Wednesday 8th January, 2020 2019 Performance of the 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 Phase 1 Victoria Island Agungi Magodo 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, and Trend – Average Vacancy Rates

33% 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 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% 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 700 180 500 135 100 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 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 - 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 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. 9,603 Nigeria 6614 Lagos is the most visited city in There is a gradual move to the Sub Saharan Africa according serviced apartments / Air bnb 5,456 Morocco to Mastercard Global Cities model 4828 Index 3,444 Kenya 704 2018 2013

1,412 Ghana 1080

13,636 Egypt 4703

Hotels in Nigeria still take 5- Actis and Westmont Hospitality 1,830 Cote d'Ivoire 7 years to complete unlike Group make $16M investment in 772 Kenya and Ethiopia which 4Points Hotel take <3 years and this is 4,151 Angola likely to continue due to Hilton opens The Legend hotel at 780 lengthy planning & approval MMIA Lagos processes and low capital Source: W Hospitality, Northcourt Industrial

2019 Purchasing Managers’ Index 59.3

58.5 58.2 57.8 57.9 57.7 57.6 57.7 57.4 57.4 57.1 Nigeria’s PMI index expands to Olam International buys Dangote 59.3 points in November from Flour for N130Bn 58.2 YoY Dufil Prima Foods acquired The growing demand for grade A 17,954ha in Edo State to operate April May June July March August January February October warehouses continues an oil palm plantation September November Source: CBN

₦10.8Bn Lexsz Plastics Limited invested $8M in BUA group expands cement Nigeria to set up a factory along the production in Sokoto & Edo states Lagos/Ibadan expressway Amount raised to expand to countries beyond current operating Kaduna State invests $200M in markets of Nigeria, Togo, Ghana and Kenya. Ramindra Tractor assembly plant 2019 In Summary 2019 in Summary

1. Overall, prices have either declined or remained unchanged (e.g. Yaba, Surulere, Gbagada). Some locations however have realised price increases (e.g. Old Ikoyi).

2. Real estate developers and service providers now consistently focus on products and services more in tune with effective demand.

3. Developers are much more flexible on payment plans and have significantly revised their product types and prices to accommodate their target market.

4. There is the informal emergence of the co-living trend as a response of tenants to the insufficient supply of studio and 1-bed apartments.

5. Average vacancies in Grade A offices dropped mildly but may still be described as high. Malls in tier 2 locations have generally struggled.

6. The Lagos State government secured a $629M loan for the completion of the Lekki Free Trade Zone. Thank You

Ayo Ibaru [email protected] +234 818 518 6975 @ayoibaru

@northcourt_re www.northcourtrealestate.com 5B Adewale Kolawole Crescent, Lekki Phase 1 – Lagos 01-291 0707

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