Following an economic downturn, Nigeria’s commercial real estate market remains resilient with several mall developments in the near-term pipeline. Tapping into the country’s huge informal retail market will take more than this, however.
One such project, the Royal Gardens Mall being developed by South African investor RMB Westport and Nigeria’s Trojan Estates Ltd, is scheduled to officially open its doors by the end of Q1 2018. The $170 million mall is currently under construction in the densely populated Lekki peninsula in Lagos and will cover an area of 29,441 sqm.
In early 2018 it will be joined on the peninsula by the Twin Lakes Mall, a 48,000 sqm development spearheaded by London-headquartered Actis Capital which broke ground in 2015. The total value of the project has not been disclosed.
The nation’s capital, Abuja, will also see a boost to its retail capacity in the coming months as the city’s flagship Abuja World Trade Centre sees the finishing touches put on its Abuja Capital Mall. Covering an area of 40,000 sqm, the mall forms a section of the $1 billion Trade Centre which broke ground in 2010. While sections of the development are already functional, the mall is set for completion before the end of the year.
Once complete, these projects will join around 30 other operational malls across the country, according to Asoko researchers. While Nigeria’s first mall, The Palms Shopping Mall in Lagos, broke ground in 1998, momentum was slow. Palms only opened its doors in late 2005, and between 2005 -2008, only 30,000 sqm of commercial retail space was completed in the country, according to Lagos-based Estate Intel. By comparison, between 2016 – 2017 alone 104,000 sqm has been added, bringing total national mall space to around 330,000 sqm.
A bulk of this has been concentrated in the main cities of Lagos (121,000 sqm) and Abuja (81,000 sqm), with an additional 240,000sqm and 170,000 sqm in the pipeline for each city respectively. That said secondary cities such as Onitsha, Ibadan, and Warri have also seen investor interest.
Growth has not always been so apparent: prior to the Central Bank of Nigeria’s introduction of the Investors’ and Exporters’ FX Window in April 2017, a severe shortage of US dollars coupled with a significant devaluation of the naira hit most mall tenants who paid rent in dollars. Many closed shop or saw margins deteriorate, with the government recording a 47% vacancy rate in the country’s shopping centers. Given the success of the Window, the challenge moving forward will be to bring Nigeria’s informal retail market – accounting for 98% of retail transactions according to Deloitte – into modern commercial centers. While many malls clock notable foot traffic, converting this to shoppers with cash in hand remains a difficulty facing the country’s mall developers.