Where is Lagos's next Lekki Phase 1?

Where is Lagos's next Lekki Phase 1?

Where is Lagos's next Lekki Phase 1?

16th February, 2022

3 minutes, 3 seconds read

The Lagos residential real estate market has seen phenomenal growth over the past few decades. With values increasing across all locations, some neighbourhoods, however, have seen a record-level rise in prices and occupancy rates. For instance, our interaction with long-standing agents shows that a plot of land in Lekki Phase 1 now averages over 300million in sales value, once sold for ₦3m in 2001. Our hunch is that a number of people who knew Lagos a few decades ago would wish they could take back the hand of the clock. A number of us wish property prices in Lekki Phase 1 can go back to when a plot of land, for instance, sold for  ₦10million or less. Or even back to 2008 when we saw a handful of land transactions closing at ₦50million. But this is not possible, and that is why we are constantly thinking “Where is Lagos’ next Lekki Phase 1?” and how can investors position to tap into a similar opportunity again? Picking a page from the Lekki Phase 1 story, we have analysed some of the factors that will drive new city development in Lagos with some insight on how to position for the opportunity ahead. 


Deep dive into the past 2 decades in Lekki Phase 1: what really happened?

Before we dive deep, what really drives the growth we have seen in Lekki Phase 1? Some will argue a number of factors and frankly, several factors drive real estate growth in general. But in the context of Lekki Phase 1, LOCATION and INFRASTRUCTURE did the job, and here is how. Victoria Island and Ikoyi are notably Lagos’ luxury residential and commercial core. Better infrastructure and planning in Victoria Island drove a mass migration of businesses from the then Commercial Business District of Lagos Island to Victoria Island. Since time immemorial, Ikoyi has always been known as the playground of the ultra-wealthy, even though the majority of Ikoyi residents in the ’80s and early ’90s were expatriates and top government officials. 


These two areas are unarguably the most prominent neighbourhoods in Lagos and are both less than 5 minutes drive from Lekki Phase 1. It makes sense that the closeness of Lekki Phase 1 to Lagos’ commercial nerves - Victoria Island and Ikoyi contributes to driving investment interest, while the attention that the Lagos State Government gave in providing infrastructure, opened up the new city. But one thing is clear, property prices in Lekki Phase 1 are now significantly high. With land price averaging over ₦300k/sqm, Lekki Phase 1 has become the 4th most expensive land location in Lagos, after Ikoyi/Banana Island (both averaging over ₦600k/sqm), Victoria Island (₦500k/sqm), and Ikeja GRA (₦400k/sqm). At this rate, it is obvious that the neighbourhood is fast becoming a playground for the ultra-wealthy, and early subscribers who were able to tap into the market are now reaping the reward. 


There is no need to flog a dead horse, and that brings us to the critical question, where is the next big thing? Where can we expect growth similar to Lekki Phase 1? Does this type of opportunity still exist? Are there other growth areas to look out for? We have some ideas and will love to share them further.


Where is Lagos' next Lekki Phase 1 and what will drive the expected surge in property prices?

Over the past two decades, the residential real estate market in Lagos has remained the biggest growth driver for the sector. Land, on the other hand, has sustained its position as a major store of wealth for investors with patient capital. In the next few years, a handful of new cities will emerge, and we expect to see real estate development in Lagos moving further to the outskirts of town. Similar to Lekki Phase 1, this growth will be underpinned primarily by infrastructure allocation.  Here are a few locations and some of the infrastructures that we expect to drive growth over the next decade.

In our next article, we will discuss these locations in greater detail, providing insights on how investors can position themselves to tap into the opportunities in these emerging locations. We would love to hear from you. Please send your comments and feedback to [email protected] and we will be in touch.


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28th April, 2022

3 minutes, 26 seconds read

Five Steps that can help forestall the trend of collapsing of buildings in Nigeria

Since the 12th of September 2014 when a six-story building located in Ikotun Lagos collapsed and 115 people were demised, there has been a record of many more collapses across Nigeria. According to reports, the approved plan for the Ikotun property was a two-story building, but the owners decided to expand it and make the building four stories higher.

In December of 2021, we also witnessed the Ikoyi building collapse which killed 42 people. These occurrences have brought up a lot of questions as to the causative factors. There have been different reports on the reasons for these collapses, some confirmed and others not. However this is viewed, this trend is taking lives, burning money and resources, and quite frankly needs to be curbed.

In this article, we will be sharing Five Steps than can help forestall the collapse of buildings in Nigeria adding to the knowledge out there already.

1.    The Right Human Resources

Experts have blamed incompetent artisans and the feeble oversight of builders as one of the significant reasons for collapsed buildings in Nigeria. Some contractors reduce the expenses of the project and sometimes hire the skills of non–experts who are not authorized to take part in any building projects.

One of the guarantees of quality assurance in the process of building constructions is ensuring the appropriate skill and manpower to deliver through industry best practices and well-tested policies and procedures. Contractors are encouraged to spare no expense in sourcing best-in-class skills and competencies for construction projects.

 

2.    Subscribe to the appropriate Structural Design Process

As we all agree, project planning is one of the most important steps in project management. For construction, the design phase is the part of planning that determines all other aspects of the project. In designing a building, more Important than the aesthetics and fancy spot are the integrity of structural design and the corresponding Bill of material (BoM) and Bill of Quantity (BoQ).

In building construction, project leadership should subscribe to building design standards that help to verify and certify the integrity of the plans. Structural/project workers also ought to guarantee that their plans are investigated and supported by suitable specialists before the building kicks off. This is essential to make sure that every building plan is made with unique design considerations like weather conditions, topography e.t.c.

 

3.    Stick to Quality Building Materials

Specialists have uncovered that one of the significant reasons why some buildings collapse is the failure of adherence to quality building materials, the Standards Organization of Nigeria (SON) also substantiates this. The research pointed at how concrete is mixed and used, most concrete used in the building does have all properties and particles properly bound together.

According to structural experts, there are three concrete types now being used around the world, which are; 32.5mpa, 42.5mpa, and 52.5mpa. The 32.5mpa can only be used for plastering and block making, the 42.5mpa is for multipurpose usage such as block molding, concreting, slabs, and high-rise buildings but it can’t be used for plastering, the 52.5mpa can be used for high density works such as bridges, embankments, dams and retainer walls.

 

4.    Imbibe Sustainable Maintenance Culture

Bad maintenance culture can impact the structural integrity of a building and cause structures to collapse. The best-developed structures need consistent attention and if the attention is postponed, what can begin as being something exceptionally minor is at risk of transforming rapidly into a costly man-made disaster. No structure can exist all through its life expectancy without proper maintenance. Even if a building is structurally impacted, the right remedial actions by expert structural engineers can help to restore the building. Experts recommend that building maintenance begins on the day the builders leave the site. Hence, the need for the maintenance of structures is very important.

 

5.    Obtaining and adhering to the National Building Code of Nigeria

The National Building Code of Nigeria is the body that is relied upon to manage and regulate all operations in the construction industry in the country. Experts have said that the failure of builders to obtain a pass from the National Building Code has been to a great extent the reason why the country has experienced several collapsed buildings over time. They believe that the National Building Code if enforced and strictly followed, will; control and stop non-experts and quacks from participating in any building projects in the country, guarantee consistent compliance by builders to stop the use of substandard materials for any building project and guarantee that builders and property owners maintain a good maintenance culture consistently.

In conclusion, the trend of collapsing buildings can be reversed in Nigeria if we follow the requirements of building construction.


27th April, 2022

3 minutes, 54 seconds read

5 things you need to know before buying a land in Nigeria

According to McKinsey & Company’s ‘Post-pandemic economy: 12 Insights’, ‘…the biggest driver of rising net worth is real estate’. Investments in real estate is becoming more accessible across income levels as new services are springing up to ease the large capital requirement through milestone payments, co-investment and crowd funding. New platforms are also making it easier to invest globally with just a few clicks of the button but due to many factors, uptake of these services is still in its infancy and people still do inspections and due diligence physically before deciding on investing in a property. As your trusted real estate partner, we have listed the first 5 due diligence steps to take if you want to buy a land in Nigeria.

 Plan your cash flow realistically 

When choosing your investment financing options, you need to plan and critically assess your cash flow. Usually, credit facilities for real estate investments are packaged with relatively long tenures to be repaid monthly, quarterly or annually terms. While making investment in real estate is a good store of value, what most people fail to consider carefully is ‘‘how much they can afford to pay per time’’ that will not impact their buying power adversely. It is important for you to scrutinise your financial standing to know how much you can afford to pay for a piece of property even before making a commitment. This may be tricky with staggered payment options especially as fluctuations in inflation and interest rates have an impact on time value of money causing a devaluation to the value of your future cash flows. Essentially, they key is to plan your cash flow realistically and determine what you can afford after living expenses and emergency funds have been allocated.  

 Understand the Size and dimension of the Land 

As a prospective buyer, this is most likely the first thing you want to know. The size or dimension of a parcel of land is a major determinant of the cost/price of that land. There are different measuring units but the most common UoM for land are plots, acres, and hectares. To appreciate the size of a land, you should understand the scale of these units of measurement and make comparisons. For some context, plots of land can come in either 500 square metre or 600 square metres. 6 Plots of land make 1 Acre and 6 Acres make 1 Hectare. It will also add more value to your understanding to consult further with a Land Surveyor for further clarification and or documents that give deeper information and context.

Access the location of the Land 

The geographical coordinates i.e. location of a property determines the integrity of the structure that can be erected on the land. To determine suitability, you need to consider purpose for acquiring a land. This will help you identify the right shape, geographical topology, proximity, infrastructure, road network, availability of anchor occupiers like banks, and other well established private and public institutions. These features play a huge role in driving property value. For example, if your reason for purchase is long term store of value, then you will most likely be purpose fit to buy a land outskirts of the city or urban areas. That gives you an opportunity to buy at a lower price per plot and then the land appreciates over time and as the locality develops. But if your purpose is to build a home or commercial structure then you need to consider thing a land with good access road, good drainage system, and proximity to commercial hub e.t.c. A plot of land in Lekki Phase 1 that now averages over ₦300million in sales value, once sold for ₦3m and less in 2001, refer to our previous article where-is-lagoss-next-lekki-phase-1. The increase in value was largely due to the location, and the presence of growth drivers within Lekki Phase 1. Before you buy into a project, it is important to assess the location and its growth potential to determine its fit for purpose.  

Create a checklist of documentation and regulatory approval requirement  

All over the world, land title is the most important component of any real estate transaction. This is because a Land title and other contractual documents are the evidence of ownership of the physical land. Outside ensuring that the land has a good title, you need understand the regulatory implications in terms of town planning to ensure the land is zoned for the use that you intend to put it to. You can check out our other articles to read more on this.

Discuss payment options extensively 

In the event you are employing credit to finance your purchase, it is critical that you do proper due diligence on the charges and all the terms and conditions. This will help you mitigate things like hidden charges and to also plan your payment calendar to avoid default. A good payment option should be considered because they help reduce the financial burden that comes with upfront payment when buying real estate. It allows you to spread the payment in a way that would not affect your other financial obligations. Where the development company or seller is willing to offer a payment plan, it is advisable to take the opportunity.

We would love to hear from you. Please send your comments and feedback to [email protected] and we will be in touch.