The Lagos State Government has commenced the re-channelisation and re-alignment of the Banana Island shoreline, with the dredging and re-opening of the illegally reclaimed portion of the Creek at 101 Close, First Avenue on the Island.

This was disclosed by the Commissioner for Waterfront Infrastructure Development, Arc. Kabiru Ahmed Abdullahi, on Wednesday.

While inspecting the reopening of the creek, Abdullah explained that there was an urgent need to nip the land extension work in the bud.

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According to him, the extension has narrowed the creek and brought about distortion in the aesthetics of the shoreline as well as a high possibility of environmental degradation.

The Commissioner stated that perpetrators of the illegal reclamation into the Lagoon violate the Physical Planning laws of the State, adding that they had been served with ‘Stop Work’ orders but persisted in the reclamation and construction.

He said, “State Government will not fold its arms and watch the degradation of its environment and attendant risk to life and property of the citizenry.

“The demolition, as well as dredging and channelisation works on the illegally reclaimed lands, will continue at Banana Island and other shoreline areas of Lagos in order to restore sanity.”

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The Lagos State Government today began the re-channelisation and re-alignment of Banana Island shoreline with the dredging and reopening of the illegally reclaimed portion of the Creek at 101 Close, First Avenue, Banana Island.@jidesanwoolu @drobafemihamzat @gbenga_omo#LASG pic.twitter.com/cG92uUH7pN

— The Lagos State Govt (@followlasg) February 10, 2021

What you should know

• The State Government commenced the demolition of buildings that contravened the building laws and regulations in Banana Island on Monday.
• At 102 Close, K Zone, a section of the lagoon has been reclaimed with just the provision of narrow drainage for water to flow. As a result, the concrete and perimeter fence erected facing the lagoon were pulled down, while the building was sealed and the gate locked.
• At 306 Close, a two-storey building under construction was pulled down for not getting an approval to build, as the development encroached on the state shoreline.
• It would also be recalled that the Lagos State Government had sealed off 22 buildings in the Banana Island and Ikoyi axis of the state over lack of building permits and conformity issues.

The Nigerian economy slipped into recession in Q3 2020 as the impact of Covid-19 took its toll on several sectors including the real estate, which has been in a recession since the 3rd quarter of 2019, ballooning to 21.99% in the second quarter of 2020 before retreating to 13.4% in the third quarter.

However, reports across Lagos indicate real estate developers continued to build during the pandemic months of 2020 fuelled by increased demands in residential housing units.

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Nairametrics research understands millions of dollars in diaspora inflows are being channelled into the sector. In the search for higher yields, Nigerians living abroad are taking out equity from their mortgages and then funnelling some of the proceeds into the country’s real estate market.

The spate of housing construction in several locations in Lagos is bringing hope of an imminent recovery in the sector in 2021. The development has enabled industry stakeholders to be optimistic that despite the second wave of the pandemic, the sector will yield returns to investors in 2021 for various reasons. Hence, they shared hotspot locations with Nairametrics across the nation’s commercial capital.

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In separate interviews, they explained that discerning investors should buy real estates around Lekki axis, Banana Island, Ikoyi, Surulere, Ikeja GRA, Magodo, Gbagada areas of Lagos and border towns like Arepo, Magboro, Sango-Ota in Ogun State, amongst others.

Adedotun Bamigbola, Chairman, Nigerian Institution of Estate Surveyors and Valuers (NIESV), Lagos chapter, told Nairametrics that though where to buy real estate largely depends on the status and purpose of the investors, some zones will yield more returns to the investors in 2021.

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According to him, Lagos State is divided into 7 zones – Island 1 (Lagos Island, Old Ikoyi, S/West Ikoyi, Banana Island, Victoria Island); Island 2 (Lekki Phase 1, Ikate, Osapa, Agungi & Chevron); Island 3 (Ajah, Sangotedo, Awoyaya & Lakowe); Island 4 (Ogba, Ogudu, Magodo GRA 1 (Isheri) & Magodo GRA 2 (Shangisha); Mainland 1 (Surulere, Yaba, Ilupeju & Gbagada); Mainland 2 (Amuwo Odofin, Isolo, Festac, Apapa); and Mainland 3 (Ikeja GRA, Maryland, Ikeja & Alausa).

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Mr Bamigbola said,

“Island 1 zone recorded the highest land prices, which is expected to be repeated in 2021, followed by Mainland 3. This is a reflection of the deepened level of commercialization in these 2 zones.

“The growing development in nascent Island 2 areas is also reflected in its high price of land averaging N112,021/sq.

“Per house types, Island 1 zone has the highest values (rental & sale) for both 3-bedroom and 4-bedroom houses. The same also goes for office space rental values.”

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He said a great number of people are moving towards Lekki axis due to the prospects they see in the area. Some of the prospects are based on believes that “Island is the commercial capital of the state,” with attractions like the Deep-Sea port, Dangote refinery, and the proposed Airport, amongst others.

Mr Bamigbola added,

“Chevron showed the highest yield of 6.87% on investment and is expected to do more in 2021, next was Agungi (6.31%), while Osapa came in third with 6.06%.

“The lowest yield was seen in Ogudu – 3.10%, next being Magodo (Shangisha) – 3.19% and third being Magodo (Isheri) – 3.20%.

“The median yield in Lagos state from this consensus analysis is 4.32% and it is obtainable in Yaba.”

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Another member of NIESV, Lola Afolabi, agreed with Bamigbola, as she projected that land and house prices in Lekki Ikate, Chevron axis, Sangotedo and Lakowe are likely to keep increasing as the area welcomes more developments like Lagos Free Trade Zone, 4th Mainland Bridge and new city – Alaro City, which are all expected to come on stream in a few years. upon completion, will further trigger the rise in property values in the zones.

She said,

“The high rental costs of Grade A office buildings located in Banana Island, Ikoyi and Victoria Island have contributed to this.

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“The presence of supporting infrastructure has contributed to the capital value increase in Mainland, especially in Ogudu and Magodo Shangisha areas, but this has not met corresponding rental valuation resulting in lower yields.

“Ikeja GRA and its surrounding areas like Maryland, Mende, Shonibare estate remains the most expensive locations on the mainland part of Lagos state.

“This is expected to continue as more residential and commercial development come up in these neighbourhoods, particularly Ikeja GRA, in few years’ time.”

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Debo Adejana, another realtor, advised that this is the time to invest in real estate with the number of growth poles in the Ibeju Lekki axis of Lagos. He said,

“There are an estimated 50,000 new jobs over the next decade. Investing in real estate now is the right investment move anybody can undertake, especially along the Ibeju Lekki axis.”

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What you should know

Despite the optimism expressed by the realtors, a number of them argued that the office market segment of the sector may suffer certain setbacks due to the pandemic.

According to Martin Uche, a Real Estate Analyst, the remote work policies by some corporate bodies, especially the multinational firms, will affect the Lagos A-Grade office market – not now, but during the next round of renewals.

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According to him, the international corporates in the financial, technology, and management consulting sectors, who account for up to 70% of prime office tenants in Lagos, are increasingly adopting remote work options, and this will impact the Lagos A-Grade office market during the next round of renewals.

He said,

“Though many offices are starting to open up, the enforcement of varying levels of lockdown as a result of the coronavirus, forced corporates to temporarily close their offices in the first half of the year or introduce new work policies to sustain business operations during the period.”

In response, most companies allowed staff to work remotely during the lockdown period. Though it was a means of keeping businesses running in the heat of the pandemic, it is clear that many international corporates will not be returning to the status quo.

Instead, they are considering a number of options centred around downsizing the space they currently occupy, as many have realized that they can operate without the entire team in the same brick and mortar space.