Macroeconomic and disruptive megatrends such as increasing urbanization, expanding trade, demographic trends such as rising income levels and a young workforce, as well as technology and a sustainable environment, are driving growth in demand for construction and real estate projects in the countries where we invest.
While these boost economic activity, they also raise demand for high-quality, long-term real estate, which is substantially disappointed in most of our target areas.
If neglected, the gap would expand as demand rises, eventually becoming a barrier to further expansion. Investments in the industry can significantly impact whether cities become local and regional hubs for long-term growth. On the other hand, local populations risk losing out if this investment and development do not occur.
However, the sector confronts several obstacles in addressing this unmet demand and realizing its full potential to improve people’s lives. The industry is fragmented with sub-scale developers in many locations where we invest, and there is limited utilization of efficient, sustainable construction processes and technology.
These characteristics usually lead to higher construction prices, a rise in small to mid-sized low-quality projects, and a scarcity of scalable investment options.
As a result, the developing market sector frequently struggles to attract institutional investor interest. There is little long-term thinking, and activity is concentrated on shorter-term initiatives with the highest potential for higher profits. Housing, industrial and logistics parks, student housing, and other sub-sectors that typically generate long–term economic growth, enable the construction of sustainable communities, and offer scalable development opportunities have been mainly disregarded.
Four investment opportunities in Nigeria’s construction industry
Residential Housing
The demand for decent housing remains high in a country with a population of over 167 million and a growing middle class. The Federal Mortgage Bank of Nigeria (FMBN) estimates the country has a housing shortage of 17 million units. In Abuja and Lagos, new real estate projects are popping up. However, those housing projects account for barely 1% of Nigeria’s requirements.
As the country’s middle class grows, there are numerous opportunities to be exploited.
Infrastructure
As more investors enter the Nigerian market, the government has given more funding for infrastructure over the last decade, which has been encouraging growth daily.
They say that public and private infrastructure still require much more construction.
As Nigerian President Muhammadu Buhari enters his second year in office, he has pledged to increase funding for infrastructure projects and use local and international contractors.
As more investors enter the Nigerian market, the government has given more funding for infrastructure over the last decade, encouraging daily growth.
They say that public and private infrastructure still require much more construction.
As Nigerian President Muhammadu Buhari enters his second year in office, he has pledged to increase funding for infrastructure projects and use local and international contractors.
Retail
Nigeria’s building industry continues to be stimulated by the retail sector. According to the statistics agency, the services sector, including retail services, contributed the most to Nigeria’s latest rebased GDP, accounting for 51%.
According to McKinsey’s latest economic growth predictions, yearly consumer goods sales might more than triple to $1.4 trillion by 2030, up from $388 billion. That explains multi-national firms like Unilever Plc, Nestle Plc, and Shoprite Holdings’ expansion plans. Shoprite, a supermarket shop based in South Africa, has announced plans to open dozens of additional retail locations across Nigeria.
Eko Atlantic City
Eko Atlantic City is one of those ambitious cities in Africa, and construction has begun on it outside of Lagos to ensure that it becomes Nigeria’s mega commercial city. This endeavour aims to make Eko Atlantic City Nigeria’s capital of commerce.