WORDS: DEBBIE HATHWAY :: PHOTOS: SUPPLIED
Broll Property Group CEO Malcolm Horne shares insights into the potential of Nigeria’s commercial property market.
Similar challenges, diverse opportunities. The parallels and prospects in the SA and Nigerian commercial property markets can offer real opportunities to those who are open to them. Despite grappling with economic hardships like those faced by many developing nations worldwide after the Covid-19 pandemic, Nigeria’s construction industry retained its strength, boasting a valuation of over $135 billion in 2022. Several other sectors are also burgeoning or showing immense promise, and success hinges on wisely tapping into the right markets at the opportune moment.
Broll Property Group CEO Malcolm Horn
Even in the face of an economic slowdown, surging fuel prices, and the devaluation of the Naira, Nigeria exhibits signs of resilience and recovery. During a recent visit to the country, Broll Property Group CEO Malcolm Horne identified multiple prospects within the retail property sector despite a shift away from malls by numerous tenants. He also noticed the reluctance of corporate enterprises to commit to long-term leases. “Instead, they are looking for flexible solutions, which has led to a dramatic fall in traditional office demand and an increased appetite for flexible, co-working spaces,” he says. “Similarly in SA, we are seeing the hybrid working model adopted during the pandemic being reimplemented by several employers as a way of cushioning them from the impact of inflation and fuel price increases.”
DEMOGRAPHIC SHIFT
Nigeria’s population is on a rapid upward trajectory, expected to double within the next three decades, creating a demographic shift that promises challenges and opportunities across various sectors in the future. Horne says although unemployment has decreased according to official statistics, Nigeria was hot on SA’s heels regarding its high unemployment figures. Along with the increased instability and insecurity in many of the northern regions of Nigeria, there has been an increase in crime because of the complex economic environment. “Given the economic challenges being faced in Nigeria and SA, in particular, both are seeing a substantial increase in the loss of talented and highly educated professionals to Europe, Canada and the US. This leaves fewer skilled people to fill roles as well as lower tax revenue for governments,” Horne says.
Horne says the over-reliance on transporting goods by roads across the continent instead of by rail or sea also presents a significant challenge to many African countries. “One just needs to look at the increase in transport and logistics costs in SA because of the crumbling rail infrastructure. The impact of movements in the fuel price is felt directly and immediately by all consumers.”
FINDING OPPORTUNITIES
The African continent is grappling with a range of pressing challenges. These encompass issues like fragile and volatile exchange rates that can be profoundly influenced by political developments, whether in Nigeria’s currency decisions or the infrastructure and debt challenges confronting Zambia and Ghana. Global geopolitical events like the Ukraine war can exert significant and enduring effects on African economies.
But with every challenge, there is an opportunity. “The growing population means a greater number of opportunities in education, housing and healthcare. I am surprised by the number of Nigerian and Ghanaian families who choose to educate their children in the UK and US. With this becoming increasingly unaffordable, there is a real opportunity for private education providers across the continent,” adds Horne.
“Historically, there has also been a preference to pursue healthcare overseas, but with the exchange rate movements, more citizens are seeking out private medical care in-country. We are also seeing interest in the manufacturing sector although this is not across the board. The falling currency and the increased cost of importation has led to more fast-moving consumer goods (FMCG) groups looking to convert to in-country manufacturing and assembly.”
UNEXPLORED POSSIBILITIES
Horne highlighted additional unexplored prospects within Nigeria, SA, and other African markets, such as affordable housing development, complete with convenient access to quality retail and educational amenities. Reimagining vacant office spaces in prestigious locations like Sandton, often referred to as Africa’s wealthiest business district, into affordable residential units offers numerous possibilities for enabling people to reside closer to their workplaces.
“Another opportunity that should be considered is specialist residential developments such as old-age homes. The brain drain has left several middle-class elderly people with no one left to take care of them,” he notes, adding that the fast-growing industries of healthcare and pharmaceuticals present further opportunities.
The pharmaceutical sector necessitates specialised manufacturing and storage facilities that rely heavily on a continuous and reliable power supply. Additionally, there is a promising opportunity within the data centre industry, given the increasing demand in SA and across the continent. This demand is driven by the global shift towards a more interconnected and automated world. “Currently, the biggest challenge to this opportunity in SA, for example, is the country’s unreliable electricity supply,” concludes Horne.
