has forced many businesses to close or reduce operations, leading to lower demand for office space.
Work-From-Home Trends Persist Post-Pandemic
The COVID-19 pandemic saw many companies adopt remote working, which has continued due to its cost benefits. This shift has reduced the need for commercial office space, further affecting the real estate market.
Mainland Lagos Sees Rental Increases
Despite challenges, commercial real estate in Mainland Lagos performed well in 2023, with rental values rising by 25-30%. Ikeja GRA experienced even higher increases, with rents growing by 30-35%.
- Ikeja CBD Alausa: N60,000 per square metre
- Ikeja GRA: N80,000 per square metre
- Computer Village: N40,000 per square metre
- Ikorodu: N30,000 per square metre
- Ikorodu Expressway: N40,000 – N60,000 per square metre
Significant Land Value Increases in Prime Areas
Land values soared in Ikoyi, jumping from N600,000 to N900,000 per square metre, a 50% increase. Banana Island saw a 15.38% rise, with prices going from N1.3 million to N1.5 million per square metre. Prices for a 4-detached house in Parkview rose from N300 million in 2022 to N500 million in 2023, marking a 60% increase.
Office Space Dynamics in Lagos Island
Grade A office buildings on Lagos Island, including Victoria Island, Ikoyi, and Lekki Phase, maintained high occupancy rates due to their prime locations. Prominent buildings like Victoria Mall Plaza 2, Civic Center Tower, and Eko Tower 1 achieved 100% occupancy.
Minimal Rental Increases and Stability
Office letting rates on Lagos Island saw minimal increases between 2022 and 2023:
- Admiralty Way/Road, Lekki: N80,000 – N100,000 per square metre in 2023, up from N60,000 – N80,000 in 2022.
- Old Ikoyi: N400,000 – N700,000 per square metre in 2023, up from N200,000 – N400,000 in 2022.
- Victoria Island: N200,000 – N400,000 per square metre in 2023, up from N80,000 – N100,000 in 2022.
- Banana Island: N500,000 – N700,000 per square metre remained constant.
Outlook for 2024
The report predicts that Grade A office buildings will continue to thrive due to their established demand and prime locations. However, no significant changes in commercial real estate values are expected in Lagos for 2024. High construction costs will likely keep the supply curve steady.
