Nigeria's office & retail property market steady in H1'22

Nigeria's office and retail property market have shown resilience and steady growth in the first half of 2022, according to reports by Broll Property Services. The formal retail property market has maintained high occupancy rates, with most malls operating at over 90% capacity. In the office market, there has been positive growth in take-up rates, asking rentals, and occupancy levels. Babafenwa Omoniyi, the Head of Markets at Broll, discussed the current state of the market in a recent interview on CNBC Africa. Omoniyi highlighted the challenges facing investors in the real estate sector, including a high inflation environment, higher interest rates, slow GDP growth, and FX volatility. Despite these headwinds, investors are cautiously optimistic and are looking to capitalize on opportunities in the market. Omoniyi emphasized the importance of seeking expert advice to navigate the challenges and make the most of the current market conditions. He noted that operating costs for properties have spiked significantly, putting pressure on both landlords and tenants. However, he expressed confidence in the market's ability to adapt and overcome these challenges. The upcoming election in Nigeria is also expected to have an impact on the real estate market, with different asset classes responding differently. The retail sector is directly affected by consumer purchasing power, while the office sector is influenced by factors such as remote work arrangements and travel restrictions. The industrial sector is also facing challenges related to supply chain disruptions and cash flow. Despite these varying impacts, Omoniyi stated that the entire real estate sector is feeling the effects of the current economic environment. Turning to the office market specifically, Omoniyi highlighted the positive leasing trends observed in the first half of 2022. There has been a 105% growth in take-up rates compared to the previous year, with sectors like oil and gas, technology, healthcare, pharmaceuticals, legal, logistics, and consulting driving the demand. Omoniyi expressed optimism about the outlook for the rest of the year, citing a strong transaction pipeline that is expected to lead to more significant announcements in the final quarter of 2022.