GLOBAL PROPERTY & FACILITIES INTERNATIONAL LTD

HIDDEN TREASURES IN THE

NIGERIAN REAL ESTATE SECTOR

LBS ALUMNI PRSENTATION

Thursday, October 29, 2015

BY

Dr. MKO Balogun

11/4/2015

TOPICS

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INTRODUCTIONS

REAL ESTATE INVESMENT OPTIONS

TRENDS IN THE INDUSTRY

HIDDEN TREASURES

Q & A

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?

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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?

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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

GLOBAL PROPERTY & FACILITIES INTERNATIONAL LTD

VARIOUS RE INVESTMENT

VEHICLES

11/4/2015

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

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RETAIL DEVELOPMENT

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COMMERCIAL BUILDING

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MIXED USE DEVELOPMENT

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TYPICAL RESIDENTIAL DEVELOPMENT

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APARTMENTS

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HOSTEL

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HOTEL

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CITY DEVELOPMENT - CENTINARY CITY, ABUJA

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CITY DEVELOPMENT - EKO ATLANTIC CITY

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MIXED USE DEVELOPMENT

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OLD LAGOS MARINA

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GLOBAL PROPERTY & FACILITIES INTERNATIONAL LTD

KEY INDUSTRY TRENDS

11/4/2015

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

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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

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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

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GLOBAL PROPERTY & FACILITIES INTERNATIONAL LTD

HIDDEN TREATURE IN ESTATE

11/4/2015

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

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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

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QUESTION & ANSWER

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Dr. MKO Balogun

MD/CEO

…enhancing real estate & infrastructure value

15th Floor, Western House, 8-10 Broad Street,

Lagos, Nigeria.

DL: +23416321446; Mobile: +2348058840888; +2348033327649

mko.balogun@globalpfi.com

www.globalpfi.com

THANK YOU

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