HIDDEN TREASURES IN THE NIGERIAN REAL ESTATE SECTOR LBS ALUMNI PRSENTATION. Thursday, October 29, Dr. MKO Balogun 11/4/2015

Transcription

1 HIDDEN TREASURES IN THE NIGERIAN REAL ESTATE SECTOR LBS ALUMNI PRSENTATION Thursday, October 29, 2015 BY Dr. MKO Balogun GLOBAL PROPERTY & FACILITIES INTERNATIONAL LTD 11/4/2015

2 TOPICS INTRODUCTIONS REAL ESTATE INVESMENT OPTIONS TRENDS IN THE INDUSTRY HIDDEN TREASURES Q & A 2

3 INTRODUCTION One of the major economic drivers of Nigeria, which is currently undervalued, is Real Estate. Real Estate (RE). RE can be viewed from the point of various types of investors, developer, corporation Nigeria in recent past has seen tremendous growth in Commercial, Retail & Residential development, the question is Have we derived value from this growth as a nation? or as investors? Are we producing the right mix of RE stock for the market? How are the investment companies and users seeing RE development and value? 3

4 INTRODUCTION In the past, Real Estate value has not been seen as an important part of a business asset. How do you ensure you are investing rightly in RE? How do you ensure your investment is optimized and value is created over the life of the asset? How do you connect your RE decision to the life cycle modeling of the same asset? How does your design, building and management practices on the property affect the value of the asset on the long term? 4

5 INTRODUCTION How do you see sustainability as an investment in RE rather than a cost in RE and How is your building designed to ensure it maximizes the value sustainability brings to your RE investment? Globally today, commercial RE is not viewed from the point of view of space used by corporate but seen as part of the investment required to deliver value to shareholders, How is your space been seen, used and are you maxing value from your space? Lagos is home to two major marinas and another one is been created, how do we transform the old Marinas to major investment and value vehicles 5

6 VARIOUS RE INVESTMENT VEHICLES GLOBAL PROPERTY & FACILITIES INTERNATIONAL LTD 11/4/2015

7 TYPES OF RE INVESTMENT Industry has been estimated to be worth about 6.4trillion by Augusto & Co with an annual growth rate of more than 10% There are various types of Real Estate Investment Commercial Retail Mixed-use Residential (single and multiple) Industrial Hostel Hotel Hospitals REITs 7

8 RETAIL DEVELOPMENT 8

9 COMMERCIAL BUILDING 9

10 MIXED USE DEVELOPMENT 10

11 TYPICAL RESIDENTIAL DEVELOPMENT 11

12 APARTMENTS 12

13 HOSTEL 13

14 HOTEL 14

15 CITY DEVELOPMENT - CENTINARY CITY, ABUJA 15

16 CITY DEVELOPMENT - EKO ATLANTIC CITY 16

17 MIXED USE DEVELOPMENT 17

18 OLD LAGOS MARINA 18

19 KEY INDUSTRY TRENDS GLOBAL PROPERTY & FACILITIES INTERNATIONAL LTD 11/4/2015

20 Key Industry Trends Prime Class A office buildings from $600 - $850 ($1000)/sq. meter and above Retail rental is about $1800/sq. meter Residential is between $65,000 - $120,000 Over supply in the 3 4 bed Apartments or Houses High demand in the 1 2 bed Apartments market Growing expansion of the retail space with more than 7 malls opening across Nigeria in the next 5 months driven largely by the Nigerian demography that will lead to more than 1m square meters of retail space in the next 4 years. Corporate Commercial Development giving way to JV between Developer, Investor and corporate anchor tenants Retail model in Commercial space Continued lack of proper city planning and infrastructure development leading to high cost of development Continued use of traditional building methods leading to high cost of housing delivery 20

21 Key Industry Trends Mortgage refinance and availability of mortgage a major requirement for meeting housing requirement of the majority proposal to allow Pension fund as a deposit for mortgage a welcome development The need for social housing development plan Corporations linking individual employee productivity and business productivity to corporate real estate management Corporations focusing on usage and efficiency of space rather than ownership Corporations focusing on Agile Work Place rather than full employee space Sustainable design and development a major focus in the commercial space with green buildings earning more in terms of rental value than ordinary buildings with an opportunity for more than 7 10% premium over only an 2% cost 21

22 Key Industry Trends Focus also on sustainable city development integrating Sustainable Urban Mobility, alternative energies, public transport, efficient logistics, improving the energy efficiency of buildings and districts, increasing the share of renewable energy sources used and the liveability of our communities; Big family dwellings giving way for apartments Rent-to-Own schemes are gaining traction Design with maintenance in mind Proper facilities management Alternative energy provision to drive down cost of ownership and usage Redevelopment of existing stock of Real Estate in the Bar Beach axis and the Marina axis through JVs 22

23 HIDDEN TREATURE IN ESTATE GLOBAL PROPERTY & FACILITIES INTERNATIONAL LTD 11/4/2015

24 Hidden Value in RE Investment in retail development, however, in the community mall model, rather than the large city mall model, is a major opportunity area and will continue to boom Residential development in the Studio, 1, 2 bed apartments sector has demand in major cities VI Lagos, Abuja, Port Harcourt, Kano, largely driving by need for accommodation for young employees working in these cities China is a classic example of this model same in Accra, Ghana Rent to own homeownership is an opportunity due to the challenge of accessing mortgage finance Corporates to focus on seeing their spaces as an investment rather than a cost Reaping value in developing sustainable buildings focusing on use of green elements to enhance the rental value of the property. Focusing on smart city development concept for major RE developments to reduce cost, enhance usability, integrate all elements together 24

25 Hidden Value in RE Redeveloping existing buildings is a will reduce cost of entering the market and enhance the value of the product on offer Ahmadu Bello way, Marina, broad Street area Developing around major big city projects will provide an alternative and also benefit from the potential opportunities such development bring VI, Abuja Integrated City planning and Development by government will also help drive value in RE going back to the Ilupeju, Ikeja model Modular development and innovative design and development will reduce entering cost, making housing affordable and available. Proper maintenance of buildings from design stage will enhance the value of the property over its useful life 25

26 QUESTION & ANSWER 26

27 Dr. MKO Balogun MD/CEO enhancing real estate & infrastructure value 15th Floor, Western House, 8-10 Broad Street, Lagos, Nigeria. DL: ; Mobile: ;

28 28 THANK YOU

29 Benefits for LBSAA Financial Members Airlines: 10% on British Airways & South African Airways Hotels: Varying discounts at Hotels in Port-Harcourt, Abuja, Lagos, Ghana, South Africa, Gambia, Namibia Restaurants: Varying discounts in Lagos Restaurants Others: Discounts on Swift Internet, Business Day Newspaper, Laterna Bookshop, Clean Ace Drycleaners and many more Discounts on Lagos Business School Programs To qualify, pay your membership dues, either N15,000 (annual) or N150,000 (Life) to Lagos Business School Alumni Association Account No Fidelity Bank Contact Dianabasi Akpainyang for details LAGOS BUSINESS SCHOOL ALUMNI ASSOCIATION (LBSAA)