Lagos real estate resilient amid volatility

The Lagos real estate market has proven to be resilient in the face of looming global recession, ongoing currency challenges, and the fuel crisis, according to a recent report by Estate Intel. Despite these macroeconomic headwinds, bright spots have emerged across the majority of the sectors within the real estate market in Lagos. Dapo Runsewe, a Senior Analyst at Estate Intel, joined CNBC Africa to discuss the key highlights from the report. One of the key sectors driving activity in the Lagos real estate market is the residential sector. With a housing deficit of around 2.3 million units, mostly in the middle to lower income segments, there is a significant opportunity for development in this sector. Runsewe highlighted a partnership between a developer and the government to build 3,000 units of low to middle-income housing, emphasizing the need for more collaboration between the public and private sectors to bridge the housing gap. However, he also noted that rising construction costs, inflation, currency challenges, and decreasing incomes have posed supply side issues in meeting the demand for housing. The office segment, especially Grade A office space, is experiencing soft demand, creating a renters market. While occupancy rates in Grade A and B office buildings range from 71% to 78%, the A-plus segment currently has an occupancy rate of around 54% due to recent completion of new developments. Runsewe pointed out that relocations have been driving the office market, with companies like Meta, Amazon, and Flutter Wave securing significant office spaces in Lagos. Looking ahead, the hospitality sector has been performing well, with new developments in the pipeline expected to increase the number of rooms in the city. The report also highlighted challenges in the retail sector, with up to 60% of pipeline stock on hold and developers focusing on smaller, neighborhood-friendly malls to accommodate reducing retailer interest. The resilience of the Lagos real estate market amidst economic challenges underscores the potential for growth and development in the sector. As stakeholders navigate the current landscape, collaboration between the public and private sectors will be key to addressing supply side issues and meeting the demand for housing and commercial space in Lagos. The future outlook for the real estate market in Lagos appears promising, with opportunities for innovation and growth across various sectors.