Land price in Eko Atlantic City, the expansive new city being developed on land reclaimed from the Atlantic Ocean adjacent to Victoria Island in Lagos, has gone up 16 percent to $1,690/ N612,000 per square metre, up from $1,250 per square metre 12 months ago.
At this price, Eko Atlantic land is about 60 percent premium over the average price range of Ikoyi N366,000 / $1,007 per square metre, Banana Island,N397,000 / $1,093 per square metre and Victoria Island, N388,000 / $1,068 per square metre, and about 157 percent premium to Lekki Phase 1 land which currently goes for N238,000 / $656 per square metre.
“The new land price in the city is as a result of the re-pricing of the official USD rate from N160/$ to the investor and exporters foreign exchange rate of N360/US$1”, according to a first quarter 2018 real estate market report by MCO Real Estate. The city has also seen substantial infrastructure and development such as the Eko Boulevard and electricity on the business district roads.
Construction work continues within the City with the Azuri Peninsula mixed-use residential development located in the Marina district beginning to take shape and other residential and office developments also gradually moving from planning to construction stage.
The significant increase in land price at the city when other highbrow locations are still struggling with falling and stable prices, in some cases, means the city is a compelling investment destination for investors who have the patience and long term view of the market.
As a brand new city Eko Atlantic remains prime real estate investors’ toast. South Energyx Nigeria Limited, developers of the city, has created 10 million square metres of prime real-estate on which office and residential developments are breaking ground. The Business District alone will have approximately 650,000 square metres of gross lettable area (GLA) to offer the market.
Thomas Mundy, director, Research and Strategy Sub-Saharan Africa (SSA) at Jones Lang LaSale (JLL), says the significant overhang of office space in the Lagos market is a mere perception, stressing that “while this reasoning may be true in the short term, it remains mere perception.”
Upon completion, Eko Atlantic will be home to 500,000 residents with an expected commuter volume of approximately 300,000 people. What this means to a savvy investor is that there are limitless opportunities to tap from as diverse businesses will be berthing in the city and will be creating jobs and attracting ancillary industries that will also create more jobs and offer more services.
Similarly, Lekki Phase 1 core land, particularly leading off Admiralty Way, is now at a premium and no longer readily available for purchase on the open market. “This can only put a premium on price values and demand has already led to an increase in land reclamation at the bottom of Freedom Way, leading to new developments including Orange Island, Periwinkle Island, Imperial City, Gracefield Island and others yet to come”, notes Munachi Okoye, managing director, MCO Real Estate.
Overall, prices in the market have remained stable over the last year, showing an average growth rate of only 3 per cent across the board with Lekki Phase 1 showing the greatest percentage increase of 10 per cent and Ikoyi falling in value by 8 per cent over the same period.
According to the report, the commercial office segment of the market has continued to suffer low occupancies of about 50 per cent through Q1 2018. This was brought about by an overhang of new space coupled with low demand in a weak economy, leading to a paucity of occupiers ready to take up new space.
Rents have stabilised, but demand pressures are neutralised by an overhang of new space still feeding into the market through 2018 and into 2019. New entrants to the market will include Kingsway Tower with gross lettable area of 13,317 square metres, Alliance Place, 6,670 square metres, Madina Tower, 8,300 square metres, and Cornerstone Tower, 12,000 square metres.
There are also others putting an additional 64,000 square metres onto the market which is approximately 12 per cent of existing stock. Class A office rents have fallen by about 20 per cent over the past three years to stand at about US$750 per square metre, down from $1,000 per square metre while Class B rents hover in the region of and US$400 per square metre.
CHUKA UROKO
