In the recently released Estate Intel 2023 Lagos Development Pipeline Report, we analyzed the performance of retail, hospitality, residential, healthcare, and office sectors. Here’s what’s in store for the Lagos retail market in 2023.

 

The retail sector recorded the largest development pipeline accounting for 60% of the total stock. Despite this, approximately 58% of the projects remain on hold with only 30% of the pipeline under active construction. This has mainly been attributed to the difficulty in securing large expanses of land for retail developments, the poor performance of retail investments over the past few years and the region’s relatively low purchasing power.

 

 

In addition, currency devaluation, a shallow tenant pool, rising construction costs and diminishing disposable incomes remain among the many headwinds facing the Nigerian retail sector, especially in A & B Grade shopping centres resulting in major exits by international retailers who also feature as anchor tenants for these malls.

 

As such, market activity is currently focused on Plazas and Hypermarkets types of facilities with the segments accounting for the majority of the stock under active construction due to the growing base of local retail players.

 

Consequently, Grade A malls are likely to contribute to increased capital markets activity in the market with major institutional investors seeking exits from their portfolios.

Therefore, the outlook for the retail sector is negative with bright spots remaining in the lower end of the market.

 

Download the 2023 Lagos Development Pipeline report for a comprehensive breakdown of Lagos’ retail development pipeline.

 

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