2019 Performance of the Nigeria Real Estate Market Northcourt

Wednesday 8th January, 2020 2019 Performance of the Nigeria Real Estate Market Ayo Ibaru, COO / Director – Advisory | Northcourt Real Estate Introduction “To understand the living present, and the promise of the future, it is necessary to remember the past.” - Rachel Carson “Study the past, if you would divine the future.” - Confucius Contents The Economy in 2019 / 4 Real Estate Markets / 10 In Summary / 21 The Economy in 2019 The Economy in 2019 200M <$63/b 11.85% National Population Oil Price Gradual growth in inflation $39Bn 2.28% ₦9.18Trn Government Reserves Q3 2019 GDP Growth Foreign Trade Q3 2019 The Economy2 Saudi Aramco lists at $1.7Trn Nigeria signed the African Continental External Debt increased to $83.88Bn in OPEC seeks to cuts production by Free Trade Agreement (AfCFTA) Q3 2019 from $81.27Bn Q1 2019 500,000 in January 2020. Border closure divides the country Presidency seeks to borrow $29.96Bn CBN reduces bank charges With BREXIT, there is the risk that the U.K The ongoing Dangote Petroleum AfDB, Nigerian Sovereign would become less interested in Nigeria’s Refinery project is creating an $11Bn Investment Authority and IFC to security and economic challenges. market for Nigerian crude - annually invest ₦135Bn in Industrial parks The Economy3 JUMIA, MTN & Airtel listing raises MTN Nigeria seeks to raise ₦100Bn BPE to list privatised state-owned $200M, $6Bn and $4.5Bn respectively through Commercial Paper. enterprises to stimulate profitability e.g. Nigerian Reinsurance Corp. Nestle, United Capital and Newrest Nigerian Breweries raises ₦15Bn Interswitch reached $1Bn valuation ASL provide the highest dividend per on the commercial paper market after Visa took a 20% stake for share of June 2019 $200M Real Estate Summary The residential market is showing signs of Coliving is a growing trend in city centres Technology is playing a major stabilisation. Studios, 1 and 2 Bed flats are still in role in the real estate industry Affordable housing still remains an demand. due to efficiency benefits. opportunity. 2018/19 Rental Growth Value (%) 50 40 37 31 30 21 20 17 12 8 8 7 10 4 5 -0.83 0 Lekki Phase 1 Victoria Island Agungi Ikoyi Magodo Ikeja GRA-2 1004 Abraham Sangotedo -10 -5 -4 -5 -9 Adesanya -20 -22 -30 -26 -40 Rental Growth 4-Bed House - 2019 Rental Growth 4-Bed House - 2018 Rental Growth 3-Bed Flat - 2019 Rental Growth 3-Bed Flat - 2018 Source: Northcourt Real Estate Markets Residential Lagos, Abuja and Port Harcourt Trend – Average Vacancy Rates 33% Lagos Abuja Port Harcourt 28% 22% Lagos 19% 16% 15% 14% 14% Abuja 14% 13% 14% 12% PH 11% 10% 11% 10% 11% 10% 10% 9% 9% FY 2016 H1 2017 FY 2017 H1 2018 FY 2018 H1 2019 FY 2019 Source: Northcourt Residential2 Lagos Island: Average Rent per anum (₦'M) 4.05 3.51 3.51 2.97 2.7 2.7 2.43 2.43 Direct Construction Limited and Family Homes Fund continues the Lagos State Development work to provide 500,000 low 1.512 1.51 Property Corporation (LSDPC) income homes by 2023 0.9 1 start construction of 48-unit residential project in Ogudu GRA Under the National Housing Programme, 767 housing units Agungi Ikoyi Lekki Phase 1 Oniru Park View Victoria in Kano, 580 in Nasarawa Estate Island among others have been 1 Bed 2 Bed completed Lagos Island: Average Sale prices (₦'M) 162 167.4 Federal Housing Authority made a Transaction values remain above 51.3 48.6 45.9 43.2 48.6 46.44 ₦27Bn, 1,650-unit housing project the average income earner’s 35.1 19 25 investment in Abuja financial ability 16.2 NMRC set to issue ₦11Bn 15-year Playing for the long term remains Agungi Ikoyi Lekki Phase 1 Oniru Park View Victoria Estate Island bonds and double its ₦40Bn asset the way to profit from Nigeria’s pool real estate market. 1 Bed 2 Bed Source: Northcourt Residential3 Select Nodes - Vacancy Rate Trend (%) Lagos Lekki 65% 54% Ikeja GRA 33% 46% 47% 37% Oniru 40% 30% 41% 34% 39% 26% 27% 26% 35% 35% Victoria Island 25% 27% 25% 13% 24% 21% 16% 18% 13% 22% 23% 16% Old Ikoyi 12% 14% 20% 10% 7% 5% 4% 5% 15% 10% 10% 11% 3% 10% 3% Magodo Phase II 5% 4% 6% 3% 9% 5% 4% 5% 4% 4% 2% 4% Surulere 1% Yaba FY 2016 H1 2017 FY 2017 H1 2018 FY 2018 H1 2019 FY 2019 Abuja Maitama 59% Apo Jabi 33% 37% 21% 29% 25% 29% 28% 12% 30% Lugbe 24% 10% 25% 13% 21% 21% 11% 13% 14% 7% 8% 5% 10% 15% Wuse 2 13% 10% 4% 4% 13% 11% 11% 10% 13% 10% 3% 6% 8% 8% 4% 4% 3% 3% 4% 4% 3% 3% 5% 5% 5% Gwarinpa 2% Katampe FY 2016 H1 2017 FY 2017 H1 2018 FY 2018 H1 2019 FY 2019 Port Harcourt Old GRA 20% 20% GRA 3 17% 17% 18% 16% 15% 13% 14% 15% 15% 15% 14% 14% 14% 15% Rumuogba 13% 11% 13% 11% 11% 11%12% 12% 11% 11% 11% 10% 10% 10% 10% 10% 10% 10% 10% GRA 1 9% 9% 9% 9% 9% 9% 9% 9% 8% 6% 7% 6% 6% 7% 6% 6% Elenlewo GRA 2 Peter Odili FY 2016 H1 2017 FY 2017 H1 2018 FY 2018 H1 2019 FY 2019 Residential4 Select Nodes - Average Land Prices psm (₦’000) Lagos Island 700 Lagos Mainland 180 500 135 100 90 250 70 180 50 55 50 50 120 120 150 40 40 70 80 30 65 30 Agungi Banana Chevron Crown Ikate Ikoyi Lekki Nicon Oniru VGC Victoria Apapa Festac Gbagada Ikeja GRA Ilupeju Magodo Ogba Ogud u Okupe Sh onibar e Su ruler e Yaba Island Estate Phase 1 Town Island Town GRA Estate Estate Port Harcourt 95 83.5 86 90 65 64 57.5 45 34 24 25 21 26 Abuloma Elenlewo Eliozu GRA Phase 1 GRA Phase 2 GRA Phase 3 New GRA Old GRA Peter Odili Rukpokwu Rumuomasi Trans Amadi Woji Abuja 260 245 119 70 47 30 44 18 15 12 Apo Gwarimpa Jabi Katampe Lugbe Maitama Utako Wuse Wuse 2 Wuye Source: Northcourt Office Grade A office vacancy rates remain Landlords have continued with most of the Conversions to office use are the order of high, averaging 55% incentives initiated during the recession the day in Ikeja GRA and Magodo Phase II Client emphasis on the presence of with some success green features in their buildings Grade A rents are priced between $550/m2 and $850/m2 The REITs market today is estimated $69.2M. Location, security and access Recently completed 12,000sqm infrastructure remain essential for Cornerstone Insurance building sells to an There is a growing insistence for clients selecting office space undisclosed buyer green/sustainability features especially from internationals Office2 Office Development Pipeline Office Vacancy Rates (Select) Name Floors Size (m2) Location Delivery Date NIPOST Towers 30% World Trade Center 22 26,000 Abuja CBD Not Specified Nest Oil Towers 55% Africa Tower 26 Not Specified Wawa District Not Specified FIRS Head Office 17 81,000 Abuja CBD OnGoinG Sapetro Towers 0% Corporate Towers II 34 Not Specified Eko Atlantic OnGoinG Mansard Place 2% DanGote Head Office 18 Not Specified 2021 FaMfa Oil Tower 20 55,000 OnGoinG BAT Rising Sun 10% KinGsway Towers 15 12,000 OnGoinG Ikoyi Heritage Place 60% NDIC Head Office 12 Not Specified OnGoinG Ogun House 5 1,000 On Hold Landmark Towers 5% SoGenal Tower 14 11,560 OnGoinG KPMG Towers 0% DiMension BuildinG 6 Not Specified LekKi OnGoinG Atlantic Resort 16 15,588 Oniru OnGoinG Standard Chartered 20% Tower BlooMsbury 6 10,000 On Hold Civic Center 0% Continental Re BuildinG 7 1,300 OnGoinG Victoria Island Jenkin's Place 8 1,350 On Hold The Wings Towers 45% NuMber One 5 8,000 OnGoinG The WaVes 13 44,000 On Hold Alliance Place 60% Source: Northcourt Retail2 Nigeria: A-Grade Retail Stock (sqm) 148,141 155,241 86,961 35,461 Nigeria’s retail was Larger malls have gradually 2006 2010 2014 2019 temporarily affected by recovered. Xenophobic attacks. Source: Northcourt 37 year old retailer - FoodCo National Retail Sales ($'Bn) Nigeria is one of the opens first store in Lagos 116 world’s fastest growing 105 market for private jets. 24 24 10 14 Ghana Senegal Nigeria Tanzania Egypt Tunisia Source: AT Kearney Abuja: Average Rent Prices (₦'000) Play areas and cinemas Lagos state is responsible for 56 are now a regular over 80% if the trade in the 45 36 36 38 feature in developments country 32 35 35 32.5 30 30 28.5 28.5 Filmhouse opens in The state also has a fast- Circle mall & Twin developing market for Waters in Lagos healthcare, wellness and Gaduwa Garki 2 Central Wuye Apo Ma ita ma Utako Asokoro Jabi Lokogoma Wuse 1 Gwarinpa Wuse 2 luxury goods. Area Source: Northcourt Retail3 Development Pipeline (m2) Mall Vacancy Rates (%) Adeniran Ogunsanya Mall - Lagos 5% Apapa Mall - Lagos 12% Name Location Size (m2) Delivery Date Cirlcle Mall - Lagos 21% E-Centre - Lagos 8% Festival Mall - Lagos 0% Benin Mall Benin City, Edo 13,300 Not Specified Ikeja City Mall - Lagos 2% Lagoon Shopping Centre - Lagos 42% Leisure Mall - Lagos 6% Capital Mall CBD, Abuja 21,500 Not Specified Lennox Mall - Lagos 5% Maryland - Lagos 5% Novare Mall - Lagos 17% Oasis Mall Ikeja, Lagos 6,000 Not Specified Palms - Lagos 6% Silverbird Galleria - Lagos 6% The Atlantic Mall - Lagos 70% Royal Gardens Twin Waters - Lagos 5% Lekki, Lagos 30,000 Not Specified Mall Apo 2 Mall - Abuja 26% Ceddi Plaza - Abuja 16% Triangular Not Jabi Lake Mall - Abuja 13% Lekki, Lagos Not Specified Business Mall Specified Novare Central - Abuja 36% Novare Gateway - Abuja 45% Victoria Mall Victoria Island, Silverbird - Abuja 18% 5,788 Not Specified Plaza Lagos Big Treat - Port Harcourt 11% Genesis Centre - Port Harcourt 11% Market Square - Port Harcourt 9% Westfield Mall Lekki, Lagos 2,787 Not Specified Next Cash and carry - Port Harcourt 38% Port Harcourt Mall - Port Harcourt 11% Source: Northcourt Hospitality Hotel Development Pipeline (Rooms) 4,311 South Africa 1293 4,279 Tunisia 1541 Hospitality is projected to grow Hotels command a 75% occupancy by 5.5% YoY rate on average in Lagos.

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