Prime office rental value in Victoria Island and Ikoyi, Lagos submarkets are expected to remain stable around N216,000 ($600) per square metre (psqm) and N252,000 ($700) psqm respectively in 2018, New Telegraph has learnt. Besides, rents for retail segment of the real estate market are also expected to experience stability throughout. According to analysts at International Real Estate Partners (IREP), rents in office and retail markets will remain at their current levels as companies strive to secure a firm growth trend. Following global and local market dynamics, the analysts pointed out that annual prime office rents in Victoria Island and Ikoyi submarkets would remain around $600 per square metre (sqm) and $700 (sqm) marks respectively.
Given the stabilisation of rentals, they added that some prudent companies would seize the opportunity to obtain ideal office space at very reasonable prices. In the first quarter report of IREP, the analysts said: “We also anticipate that there will be more relocations to newly built, and better managed facilities, as general business environment improves. “However, we do not anticipate any major new entrants (occupiers) into the office market as blue chip and multinational firms will continue their prudent ‘wait and see’ approach to space acquisitions.”
The report said that landlords on the other hand were faced with the need for product differentiation while trying to maintain a profit on investments. In addition to rentals, the IREP’s analysts noted that with some of the additional pressures that might negatively affect real estate market in Lagos, such as the changes to the Land Use Charge, it was time to entice corporate tenants to take up more formal office spaces “with the lure of a lifestyle change by including cafés, gyms, crèches and a bit of retail, as well as green solutions and power saving features in the offerings.”
Like the office market, the analysts said they did not anticipate any change in actual retail rentals as tenants continue to negotiate concessions and rent holidays from landlords. On prime office pipeline for Victoria Island and Ikoyi, the IREP’s report stated that with the adoption of naira-based leases, many smaller retail centres had increased their uptake from retailers.
“For those larger malls that are unable to convert their leases to naira, agreeing a fixed exchange rate, lower than the inter-bank rate, helps to retain good tenants,” they said. Despite the difficult operating environment, the analysts said that the retail market has been gradually recovering, a situation that is evidenced by the increase in footfall in some malls such as Circle and Novare Malls in Lekki.
They attributed the reduced vacancy rates and some increased activity in these malls to new international retailers like the new Japanese retailer, Miniso. The IREP report read: “Without a doubt, the size of the population of Nigeria is every retailer’s dream. While the cinemas and the grocery tenants draw a large portion of the shoppers as anchors, it is observed that the paying customers are desirous of a more exciting retail experience.
This is evidenced by the population at the various retail fairs organised from time to time. “The task at hand is to ensure that increased footfalls translate into actual sales; landlords and developers will need to invest in intense marketing and promotional activities to ensure that their respective centres remain the preferred retail centre of choice.”
Tincan Customs chief to implement 48-hour cargo clearance
Customs Area Controller (CAC), Tin Can Island Port Command, Musa Baba Abdullahi has reiterated the command’s unshaken commitment to achieve 48hour cargo clearance from the port without compromising revenue collection and national security.
The customs chief said efforts are being put in place to maximise benefits of technology and build the command’s manpower to meet with the growing challenges of modern trade.
While addressing maritime journalists in his Apapa office, Musa identified swift dispute resolution as a key component to facilitate trade. He said the command has put in place a faster mechanism to address any area of disagreement in interpretations of guidelines for duty collection and other related matters.
He added that a committee put in place for disputes resolution meets as soon as any dispute arises to avoid port users incurring costs caused as a result of delays in resolving such disputes.
According to him, there is a quicker process of bringing issues to his attention and contacting the headquarters where necessary to avoid delays associated with such disagreements. He said the command has stepped up efforts at keeping officers and relevant stakeholders abreast with the use of technology for the purpose of customs operations.
The Controller disclosed that senior officers and licensed customs agents are being trained at the command’s Information Communication Technology (ICT) Centre on the latest Nigeria Customs Information System (NICIS 2) in batches.
Musa said the training and retraining of customs personnel and stakeholders will continue with a view to getting as many persons as possible knowledgeable in the workings of the system.
He also stressed the need for all stakeholders to increase their levels of compliance with rules and improve on their knowledge as ways of achieving seamless flow of trade thereby achieving faster clearance of goods from the port.
The Controller also advised the maritime media to uphold the ethics of their profession and be fair and truthful in all they do.
Early rainfall to boost Nigeria’s cocoa mid-crop
Nigeria’s mid-crop cocoa output for 2017/18 could rise by 15 per cent from last season, helped by a mix of rainfall and sunshine in the main growing regions which has helped the trees, President of Cocoa Association of Nigeria (CAN) Sayina Riman said in a recent interview with Bloomberg.
Drought cut last season’s mid-crop harvest by 40 per cent. The dry weather continued into the main crop of the new season.
Riman said the drought affected the trees, reducing output of between 300,000 tonnes and 320,000 tonnes projected at the beginning of the 2017/18 season.
He said that early rains in March and April have helped boost the mid-crop, which could see the season’s output close at around 290,000.
Riman farms on a 170 hectare cocoa plantation in Nigeria’s second-biggest region of Cross Rivers.
The cocoa season in Nigeria runs from October to September, with an October-to-February main crop and a smaller light or mid-crop that begins in April or May and runs through September.
“Despite the drought of last year which affected cocoa we believe we would be close to 290,000 tonnes for 2017/18 season,” Riman told Reuters.
The International Cocoa Organisation (ICCO), however, gives much lower estimates of Nigerian cocoa output. It forecast last season’s production at 225,000 tonnes.
Riman did not give a reason for the discrepancy. Nigerian government production figures are also significantly higher than ICCO estimates.
Nigeria has recently emerged from recession and a currency crisis which caused a chronic dollar shortage, forcing exporters to under-invoice their goods in order to use the foreign exchange black market to get premium for their hard currency.
The action caused the West African country slip to the sixth producer of cocoa in the world at the peak of the crisis. Riman said Nigeria was getting back to number four grower as exporters now use the official currency markets.
Riman said Nigeria was working on improving its bean quality especially with renewed demand from Europe.
However, bean count, a measure of the number of beans needed to produce 100 grams of cocoa, reached as high as 140 for the main crop.
Rising Nigerian bonds drags yields down
Nigeria’s local-currency bonds are on a roll, rising for the last eight days and driving their yields below Turkey’s for the first time in more than two years.
The average rate on Nigerian government bonds has fallen around 400 basis since an August-peak to 13 per cent. Yields are now 100 basis points below the Central Bank of Nigeria’s benchmark interest rate of 14 per cent, where its been held since July 2016.
Investors have piled into the naira market thanks to slowing inflation, a stable currency and rising Brent crude prices, which climbed about 25 per cent in the past six months to more than $70 a barrel. In contrast, they’ve turned bearish on Turkey, which has the worst-performing local bonds in emerging markets this year, because of accelerating inflation and loose monetary policy.
Central Bank Governor, Godwin Emefiele, may be tempted to commence his long-touted easing cycle and help revive the economy that has faltered since the 2014 oil crash. While that would reduce the attractiveness of naira assets, Nigerian yields are still high relative to other major emerging markets. Aside from Turkey, Argentina and Egypt’s bonds are the only ones to yield more in the Bloomberg Barclays EM Local Currency Index.
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