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Will The New Lagos Rail Line Affect Real Estate Prices?

According to Mr Kolawole Ojelabi of LAMATA, the infrastructure for the first phase of the Lagos Rail Mass Transit (LMRT) Blue Line is ready for the first phase of operations. In fact, the train was recently tested by the state governor, Babajide Sanwo-Olu, in accordance with his promise that the first phase would be tested in the fourth quarter of 2022, with full operations beginning in the first quarter of 2023.

According to Mr Ojelabi, the Lagos Rail Mass Transit Blue Line is one of the six rail lines and monorails prescribed for Lagos in the state’s Strategic Transport Master Plan (STMP). He said that the LRMT Blue Line is a 27-kilometre rail system from Marina to Okokomaiko. Construction has been divided into phases for ease of implementation and this system is expected to move more than 500,000 passengers when the entire line is completed. It is worth noting that the rail system would be powered by electricity from an independent power plant to be purposely built for its operation. However, is this new light rail mass transit (LRMT) system in Lagos set to have an impact on property prices in Nigeria’s commercial capital?

Lagos is seen to be the third largest mega city in the world with over 21 million people. This huge population has been largely responsible for the increase in the intensity of traffic congestion and by extension, environmental degradation and a rush for limited properties by an ever-rising number of people whether for commercial or residential purposes. Therefore, the LRMT system is likely to have a significant impact on urban planning and real estate values.

“In a survey conducted by Alitheia Capital, from 1990 to 2001 on 12 rail transits in different cities around the United States, the survey demonstrated that depending on land use and the efficiency of service on transit routes, commercial and office spaces located 0.80 kilometres from LRT stations charged rents up to 50% higher than similar spaces only a kilometre away. This survey concluded that in most cases, access to rail transit increases the value of properties”.

See also: Property for Rent in Lagos

Although this survey may have been conducted some years ago, the changes that the same results are still likely to apply in Lagos is very high.”

Looking at the objectives of the railway construction stated by the Lagos Metropolitan Area Transport Authority (LAMATA), it is planned to significantly contribute towards urban restructuring, shorten travel time in the state, and improve city sustainability. It can therefore be deduced that when these objectives are achieved, commercial real estate activities would be expected to increase in areas such as Agbado, Marina and Okokomaiko. Agbado area is one of the borders between Lagos State and Ogun State and has relatively low house and land prices compared to other central places in Lagos mainland like Surulere, Magodo, Ikeja, and Gbagada. Its location, which is close to the outskirts of Lagos and far from major commercial hubs, has impacted its value. Okokomaiko on the other hand, is also an area close to the Lagos-Ogun State border. It is close to Agbara, which is a major industrial hub in Ogun State. So, it is understandable to identify why the railway will gradually draw in commercial real estates activities, such as office and retail developments to these areas and likely increase the value of these properties.

Let’s not forget that increased accessibility will result in rising demand for residential real estate and land, just like we saw in the Epe area (another border area between Lagos and Ogun State). With the development of major infrastructure in Epe, such as the Ibeju-LekkiLekki–Epe Expressway and the development of the Lekki Free Zone area, land prices in the area have grown by more than 100% in the past 5 years. As such, a similar surge is expected along areas affected by the new railway line in Lagos State.

The Lagos Rail Mass Transit Blue Line is indeed a welcome idea that would alleviate the pains suffered by commuters along the Agbado, Marina and Okokomaiko axis, but as they say, no gain comes without its own consequences, while the issue of ease of transportation may have been finally resolved, this singular action may just change the dynamics of property valuation, putting property prices on the high side in the affected areas.

Let us know how you think the rail project will affect the property market in Lagos by sending an email to info@buyletlive.com You can also join the conversation on LinkedIn and Instagram.

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