Slow momentum building in West African property markets

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Zandile Makhoba, Head of Research for Sub-Saharan Africa, JLL, confirms various sectors have seen minimal growth this year, with rental rates for both retail and office space hovering around the same levels as last year. Zandile Makhoba, Head of Research for Sub-Saharan Africa, JLL, confirms various sectors have seen minimal growth this year, with rental rates for both retail and office space hovering around the same levels as last year.

JLL’s 2018 City Reports for Accra and Lagos confirm minimal growth across real estate sectors in these West African commercial capitals, with cautious indicators that the impetus is shifting, particularly in Ghana.

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With an increased attention on obstacles and opportunities in the region’s property market, investors around the world are seeking insights into the regional landscape.

Real estate consulting firm JLL has released its 2018 City Reports for Lagos and Accra to offer a concise overview of current developments in the local office, retail, hotel and industrial sectors.

In wavering economic conditions, the analysis offers several interesting points and trends to note regarding local investment markets, vacancies and rental growth.

Commenting on the Nigerian real estate environment, Zandile Makhoba, Head of Research for Sub-Saharan Africa, JLL, confirms that the various sectors have seen minimal growth in 2018, with rental rates for both retail and office space hovering around the same levels as last year. 

On the positive side, the Lagos report outlines that the recent economic recovery and stable exchange rate have motivated the continuation of some of the development projects that were placed on hold last year. “Office stock has increased by about 11,000m2 in 2018 despite the slow improvement in demand for space,” says Makhoba.

Shifting to Ghana, prospects are even more positive in the capital city. “Accra has benefited from a significant pick up in the supply of quality real estate assets, from office to retail, to hotels and industrial,” Makhoba says. The report suggests evidence that the country should benefit from the recovery in global commodity prices through the previous 12 months which should underpin economic growth and stimulate investor confidence.

As demand gravitates to new stock in the office market, it could tip into oversupply. However, sentiment is encouraging with international capital becoming more active in the city.

While retail accommodation is expected to grow by a further 30,000m2 to 40,000m2 in Accra, the prime industrial market in Ghana remains under-developed. As the economy improves and demand increases, there are certainly opportunities for developers. There are also good prospects in the hospitality market with a recent proliferation in the serviced apartment sector. Makhoba also says the number of international brands entering Accra’s hotel market is set to further establish the Gold Coast airport node.

Summing up both city reports, Makhoba says Accra remains a strategic entry point for investors looking for strong demand fundamentals, political stability and a relatively transparent real estate sector. “We anticipate that transactional activity will increase in the next few years, driven by a recovery of the economy, owners looking to recycle capital and more rational development costs.”

The upcoming elections in Lagos may slow down economic activity in the first half of 2019. However, the Nigerian economy is expected to improve in the short term as business and investor confidence picks up, and we can still expect positive momentum through 2019 and into 2010.

Read more on:

Ghana Property Market  |  Nigeria Property Market  |  Zandile Makhoba  |  JLL Africa

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