The 2023 West Africa Property Investment (WAPI) Summit themed “Rewriting the Narrative: Positioning & Strategies for the Future” brought together industry professionals across West Africa to discuss the current state of affairs in the real estate and construction sector and strategies being implemented for success.

Here are our takeaways from the event:

 

Current macroeconomic conditions are driving the flight to quality 

Against the backdrop of a subdued macroeconomic environment in both Ghana and Nigeria, there has been a flight to quality in commercial real estate. Stakeholders note the success of quality spaces and increasing upgrading and retrofitting demand driven by multinationals. 

Suzanne Oluwole (Director, Trillium) noted “there is existing demand for grade A office buildings on the mainland from corporations operating within Ikeja, with just one of such developments currently in the pipeline.”

 

 

Furthermore, panelists discussed how the changing work dynamic has led to an increased supply of co-working spaces with emphasis on live-work-play arrangements.

Michael Aldridge (CEO, Kofisi) noted that as more companies adopt the remote working model, workers will require optimized working spaces to be efficient. This has influenced Kofisi’s holistic approach to work space design.

 

The retail and hospitality markets have stayed resilient despite economic headwinds

The retail and hospitality sectors have stayed resilient with retail stores and hotels recording high occupancy and RevPAR respectively at pre-pandemic rates. 

 

 

Laolu Alabi (Senior Vice President, African Capital Alliance) noted the unique retail situation stating “the retail market is exhibiting an indirect correlation with current economic conditions as retailers are still making rent on leased spaces despite the harsh economic situation reducing the citizen’s spending power.”

However, despite high occupancy in higher-grade retail malls, the market has exhibited a preference shift to neighborhood plazas and hypermarkets particularly in the Nigerian market.

 

Collaboration amongst stakeholders and funding diversification is key for success in the West African market

The growth of the African real estate market has been hampered by limited project financing options and a hesitant approach to collaboration amongst stakeholders. 

Rolake Akinkugbe-Filani (Independent Real Estate Advisor) noted that real estate cannot exist in a vacuum, as such while improvement in the real estate sector is being pushed, provision of adequate infrastructure such as rail and good roads by the government is key to facilitating supply and attracting investment.

 

 

In terms of financing, the West African market currently lags behind international markets evidenced by Ghana’s attempt to establish their very first REIT with Nigeria having just four. Furthermore, panelists at the 2023 WAPI Summit also emphasized the need for diversification in terms of fundraising options with Nigeria’s hesitation to tap into pension funds viewed as a missed opportunity. 

George Allotey (Chief Investment Officer, Stanbic Investment Management) echoed this sentiment citing Ghana’s first REIT and Nigeria’s first REICO vehicle by Purple late last year as indicators of a maturing market.

 

Creative approach could be key for unlocking quality and accessible housing in West Africa

In terms of affordable housing delivery, the focus has been on funding opportunities and avenues for cost subsidy that could be exploited to curb the high cost of housing delivery. This is particularly relevant in Nigeria where we import approximately 80% of building materials used from tiles to roofing sheets.

 

 

During the panel session on improving access to quality and accessible housing in West Africa moderated by Dapo Runsewe (Senior Analyst, Estate Intel), panelists highlighted local production and public-private partnerships as strategies for mitigating costs and enabling delivery of low-cost housing. In addition, creative approaches such as the replacement of steel rods with laterite are being implemented to facilitate housing delivery at an affordable rate.

 

In terms of fundraising, investment opportunities abound for developers to tap into outside PPP, with sustainable and green building initiatives lacking suitable products to invest in. Chido Onyilimba (Head: Origination & Structuring, InfraCredit) noted that InfraCredit is constantly on the lookout for sustainability-focused projects to invest in. However, direct investment in green-focused real estate developments have been limited.

In addition, Bankole Osituyo (Investment Officer, IFC) highlighted IFC’s performance-based MAGIC funding program that covers 80% of green construction cost increment for developers. 

 

Data Centres are leading the alternative asset classes in terms of continued growth

In terms of alternative asset classes, data centers have recorded a positive year, with Rack Centre, Agility, and Digital Realty announcing new projects in 2023  as the adoption of technology increases across the continent. One of such projects is the installation of two subsea cables in Lagos being undertaken by Digital Realty in partnership with a Meta-led consortium. 

 

 

The Nigerian Proptech Sector Hit by Fundraising Lows

On the other hand, the proptech sector is currently facing a “tech winter” as fundraising fell considerably short of last year’s highs with several companies like GatePass making the difficult decision to wind down operations. As a result of limited funds, companies have had to rethink growth and operational strategy in a bid to cut down on costs where applicable/appropriate. 

 

 

Tola Adesanmi (CEO & Co-founder, Spleet) noted the need for data-backed decision making to ensure revenue is going into the right places citing the importance of companies like Estate Intel to facilitate this.

 

Estate Intel loves your feedback! Let the Insights team know what you think about Key Takeaways from the 2023 WAPI Summit by emailing [email protected].

 

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