A young Isaac Newton, after his school, Trinity College, Cambridge, sent students home during the Great Plague of 1665-6, used his period under isolation to discover a new theory of light, discover and quantify gravitation and discover calculus. The discerning investor in Lagos, while in self isolation due to the coronavirus pandemic, is determined to be like Isaac Newton and make this time productive despite the negative impact of the crisis on the economy and the existing prevailing sense of uncertainty.
As Lagos battles with the pandemic, investors are taking a hit as the economy reels from the impact of the crisis. Investors in the stock market have been the hardest hit; with over ₦2.3 trillion lost within the first month of the pandemic hitting Lagos. As the federal and state governments rolls out measures geared at producing a more effective containment of the pandemic, businesses are shutting down and investors are getting restless and seeking suitable investment alternatives that are immune from the crisis.
Experts have been unanimous in providing the answer: the real estate sector. Lagos, with its growing population, economic/industrial advancements and rapid urban growth has been identified as one of the cities with the highest returns on real estate investment.
“No other investment can give the level of immunity to all this uncertainty and appreciable returns like the real estate sector,” said Kehinde Obada, a realtor. “Lagos, especially strategic areas such as the Lekki-Epe Corridor, guarantees no less than 500% value appreciation on real estate within a five-year time frame; and this of course depends on specifics such as area, type of investment, etc. In Ibeju-Lekki, for instance, a property I acquired for a client in May 2019 has already appreciated by 150% due to the impact of the Lekki Free Zone.”
The Lekki Free Zone, an ambitious 16,500-hectare business hub – a joint venture between the Lagos State Government and private investors – has been hailed by economists as one of the biggest economic stimulants in the state. Within the past year, hundreds of foreign and local investors have established their presence in the zone, leading to unprecedented development and job creation in the area and the state. One of the biggest attractions for investors, according to experts, is the tax rebates available in the free zone.
“These investors are attracted by, among other things, the tax breaks available with operating in a free trade zone,” said Bidemi Olumide, Partner and CEO of Taxaide, a tax and data protection management firm. “For your company to be operating in that territory, you have a significant rebate in taxes; and that’s a conservative way of putting it.”
Dangote Group, located in the South East Quadrant of the LFZ, is the biggest investor taking advantage of the full benefits of the zone, investing about $15 billion in a petroleum refinery, a fertilizer processing plant, a gas pipeline project and a Petro-chemical plant. In the South West Quadrant of the zone, the Lekki Free Zone Development Company (LFZDC), a joint venture between China-Africa Lekki Investment and the Lagos State Government, has already attracted multiple investors. In the North West Quadrant of the zone, the newest city in Lagos – Alaro City – a developing city-scale project planned on 2000 hectares, has been of particular interest to real estate stakeholders.
A partnership between Rendeavour, the largest city builder in Africa, and the Lagos State Government, Alaro City provides industrial and logistics locations, complemented by offices, homes, schools, healthcare facilities, hotels, entertainment and 150 hectares (370 acres) of parks and open spaces. 3.5km of initial road networks and a modular 50MVA power plant are under construction in the city and over 20 businesses are in various stages of establishing their presence in the city.
“Alaro City has increasingly become a big motivator for increased business in this area,” said Mr. Obada. “Together with Dangote (Refinery), they are the major factors that clients are considering while making investment decisions in this axis. Over 80% of our enquiries these days are about land in Alaro City and near it.”
According to Mr. Olumide, residents are also particularly attracted to Alaro City by the various advantages that building and living in a free zone come with. “Residents of Alaro City, because they live within the LFZ, will also benefit from a significantly improved regulatory landscape where they do not get to respond to multiple regulators; and of course, the general sanity that comes with living in such an environment.”
Investors will also need some level of sanity in the coming months. As COVID-19 ravages the world and a global recession has been announced by the International Monetary Fund (IMF), the Nigerian economy is expected to be severely affected, especially as the price of crude oil is expected to drop below $15 per barrel. Investors in the LFZ, according to economists, are therefore going to benefit from the fact that transactions within the zone, as applicable to free trade zones, are made in the international currency of trade – USD.
Experts say the level of interest in the zone will also further increase as appreciable progress is made on such strategic supporting infrastructure as the Lekki Deep Sea Port, the proposed Lekki-Epe International Airport and access roads. On March 30, in a move that stakeholders say points to the economic potentials of the zone, the Lekki Port LFTZ Enterprise Limited received $221 million in equity funding from China Harbour Engineering Company, one of the shareholders of the seaport project. This fund injection coming during a time that the world, and particularly China, battles the pandemic, reaffirms the fact that daring investors will not allow COVID-19 stop them.
“For people sitting at home and restless but unwilling to allow this crisis period be a wasted one, investing in real estate either within or around the Lekki Free Zone is the perfect place to put your money and grow it,” said Mr. Obada. “Of course, things have slowed down all round, but we are noticing a growing level of enquiries as the smart ones realise this is perhaps the only sector that offers some form of immunity to the coronavirus (pandemic). And our advice is simple: buy now.”
Source: Businessdayng
