Article summary
- The Estate Intel 2023 Lagos Pipeline Report will be released on March 6, 2023, and analyzes the performance of the retail, hospitality, residential, healthcare, and office sectors in Lagos.
- The retail sector has the largest development pipeline, but 58% of the projects remain on hold due to difficulty in securing land, poor performance, and low purchasing power.
- Market activity is focused on plazas and hypermarket facilities, while Grade A malls are likely to see increased capital market activity, with a negative outlook for the retail sector overall.
The Estate Intel 2023 Lagos Pipeline Report is scheduled for release on March 6, 2023. In it, we analyzed the performance of the retail, hospitality , residential, healthcare, and office sectors. Here’s what’s in store for the Lagos office sector in 2023.
The retail sector recorded the largest development pipeline, accounting for 60% of the total stock. Despite this, approximately 58% of the projects remain on hold, with only 30% of the pipeline under active construction. This has mainly been attributed to the difficulty in securing large expanses of land for retail developments, the poor performance of retail investments over the past few years, and the region’s relatively low purchasing power.
In addition, currency devaluation, a shallow tenant pool, rising construction costs, and diminishing disposable incomes remain among the many headwinds facing the Nigerian retail sector, especially in A & B-grade shopping centers, resulting in major exits by international retailers who also feature as anchor tenants for these malls.
As such, market activity is currently focused on plazas and hypermarket types of facilities, with these segments accounting for the majority of the stock under active construction due to the growing base of local retail players.
Consequently, Grade A malls are likely to contribute to increased capital market activity in the market, with major institutional investors seeking exits from their portfolios.
Therefore, the outlook for the retail sector is negative, with bright spots remaining at the lower end of the market.
Author – Bisi Adedun
