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Nigeria has drawn $600 million in real estate investments over the past 13 years

Nigeria has attracted $600 million in real estate investments over the past 13 years, according to a report by Estate Intel. The report, titled "African Real Estate Capital Trends Report 2024," revealed that up to $30 billion worth of transactions have occurred in Africa over the past two decades.
 
"Key cities in South Africa, Nigeria, Egypt, and Mauritius have led the way," the report stated. "These countries' robust property markets and their status as Africa's business hubs have made them attractive for investments. South Africa, in particular, benefits from strong capital markets supporting its investments. Even post-COVID, these countries continue to dominate Africa's real estate market."
 
The report also highlighted a few standout countries that have attracted significant institutional capital despite having relatively smaller economies. These include Mauritius, Mozambique, and Senegal, which have been popular due to their well-performing hospitality and industrial sectors.
The report highlighted that while Africa remains one of the world's greatest hotspots for diversity, 10 of the largest economies among its 54 countries account for 71 percent of the continent's GDP. It noted that 54 percent of the population and 98 percent of all investment activity are currently being tracked.
 
Addressing the Environmental, Social, and Governance (ESG) agenda in the country, Dolapo Omidire, the Research Director at Estate Intel, emphasized the growing role of ESG in shaping the African real estate capital landscape. He stated, “We have seen the provision of green and ESG-linked financing for real estate transactions grow by an annual average of 41 percent since 2018, bringing us to a cumulative total of $4.2 billion by mid-2024. With over $1.3 billion announced year to date, 2024 has seen record-breaking green and ESG-linked property financing activity. Estate Intel forecasts this will cross the $2 billion mark before the year ends, as ESG themes become increasingly popular among institutional investors.”
 
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Omidire also noted that amid exit struggles, debt payment has been used as a proxy for acquisitions. “We typically wait for at least three events to call a trend. But in the two interesting examples we highlighted, debt payment is used to help close a sale where a standard sale failed and was too good to ignore. The case studies in question are in Nigeria and the retail sector linked, with one example being Gruppo’s plan to settle a $25 million senior debt using Ikeja City Mall sale proceeds. Specifically, the firm announced plans to dispose of its 75 percent interest in Ikeja City Mall to Actis through its NREIF fund in November 2020. As such, Actis will own 50 percent of the resultant shares and shareholder loans in it and advance a shareholder loan to Gruppo for an aggregate consideration amount worth $25 million, which Gruppo intends to use in settling its senior bank debt,” he explained.
 
Omidire asserted that institutional interest is strongest in the hospitality market, adding that strong institutional interest has historically been witnessed in the hospitality, retail, and office sectors, with overall growth averaging 23 percent per annum across the market. “The hospitality sector, in particular, has recorded the highest deal volumes and value worth over $2.5 billion (exclusive of South Africa), with the post-COVID-19 period realizing the highest activity.
This is on the back of tourism resurgence and increased investor interest in smaller and Francophone countries, such as Senegal and Côte d’Ivoire. Transaction yields on average have remained relatively stable at 8.7 percent since 2014. Notably, the hospitality and industrial markets registered yields lower than the market average at 7.5 percent and 8.1 percent, respectively, citing attractive transactions to investors. On the other hand, the retail and office transactions recorded yields averaging 9.3 percent."
 
Estate Intel data showed that up to $30 billion worth of transactions have been undertaken in Africa over the past two decades. “Key cities in South Africa, Nigeria, and Egypt have led the charge, with the overall attraction underpinned by their robust property markets, popularity as Africa’s business hubs consequently attracting investment, and specifically South Africa’s robust capital markets supporting its investments,” the report indicated.
 

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