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Investment appetite in retail space swells on back of growing demand


News » Editorials
Nigeria

IMAGE: Polo Park Mall, Enugu »

03.Apr.2014

 

Story:  ODINAKA MBONU


The huge demand-supply imbalance in Nigeria’s retail sector is believed to be fuelling a new investment interest in retail space from savvy investors who are eager to grow their existing portfolios with more investment in the relatively untapped sector.

Despite its fast-growing economy, rapid urbanisation, and changing shopping culture among the growing middle class, Lagos can only boast of two world-class shopping malls – The Palms and the Ikeja City Mall – which industry watchers describe as inadequate.

Analysts say the immense shortfall in the sector presents a huge opportunity for investors if some of the obstacles, such as the high pricing of land, high cargo dwell time at the ports and poor transportation and distribution system, which is largely road-based, can be eliminated.

“The visible supply-demand imbalance in Nigeria’s retail space is attracting growing interest from both local and foreign investors,” Chu’di Ejekam, director for real estate, Actis, told BusinessDay.

Explaining the reason for the growing investors’ interest in Nigeria, Ejekam explained that the market remained visibly untapped, even as the number of consumers with discretionary income in sub-Saharan Africa had increased with not enough shopping centres to meet their needs.

“Before now, the proportion of people in sub-Saharan Africa who were classified as having discretionary income was about 34 percent of households, but that proportion is shifting and by 2020, 54 percent of the households will be discretionary income households,” he said.

The Nigerian economy, which is the second-largest in Africa, has expanded an average of 8.2 percent annually since 1999. Economic growth has increased per-capita income in Africa’s most populous nation by more than fivefold to $1,725 over the same period.

Hakeem Ogunniran, managing director, UACN Property Development Company (UPDC) plc, had in an earlier report by BusinessDay noted that the growth in the Nigerian retail market was a direct reflection of the growing sophistication of the Nigerian middle class whose shopping preference had shifted from the traditional shopping in the open market to a more organised and convenient shopping experience offered by retail malls.

Ogunniran, however, maintained that the present effort at building shopping malls was just a scratch on the surface of opportunities for investors in that segment of the Nigerian real estate sector.

Meanwhile, the Persianas Group is planning a whopping $200 million investment for the extension of the prestigious The Palms shopping mall in the Lekki area of Lagos.

The move, which will mark the group’s fifth retail centre, having developed The Polo Park shopping mall in Enugu, Kwara shopping mall in Ilorin, Ibadan shopping mall in Oyo, and The Palms shopping mall in Lekki, further exemplifies the huge opportunity in the sector.

The Palms expansion is expected to commence in the second quarter of 2014. It will change the Lekki skyline with its imposing structures, which include a twin office complex, residential apartments, a ferry link to the lagoon, approximately 40,000 square metres of additional retail space and 16,000 square metres of multi-level parking space, and also raise the bar in commercial real estate development in Nigeria.

To be delivered on a large landmass of about 2 million square feet along the Lekki-Epe corridor, adjacent The Palms Lekki, the extension will be the third world-class retail shopping centre in Lagos, adding to the existing The Palms and the Ikeja City Mall.

Article Credit: BusinessDay newspaper

Updated 5 Years ago
 

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Tags:     Investment     Nigeriaís retail sector     economy     The Palms     Ikeja City Mall     UACN Property Development Company (UPDC) plc     Chudi Ejekam     Hakeem Ogunniran

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