Nigeria’s informal market structure might be changing with the urge for modern organised markets such as world class shopping centres, retail malls rapidly growing among the nation’s expanding middle class, however, the lack of top grade retail space for both indigenous and international retailers to meet this rising demand remains a major source of concern.
Evidently, this shortfall has been attracting more retail investors into the country, as they aim to provide grade A retail space across major city centres.
In what appears to be a mismatch, Lagos currently has only two world class shopping malls; Ikeja City Mall and the Palms for its 17 million population, a situation analysts say it is abnormal.
The new shopping culture which is further fuelled by a rapid urbanization, changing shopping culture has also forced local retailers rethink their business strategy as they strive to compete with foreign retailers such as South African owned Shoprite, Spar in what analysts has describe as an imminent retail revolution.
“The visible supply-demand imbalance in Nigeria’s retail space is attracting a growing interest from both local and foreign investors, Chu’di Ejekam, director for real estate at private equity firm, Actis, had earlier told BusinessDay.
According to him, Africa’s real estate market holds tremendous potential for investors and the news is gradually beginning to get out so am sensing that most investors wouldn’t want to enter the market when it is already late.
The need to provide befitting retail space has also informed a second property fund by the Novare Equity Partners for Sub Saharan Africa which the firm says will be worth about $500 million.
According to a top official of the firm, about $200 million of the fund will be used for the development of top grade retail and office space in choice destinations in Nigeria, while others include; Ghana, Angola and Mauritius.
BusinessDay also gathered that the high returns on retail space in the country has spiked investors interest in recent time despite the peculiar challenges associated
Jan van Zyl, Head of Property Development at Novare Equity Partners, had in earlier report termed that the difficulties with the power supply as problematic and ambiguity in the rules and regulations in Nigeria as ‘cumbersome’, however, Van Zyl remains optimistic that the opportunity offered by the sector offsets these challenges.
“The factors that make Nigeria worth this sort of trouble include the size of its huge economy that is expanding by around 7 percent a year, its fast-growing middle class and a continuous inflow of foreign exchange from oil and gas exports,” Van Zyl added.
ODINAKA MBONU
