Urshday Limited, a joint venture between local landowners and Novare Equity Partners opened their 22,000m2 shopping mall – Novare Lekki Mall – to the public last week. This single level mall has attracted thousands since it opened on Thursday as residents in the estates nearby and others from farther out in the city traveled to see what Lagos’ newest mall had to offer.
Stores like Shoprite, Game, Tantalizers, Med Plus, Standard Chartered Bank, Finet and Mondo are currently trading, while others including TM Lewin, Swatch, Levis, Spur, Nike, Fun World, Invivo, Essenza and more have shop fronts up, indicating that they will be opening soon. After having a look at the project, we have selected 5 reasons why we think this mall will be a hit despite the current environment.
Putting it simply, the catchment area for the mall is fantastic. As the map below illustrates, there is no other shopping mall within a 15km radius. This radius can even be widened further to 20km if we consider that the closest shopping mall (Circle Mall) is better defined as a neighbourhood mall/convenience centre as opposed to a mall.
Unlike regions such as Ikeja or Victoria Island/Oniru where there is a mix of commercial real estate stock, most of the real estate within this 20km radius is purely residential. A major plus, as this means the mall has a strong and steady driver for footfall. The list of existing and upcoming estates along the Lekki-Epe axis goes on and the region is often referred to as the fastest-growing real estate axis in West Africa.
The Palms is similarly surrounded by the affluent suburbs of Lekki Phase 1, Oniru and parts of Victoria Island. However, imperfect access and a neighbourhood which is more traffic inclined as a result of its commercial relevance hinders this mall from reaching its optimal performance.
On the mainland (Ikeja in particular where land is scarce), Ikeja City Mall still has a great catchment area. However, with the emergence of smaller retail centres such as Maryland Mall who have the almighty Shoprite as anchor, their catchment area is being eaten into.
In this context, we refer to timing as the period this mall was delivered relative to existing retail schemes as well as those in the development pipeline. While there are over 5 retail projects planned for the Lekki-Epe axis including Twin Lakes Mall by Actis and Royal Gardens Mall by RMB Westport, these projects are still at least 24 months out. Basically, Novare Lekki Mall was delivered/completed in a period where it will have the ability to enjoy large foot traffic volumes while it establishes a loyal customer base without the overhang or pressure from competition for a good period of time.
Novare Lekki Mall currently has 1,000 parking bays that are currently being offered to prospective shoppers for free, this is in sharp contrast with many of the other malls of similar size in Lagos. There is also no indication that this will change in the future, especially since the developers are marketing this factor as one of their key services. The out of town location should have allowed the developers to benefit from relatively cheaper land costs and enable them to offer such an incentive.
If we use Ikeja City Mall and The Palms as case studies, it is possible that this may change.
This is purely a hunch, but we will be very surprised if Novare has not kept some space for expansion. According to the owners, the mall is still some distance from full occupancy at 75% so expansion at this time may seem a bit far-fetched.
Over the next decade, however, as the Nigerian economy (hopefully) recovers, ongoing residential developments on Monastery Road continue and more structured developments emerge along the Lekki-Epe Expressway, it is possible that there may be a case for expansion. Seeing as it is a single level mall, there may be a provision to build an upper level.
As we speak, Ikeja City Mall has an upward expansion capacity of 7,000m2. The new owners, Hyprop and Attacq previously indicated some interest in moving forward it.
Planned Infrastructure Projects
There are a number of infrastructure projects planned along the Lekki axis including the Free Zones, the new airport, the 4th Mainland Bridge, Ajah Flyover and much more. Improved infrastructure typically enhances access, improves the ease of doing business and drives commercial activity. This will enable residents and businesses in this region thrive and this should positively impact the mall.
The project is a good allocation of capital from Novare’s Africa Property Fund II and the mall should be able to do well. Nonetheless, there will be challenges. A few of which will include chronic traffic issues, purchasing power of the residents in the catchment area, increasing cost of occupancy for tenants/retailers and high inflationary environment for customers.